Women make up almost 50% of the American workforce, and for decades they'd been increasing their numbers in senior leadership roles. But in 2022, that trend began to reverse. According to the World Economic Forum's 2023 Global Gender Gap Report, the percentage of women in director roles or higher dropped by 10%.
Why the downward trend? I believe there are two reasons. First, the pandemic caused a significant number of women to leave the workforce, creating gaps in the talent pipeline at all levels. With fewer women in the talent pool to choose from, companies defaulted to promoting men. Then, a large number of companies haven't engaged in succession planning for women leaders—or in general. This has contributed to the significant drop in women currently at the vice president or C-suite levels.
There's a very high, tangible cost to poor succession planning. When companies fail to pay enough attention to their leadership pipelines and succession practices, it leads to excessive turnover at the top and destroys a significant amount of value—close to $1 trillion a year—in intellectual capital in the C-suites.
Companies Need To Elevate Their Women Intentionally
Based on more than 20 years of engaging with corporations on women's development programs, our Gender Dynamics Institute at Leading NOW determined there are two critical times in women’s careers when they don't get the professional development they need: when moving from manager to director, then from director to vice president and above. If companies aren’t intentionally looking at women in their talent pipeline when doing succession planning, and looking backward to those levels, then the chances of women making it to vice president are slim to none.
To reverse course, organizations must intentionally build a leadership pipeline with more women in it. This must include CEOs and CHROs collaborating to identify and develop high-potential women so they can replace senior leaders when they retire or leave. Most importantly, succession plans should roll all the way down to the manager level. Otherwise, there will continue to be a lack of women to pull from when the time comes to fill those critical senior-level roles.
At Leading NOW, we had a large global client whose data showed a proportional lack of women at the director level and only two at the vice president level. It was determined that, when succession planning conversations were taking place, senior leaders weren’t even identifying women to be considered. This client consulted with us to find out how they could ensure more women were prepared for senior-level opportunities. With a targeted leadership development and mentoring program customized for their organization, we were able to help them fill their talent pipeline.
Organizations should start succession planning years in advance. Involve senior leadership in the process to identify what skills and experience are needed for key positions. Once identified, put an evaluation process in place that utilizes skills assessments, performance reviews and feedback to identify potential successors and determine future leaders. Finally, invest in professional development to help prepare successors for their new roles when the time comes.
It's Time To Plan For Women's Success
Among the five biggest hurdles CEOs cited as impacting organizations' future performance, one was leadership training and succession planning. Considering companies with women executives are more likely to outperform their competitors, they must make an intentional effort to include women in the C-suite talent pipeline.
The only way to reverse the downward trend of women in leadership is to actually provide advancement opportunities. By identifying the high-potential women you have, developing them as early as the manager level and then promoting them when the time comes, you'll help bridge the gender gap that's been increasingly plaguing companies.
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This article was originally written for the Forbes Human Resources Council, and published on the Forbes website in July 2024. You can see Kelly Lockwood Primus' other Forbes articles on her author page.
