NZ women and minorities falling down the ‘glass cliff’

The ‘glass cliff’ is a term that describes the phenomenon of women and those from minority groups being more likely to achieve leadership roles during periods of crisis, when the chance of failure is highest.

New research by a Massey University master’s graduate suggests the ‘glass cliff’ exists in corporate New Zealand. MBA graduate Kam Sharma analysed the circumstances leading to the promotion of ‘occupational minorities’ to the role of chief executive in NZX 50 companies over a 12-year period. He found that women and those from minority ethnic backgrounds were more likely than white men to become chief executive when a firm was going through a period of weak performance.

The ‘glass cliff’ is a term coined by two professors from Exeter University to describe the phenomenon of women and those from minority groups being more likely to achieve leadership roles during periods of crisis, when the chance of failure is highest.

During the study period, Mr Sharma found there were 59 chief executive transitions at NZX 50 companies – and only four of these transitions led to a chief executive from an occupational minority. Of these, there were two clear examples of the chief executive taking the helm during a period of crisis.

“There is no doubt that when Ralph Norris took over Air New Zealand it was in dire straits – it had announced a $1.4 billion operating loss in 2001 following the collapse of Ansett.

“Similarly, for Vicki Salmon, taking on the top job at New Zealand’s only listed fast-food company Restaurant Brands was effectively a hospital pass because of a historic lack of investment.”

Massey University MBA graduate Kam Sharma.

Existing biases and less opportunities

Mr Sharma says there could be an existing bias that suggests that women and ethnic minority leaders will bring a more collaborative approach at a time when that is needed. Or it could be, he says, that occupational minorities feel they should take leadership opportunities when they are offered, even if there is a higher risk of failure.

“Good interpersonal skills are valued when you have to make difficult personnel decisions in struggling organisations, so the stereotype that women and ethnic minority men are better at that sort of thing is seen as compensation for other qualities they are assumed to lack.

“Plus the pool of potential CEOs willing to take on a struggling business is a lot smaller so occupational minority chief executives who take over in these circumstances have a very difficult job to do that others don’t want. They are often not well supported and, if they are not successful, the existing biases are reconfirmed.”

Only four new minority CEOs were promoted in 12 years

Mr Sharma acknowledges that the small number of transitions in his study makes it hard to draw strong conclusions, but this, he says, is also a reflection of the barriers that women and those from minority ethnic backgrounds face in reaching the top levels of management.

“During the period of my study there were only seven occupational minority CEOs – two were already chief executive of their companies when the NZX 50 index was established in 2003, and were subsequently replaced by ‘traditional’ chief executives. The third was Rod Drury, chief executive of Xero, who founded his own company.

“Only four new occupational minority CEOs were promoted over the 12 years of the study – and all of them have since been replaced by traditional chief executives. Rod Drury is currently the sole occupational minority chief executive leading a NZX 50 company – so you could argue that the trend is not improving.”

He says that with only one Māori male chief executive and no female chief executives leading an NZX 50 company at present, it is clear there is a tendency to “think manager, think male”.

“Because the numbers are so small, it is hard to know exactly what is going on inside organisations. We need more research at all levels of management to better understand the point at which occupational minorities, despite their capability and hard work, are failing to break through.

“If women and people ethnic minorities aren’t coming through the ranks, they aren’t in the talent pool being considered for the top jobs.”

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