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Glass 5% full for women CEOs - now what?

By: Catherine Yoshimoto, Senior Index Product Manager

International Women’s Day comes at a time when gender equality has never been more relevant. On January 21, women’s marches around the globe attracted unprecedented numbers. As the campaign for women’s rights appears to be growing into a global movement, I thought I’d take a closer look at how women are represented in our US index constituent companies. The results are not encouraging.

I discovered that, at least in the US, the glass is only 5% full for women, as represented by the percentage of female CEOs of companies in the Russell 3000® Index. This figure was consistent when based both on number of companies and as a percentage of market cap. Five percent is remarkably low, given women make up 47% of the civilian labor force, of which 75% work full-time.[1]

This year's theme for International Women's Day (March 8) is Pledge for Parity, but if these numbers are any indication, we’re far from gender parity in the corporate boardroom. Even as we strive for equality, I think it’s important to examine the reasons we may want gender parity, and what the "power" in achieving this objective may be.

Simply hiring women leaders could be counterproductive, and in fact female CEOs don’t necessarily outperform male CEOs; however, according to some academic research, a more diverse leadership team does tend to deliver better outcomes on average.[2] So one view is that the power of parity is not necessarily in having a female leader, but rather a mix of views and backgrounds among the leadership team.

Studies have demonstrated that gender equality could be favorable for the US. According to the McKinsey Global Institute, achieving gender parity in the US could add $4.3 trillion of additional annual GDP in 2025, 19% higher than the business-as-usual scenario.[3] Even just matching the best historical rates of improvement on gender equality in the workplace could increase annual GDP by $2.1 trillion in 2025, according to the McKinsey  report.

The lack of women in CEO positions highlights the disparity in the workforce and the lack of diversity in the top role. But how does the distribution look if we segment by company size?

The data is mixed: Based on numbers, mega cap companies in the Russell Top 200® Index have the highest percentage of women CEOs, followed by the Russell 2000® Index. The Russell Midcap® Index has the lowest percentage of women CEOs based on numbers, however it’s comparable in terms of market cap. The Russell 2000 Index leads the other cap segments in terms of percentage of company market cap led by women CEOs.

I also examined the Russell 3000 Index from a sector perspective, and discovered consumer discretionary (39) and health care (28) have the highest absolute number of women CEOs. Based on percentage of companies in the sector, however, utilities and consumer staples take the lead.

Technology lags in terms of absolute number and as a percentage of companies, despite high profile CEOs like Marissa Mayer of Yahoo! and Meg Whitman of Hewlett Packard (who was preceded by another famous woman, CEO Carly Fiorina). Energy is last, with only four women CEOs out of 150 companies in the sector.

While I caution that we should not necessarily equate gender parity with better leadership, past studies have shown that gender diversity may be beneficial to corporate outcomes. With women CEOs leading only 5% of companies in the Russell 3000 Index, much progress has yet to be made. Keeping an eye on these statistics can help us measure this progress (or lack thereof), with the intent of increasing diversity at the top level of corporate America.



[1] Bureau of Labor Statistics, data as at December 2016.

[2] M. Noland, T. Moran and B. Kotschwar, Is Gender Diversity Profitable? Evidence form a Global Survey (Working Paper), February 2016.

[3] McKinsey Global Institute, data as at April 2016. The Power of Parity: Advancing Women's Equality in the United States.


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