The “glass cliff” has been back in the media as of late, with both Forbes and Fast Company recently publishing articles on the subject. This may have been triggered by the appointment of Jane Fraser as the new CEO of Citigroup—a move that led some commentators to express concerns that Fraser was being put on a glass cliff. An obvious allusion to the glass ceiling, the glass cliff, for those unfamiliar, is a theoretical concept holding that when organizations seek to change leadership during times of crisis, women are more likely than men to be appointed to positions of said leadership. It further holds that these female leaders are then more likely to fail due to the volatility of whatever crisis situation the organization is facing, thus reinforcing the implicit bias that women are less capable leaders than men.
There’s just one problem with the glass cliff theory: Though there is evidence to support the glass ceiling as a real problem, there is not currently enough empirical evidence backing the existence of the glass cliff. Moreover, while the motivational drive behind the glass cliff theory—the desire for greater gender diversity in corporate leadership—is a positive one, it actually distracts from the real causes behind the perception that female CEOs are disproportionately being appointed leaders in times of crisis and that, as a result of this, they are failing more often. Addressing these causes effectively will require us to have a clear understanding of what they are so we don’t waste effort and resources on a phantom problem.
The Need for More Research and Evidence
Before we get into it, there are just two things I wish to clarify upfront. First, like many in my field, I am an advocate of greater diversity in corporate leadership. Hopefully, it goes without saying that one can support diversity but also feel the need to approach any and all claims of causation with analytical rigor and a measure of warranted skepticism. Second, questioning the glass cliff hypothesis isn’t the same as denying the possibility it may be correct. It may very well be correct, but as of right now, there isn’t enough data and evidence to either confirm or refute this, so it would be wise to exercise caution before making sweeping claims.
Much of the discussion around the glass cliff concept is based on a 2005 study by two U.K. researchers, Michelle Ryan and Alexander Haslam. Ryan and Haslam’s study looked at FTSE 100 companies, basically the U.K. equivalent to the Dow Jones Industrial Average, during 2003 to determine specific company stock performance around the appointment of a new male or female board member. In total, 19 female board appointments were made in 2003 with respect to FTSE 100 companies.
What these researchers concluded was that female board members were more likely to be appointed during times of crisis, whereas male board members were more likely to be appointed during periods of stability, and being appointed during a period of crisis put these female board members at higher risk for failure. What I am skeptical of is not the numbers cited in the study but rather the authors’ interpretation and the way their research has been framed in the general media.
Let’s start with the researchers’ original interpretation that women were being appointed board members in times of crisis and that this put them at higher risk for failure. For context, it’s helpful to remember that during the late 1990s and 2000s, amid calls for greater gender diversity on corporate boards, efforts were made to diversify representation on corporate boards both in the United Kingdom (which the aforementioned study focuses on) and in the United States. If more women were being appointed board members during this period overall, then naturally, there were board vacancies filled by females at companies that were performing strongly, as well as those that were underperforming.
It’s also critical to note that this study observes board appointments, not executive management of the company. The authors incorrectly characterize board governance as management of the company. It is well-founded in corporate governance literature that the main role of a board of directors is advisory, oversight, and monitoring. Effective directors are diligent monitors but not managers of business operations. They exercise attentive oversight of a company’s affairs, but they do not manage the daily affairs of the company’s business. These female directors are one, perhaps two members of a much larger board of directors. A board of directors functions as one governing body. So, it’s inaccurate to conclude that the female board members were “set up to fail” because if the company underperforms, the “buck stops” with the entire board. There is no distinction between genders of individual board members with respect to company performance.
However, based on Ryan and Haslam’s own research, it turns out it wasn’t even the case that female board members appointed during this time performed poorly on average. In fact, generally speaking, they performed quite well. So, while it may be true that the FTSE 100 companies in the study disproportionately appointed female board members during periods of recent underperformance (and that could certainly be something to examine more closely), share prices actually went up or enjoyed stability following those appointments. This seems to somewhat conflict with the idea that the female board members were put at higher risk for failure. To be sure, one could conclude that the appointment of female board members led to improved company performance.
Next, let’s look at the way this study and its conclusions have been framed more recently in the general media. There are two ideas being put forth. One is the implication that women who are appointed to leadership positions are somehow being set up to fail. As anyone who has served on a board or is familiar with the way boards are run would probably agree, corporate boards and the shareholders who elect them simply don’t think this way. It is in their own self-interests that their companies succeed, and they are not going to purposely make decisions to undermine that, regardless of their ideological stances on gender and leadership.
The other suggestion being made is that perhaps women may be appointed CEOs or board members during times of crisis due to the perception that women are more likely to have leadership styles that emphasize cooperation and that this would serve companies well during those times of crisis. This line of reasoning seems more plausible, as there’s been research in recent years making the case for female leadership during crisis, and it’s possible that companies may appoint more women to leadership roles as a natural response to this, partially.
But, again, the desired outcome in this scenario is for the appointed women to succeed so the company performs well and generates abnormal shareholder returns, not to set the women up for failure. Moreover, there are generally only two situations in which CEO and board member positions become available: when leaders voluntarily decide they’ve served long enough or when organizations are facing a crisis. The first situation doesn’t happen very often, while the second, unfortunately, does. Therefore, we may inevitably see women being appointed leaders during times of crisis, especially because there are more women in mid-management roles, poised to move into senior leadership or the C-suite. But it is happening organically, not insidiously.
The Real Problems Companies Should Focus On
Part of the reason for the appeal of the glass cliff theory may just be the disparity between men and women in senior leadership roles. This is something I do agree is a problem, albeit one we have made progress on. Despite that progress, there is admittedly still a gap, and for this reason, there may be more scrutiny toward female leaders in ways both good and bad—good if it helps us keep improving and bad if it leads to theories that distract us from the more fundamental problems. In other words, both men and women will be appointed to leadership roles, and for some of them, this will inevitably happen during crisis situations. Some of these leaders will succeed, and some of them will not.
However, because of the gender disparity, and also because more women are being appointed leaders now than before, we may just be noticing it more when the leaders who fail are women (even though men are also failing). The solution to this, therefore, is not to devote inordinate attention on the glass cliff but to keep improving gender diversity within senior leadership so the significance when female leaders fail isn’t exaggerated. It’s beyond the scope of this article to discuss the precise ways to improve corporate diversity, but there are already many helpful articles out there on this very topic.
Next, if we can agree that male and female leaders are equally capable of both success and failure, then the other problem to focus on is one of better succession planning. Unfortunately, most companies in general don’t distinguish between leaders who are good for times of stability and those who are good for times of crisis. Often, leaders who’d be perfectly suitable during normal times are not cut out for leading during crisis situations and vice versa.
Take CEOs. Typically, when a board looks for a new CEO, they’ll consider three broad categories or buckets:
- Knowledge and skills (Does the individual know the organization and the industry?)
- Leadership (Can the person build trust, develop talent, and articulate the company’s mission?)
- Culture carrier (Does he or she have the right mindset, inspiration, and personal attributes?)
But I suggest that a fourth principle be added. We could call it situational awareness, which assesses whether a candidate’s other three criteria are best suited for a period of stability or adversity. Good leaders are generally suited for one or the other; “great” leaders are adaptable and resilient and can succeed in both environments. This also applies to low- and midlevel management just as much as it does to senior and executive management.
Combined, these two approaches would work together to (a) further diversify gender representation in corporate leadership and (b) add the missing component to succession planning to ensure that more leaders appointed during times of crisis, male and female alike, succeed. Succeeding during times of crisis and instability may very well be like climbing a cliff—difficult and challenging. But perhaps it is just a regular rocky cliff, not a glass cliff, and there is plenty organizations can do to ensure the leaders they place on those cliffs are skilled mountaineers with the right kind of experience and equipment they need to climb successfully. Shane Goodwin, PhD, is the Associate Dean for Executive Education and Graduate Programs and serves as Professor of Practice in the Department of Finance at the Cox School of Business at Southern Methodist University.