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Polling 233 of the largest listed companies in Germany and the UK for over a decade, a study featured in The Leadership Quarterly “The Glass cliff myth? Evidence from Germany and the UK” explores whether the gender of new leaders ties in to corporate performance trends prior to appointments.
The authors examined both accounting-based and stock market performance measures before key leadership appointments. Various analytical methods were adapted to identify the correlations and the causal relationships in a bid to determine whether companies were more likely to appoint women to the board when earnings fell. Then, researchers repeated the analysis with data from 105 of the biggest UK-listed companies.
The study has drawn a positive conclusion that women do not run the risk of being promoted to precarious management positions significantly more frequently than men. Meanwhile, of over 500 board members appointed in Germany between 2005 and 2015, less than eight percent were women. No woman was appointed CEO in the companies surveyed. In the UK, over 10 percent of the newly appointed board members were women and three of them were CEOs.
The development of management board appointments over time
On average, it was observed that German companies tended to perform better before women were appointed to executive positions. The financial market in Germany also reacted positively when companies that experienced a longer period of declining earnings appointed a woman to the board.
In the UK, however, this effect was not replicated.
The authors pinpointed the issue of lacking diversity in German organisations to the political climate at that time. A nationwide corporate initiative, the Charta der Vielfalt, was debuted in 2006 to promote diversity in companies and institutions.
“Our study demonstrates that promotion patterns of female top managers in both Germany and the UK do not support the idea of a “Glass cliff”, which we think is a positive finding. That said, we found that the “glass ceiling” – the metaphor for the barrier that prevents women from advancing – does indeed persist. Women lead only a small number of the companies we studied,” Myriam Bechtoldt from EBS University of Business and Law, Oestrich-Winkel, Christina Bannier and Björn Rock from Justus Liebig University Gießen, commented.
The term “Glass cliff” was coined by researchers Ryan and Haslam in the early 2000s to describe a phenomenon in which women are more likely than men to be promoted to precarious management positions with a higher risk of failure.
The Leadership Quarterly is a social-science journal dedicated to advancing the understanding of leadership.