Having More Women CEOs Won’t Fix the Gender Gap

(Bloomberg Businessweek) -- It’s a heartening sign of progress that, in a world where men continue to hold 95% of the top jobs at the biggest U.S. companies, there’s been a recent surge of money and attention going to startups founded and run by women. The past two years have seen an unprecedented number of unicorn valuations for companies with women in charge, with the upstarts Glossier and Rent the Runway nabbing big funding rounds in the same week this year. It stands to reason that there can’t be a more efficient way to target female customers—especially those who care about gender equality—than with companies run by women.

The logic goes something like this: A company founded by a woman, especially if it makes a product for women, will operate in a different and better way than one founded by a man. Both a Pew Research Center survey and a study by researchers at the U.S. Naval Academy and Harvard have found that female leaders are viewed as more compassionate and empathetic, and people think they create safe and respectful workplaces.

That reasoning, however, is flawed. Just having more women in charge—even ones who define their missions as feminist—doesn’t mean greater equality for all women. Nor is it a guarantee of a well-run company. Here’s how it often goes: A woman starts a company that caters to female consumers better than what’s out there. The company uses that market differentiator to sell itself as a warrior in the fight for greater equality. Then, it turns out, the company itself is, in some way, not living up to the inspiring ideals that it’s virtually made its raisons d’être. Among those that have come up short: bra retailer ThirdLove, where female employees told Vox they were bullied and told not to negotiate salaries, and the online fashion store Nasty Gal, which is in a lawsuit that describes it as a horrible place for pregnant women to work. On Dec. 9, Stephanie Korey stepped down as chief executive officer of Away luggage after employees alleged in an article in the Verge that she created a toxic work culture.

There’s also the Wing. The mission of the New York City-based coworking space is the “professional, civic, and social advancement of women.” Audrey Gelman, its co-founder and CEO, has positioned herself as the leader of a feminist movement. Just this fall, Inc. made her the first visibly pregnant executive to appear on the cover of a business magazine. Yet the Wing faces allegations it has violated its own mission.

The Wing’s messaging is about getting women paid. But members and former and current employees say it’s failed to properly compensate them. This June, according to emails reviewed by Bloomberg, the Wing failed to pay a group of its hourly workers on time. “The mission is a complete farce,” says Vei Darling, who worked as a front desk receptionist in Brooklyn for a year and a half. Anna Russett, a Chicago-based influencer who has 172,000 Instagram followers and depends on paid appearances for her income, says she was told by the Wing that it wasn’t “authentic” to pay her to promote its brand on social media. L’Oreal Thompson Payton, the director of communications at a Chicago nonprofit, says the Wing asked her to promote its fall line of merchandise without pay. “It’s not enough to simply hire women,” she wrote in her newsletter. “You must also pay them for their work.”

Other complaints involve racism in its spaces. In August, Asha Grant, the director of the Free Black Women’s Library, announced she was canceling her Wing membership. Grant alleged she was harassed and threatened by another member’s guest—a white woman whom neither Grant nor the Wing has chosen to identify—in the parking lot outside the Wing’s West Hollywood location. The woman accused her of taking a parking spot that belonged to her, then yelled insults at her as she followed her into the building. When Grant asked Wing staff to remove the woman, she says they insisted they couldn’t do anything about it. Stephanie Kimou, the founder of PopWorks Africa, an international development consulting firm, witnessed the incident. She wrote on Instagram that “the facade started to crack and what was underneath all that pink felt oppressive and debilitating.” Kimou also quit.

A source at the Wing says it’s taken steps to address racism since the fall, including 15 community meetings with the entire executive team, staff, and members. The payment issue was a clerical error; the space didn’t have a general manager at the time. A company spokeswoman wrote in an email: “At The Wing, we are committed to creating a community where everyone feels valued. We recognize for our mission to be true it has to begin with how our community, both employees and members, experience our culture every day. When we make mistakes, we promise to take action, and will continue to hold ourselves accountable.”

Other companies that market and profit off of female empowerment have been hit by harassment lawsuits by employees, mostly women. In late 2015, Thinx—which markets menstrual underwear—plastered ads all over the New York City subway featuring euphemisms for vaginas and periods. Miki Agrawal, who co-founded Thinx in 2013, called the marketing stunt an “ideological pushback against generations of condescension and insulting marketing towards women.” A year and a half after the ad blitz, Chelsea Leibow, Thinx’s former head of PR, filed a complaint with the NYC Commission on Human Rights alleging that Agrawal, then the company’s chief executive, had touched her breasts without her consent. Agrawal denied the allegations; the two settled in 2017. Agrawal says she can’t comment on the specific case. Leibow didn’t respond to requests for comment.

The complaint came shortly after stories in the websites Racked and Jezebel cited Thinx employee complaints about low pay, lackluster benefits, and management issues. One employee alleged Agrawal had called a colleague a “bitch” before a meeting; another likened her job to an abusive relationship. The company had no parental leave policy and no human resources department, issues Agrawal acknowledged in a Medium post she put up shortly after she was ousted as CEO in March 2017. “Do you think that if you had a company, you would have every single policy in place right off the bat even if it was not needed yet? Startups are building their planes as they are flying them and addressing things as they come up,” she wrote in an email to Bloomberg. “All I can say is that while I was not the perfect boss (I challenge you to pls find one!) and made mistakes like most humans do, I cared and still care deeply about changing the conversation for women around shame and how they feel about their bodies and their place in the world.”

Why is achieving gender equality so difficult in corporate America? There’s a strong business case for diversity. Boston Consulting Group found that companies with more diverse management teams have 19% higher revenue due to innovation. A recent study found that stock prices spike when companies reveal relatively good diversity statistics. Another recent survey found that female chief financial officers brought in more money than their male predecessors when hired. By not creating pathways to success for women, companies are hurting their own financial growth.

But real life suggests that putting more women in charge won’t necessarily result in more moral, ethical, or gender-equal companies, which is where a lot of thinking on workplace diversity goes wrong. “There’s not much of a difference between women and men,” says Stefanie Johnson, an associate professor at the University of Colorado Boulder Leeds School of Business, where she studies leadership and diversity. Analyses of hundreds of leadership studies going back to the 1960s have found the two genders are more similar than different in how they lead. Female leaders run the spectrum from Elizabeth Holmes to Sheryl Sandberg to Mary Barra, just as men range from Martin Shkreli to Mark Zuckerberg to Warren Buffett. But it’s harder to see the range of leadership archetypes among women, because, well, there aren’t that many to choose from. So the bad ones stick out.

But there’s another dimension to the problem of fallible female companies. “It’s not the women,” says Johnson. “It’s the diversity.” A body of research going back decades has found that boards act more ethically when they have more women. But it’s not because women are more ethical than men, she says. Rather, having different types of people in the room acts as a check on the kind of groupthink that turns a blind eye to corporate crime. Sallie Krawcheck, a former senior executive at Citigroup and Bank of America, has hypothesized that Wall Street’s lack of diversity caused the 2008 financial crisis.

The same goes for other benefits accrued by adding women, people of color, or otherwise different people to a group of mostly white men who went to the same three B-schools. Diversity of thought, not more women, brings success. The recent crop of female-led companies is a good example of that. Just by investing in different kinds of people and letting them make their ideas reality, we get different sorts of businesses and a broadening of ways to make money. Women are filling in the market holes that centuries of men before them ignored.

Unlike its gender-neutral rivals, the Wing isn’t only a community for women; its spaces were designed with them in mind, too. The furniture fits smaller frames; the balmy 73-74F on the thermostat is calibrated to women’s preferences. Payton says she “instantly fell in love” with the “millennial pink feminism” of its spaces. She’s still a member, benefiting from a scholarship program that covers a yearlong membership through May 2020. However, she doesn’t plan to renew. Grant said “the little signs of diversity,” like black hair care products in the bathroom, weren’t enough for black women who “want to know that the community includes us in real time.”

Companies run by women can fall prey to the same groupthink as those run by men, Johnson says. Many startup founders, male or female, turn to people they know as early hires. A group of white women who all went to the same school does not a diverse company make. If anything, this shows how female CEOs are a lot like men: When facing the same corporate pressures as any other business, they react a lot like their male peers. Say a startup’s just raised a big round of funding and has mandates to grow and meet investor demands with a limited pile of cash. What will it do? Minimize costs, because employees and the benefits that keep them happy are expensive. Many female-run startups reveal management missteps shared by other newly minted enterprises—not budgeting for a human resources department, for example. Uber Technologies Inc. hired its first senior HR executive in 2014, five years after its founding, when it already had around 500 employees. A 2010 study found that after five years, only a third of new companies have a human resources planning or evaluation system.

Suggesting women are innately different than men is the kind of gender essentialism that results in fewer women at the top in the first place. A recent study from the American Psychological Association found that female CEOs are judged more harshly for ethical failures than men “because of persistent gender stereotypes that tend to categorize women as having more communal traits than men.” This excuses male leaders who lack morality, empathy, and compassion and who treat their workers poorly. Companies with men in charge can and do create workplaces that, at least in some ways, help women succeed. Disney, Nike, and Patagonia have all had on-site day care for working parents for decades. Netflix Inc. offers one of the longest and most inclusive parental leave policies in the country—even as 83% of workers in the U.S. get no paid time off to care for newborns.

There is one way that women, just by virtue of being women, lead to more equality for other women. In 1993, India passed a law requiring randomly selected villages to reserve a certain number of elected seats for women. Because the law didn’t apply to all villages, researchers were able to study the effects of female leadership on young women and girls in these villages compared with those in villages led by men. They found female leaders inspired young women to have higher aspirations, so much so that they seek out more education.

Having more women in charge inspires other women to go for leadership roles. They probably won’t create feminist utopias. But that’s not the point.

To contact the editor responsible for this story: Howard Chua-Eoan at hchuaeoan@bloomberg.net

©2019 Bloomberg L.P.

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