Companies are touting women in the C-suite – but their ranks are falling

In the broader discourse about DE&I in the workplace, companies tout gender-diverse leadership more than they actually achieve it.

In mid-March, Stephanie Cohen, a veteran banker, made headlines as the latest senior executive woman to leave the international investment bank Goldman Sachs.

Cohen joined the Wall Street behemoth in 1999, climbing the ranks to become partner in 2014. Most recently, she'd overseen the bank's consumer and fintech operations, and was one of the most senior women at the firm. Cohen's departure particularly garnered attention because it followed the news that another senior woman, Beth Hammack, who had co-led the bank's global financing group, was also leaving.

The departures prompted comments from the bank's chief executive, who doubled down on his commitment to achieve greater gender equality across the firm's top leaders. "Advancing women into our most senior ranks is an area where we have not accomplished our goals," David Solomon said in a statement, first reported by The Wall Street Journal. "Our longer-term success depends significantly on developing female partners in senior roles."

Throughout the past few years, there's been a dramatic rise in the number of companies committing to increasing their gender balance at the highest echelons of management, both within financial services and beyond. McKinsey and Company's most recent annual Women in the Workplace report showed nearly three in four human resources leaders now said that DEI – diversity, equity and inclusion – initiatives are critical to their companies' future success, with many placing a particular emphasis at gender balance at the very top.

Yet recent research shows that these commitments and stated initiatives are not necessarily translating into reality. Data from Standard & Poor Market Intelligence, published in March, shows the growth in women's representation among all senior leadership positions in the US dropped to the lowest rate in more than a decade in 2023. And across all C-Suite positions, women lost seats for the first time since S&P started collecting data in 2005. 

The analysis by S&P also showed executives at publicly traded firms spent less time talking about diversity and inclusion while on earnings calls with shareholders. In 2023, mentions of the topic fell to multi-year lows.

Now, academics and organisational experts warn that companies deprioritising gender diversity risk losing out – reputationally and financially.

One way to explain the disconnect between these commitments and what's happening in practice is that we're seeing the gender equivalent of "greenwashing". Michael Smets, professor of management at Saïd Business School at the University of Oxford, describes this as "getting stakeholders off your back by making bold public claims without necessarily walking the talk".

Smets also notes that we could be seeing a degree of "gender equity fatigue". It's hard work implementing effective DEI initiatives because these require addressing entrenched biases, stereotypes and ways of working. Some organisations might just be losing patience and focus, he suggests.

Others, including Heejung Chung, a professor of sociology and social policy at the University of Kent in the UK, say the dissonance could also be a result of the nature and dynamics of the labour market and, specifically, the extent to which women are struggling to climb the ladder. "This return-back-to-the-office work culture … may have limited many women from reaching or taking up senior leadership roles," she says. Data from 2023 found record numbers of women returning to work from pandemic levels, which has not translated to the number of women holding the highest positions.

In other words, Chung suggests, companies are publicly committing to achieving more gender diversity at the top, but the parameters of the working day and workplace requirements means that some women – and particularly women of colour – feel they have no choice but to leave. This, in turn, reduces the pipeline of women candidates for the top spots.

There's also evidence that DEI initiatives are frequently first on the chopping block when the economy is uncertain. One working paper based on data from LinkedIn showed that "when labour conditions worsen, a smaller share of new hires into leadership are women".

Women and gender-diverse workers may be feeling the effects of a broader backlash against recent advances towards greater diversity in the labour market, some academics say. 

"[There's a] significant proportion of the population that believes that feminism has gone too far," says Chung. "I can't say if companies are also at least internally having such beliefs – but I would not be surprised if this is the case."

Nicholas Pearce, a DEI expert, professor at Northwestern University's Kellogg School of Management, US, and the founder and chief executive officer of management consultancy The Vocati Group, agrees. He says that he is witnessing an "escalating war on DEI", which is built on a "patently false yet increasingly widespread belief that DEI [initiatives] inherently discriminate against and disadvantage white males".

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"Many organisations are reversing course on DEI to avoid becoming legal and political targets," he explains. "The short-run impact of this fear-motivated strategic shift is fewer women and persons of colour being advanced into positions of corporate leadership."

Management experts and other scholars specialising in DEI research agree that the reasons for the divide between promise and reality likely vary among companies. What's true for all organisations, though, is that empty promises – words without action – can have consequences.

A growing body of research shows that diversity in leadership tends to dictate diversity and a sense of inclusion throughout all seniority levels of an organisation. Research also shows that more diverse businesses are more resilient and more innovative – which ultimately makes them more economically successful.

McKinsey research has shown that companies in the top 25% for racial or ethnic and gender diversity were respectively 36% and 25% more likely to have superior financial returns. And a study by the World Economic Forum shows that companies with better than average diversity scores drive 45% average revenue from innovation, while companies with below-average diversity scores drive only 26%.

This data particularly underscores the counterintuitive nature of decisions made during times of economic uncertainty to cut back on efforts to enhance diversity. In fact, the research suggests it's precisely during these tumultuous times when diversity in leadership should be a priority, says Smets, and getting more women into the C-suite is one way that companies can achieve this.

"Rather than using a world on fire as an excuse for reducing female representation on boards," he adds, "maybe we should take it as a rallying call to redouble our efforts to get there sooner rather than later."

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