This post is authored by Elizabeth Freedman of BTS Boston
According to 2022 research by McKinsey & Company and Lean In, American workplaces are experiencing an exodus of women from leadership positions. In fact, for every director-level woman who gets promoted, two women directors leave their company. What's behind this shift? It would be easy to blame recent events such as the pandemic and economic uncertainty, but what the figures are actually telling us is an older, familiar story about why women leave senior-level roles. For example:
- Promotion rates. Despite the fact that women want to advance inside their companies at equal rates to men, for every 100 men that are promoted to manager positions, just 86 women are given higher positions, according to the above McKinsey research.
- Options and flexibility. Women now have options beyond the traditional in-office model. Companies offering hybrid work arrangements provide a level of flexibility that aligns with the different types of responsibilities women tend to shoulder, from child care to taking care of aging parents and more.
- Fair compensation. Unfortunately, pay disparity between men and women for comparable work is not a new issue; what's different now is how new state requirements around salary transparency reveal gender gaps in pay that hit very close to home. For the first time, women might be able to access salary information that applies to their own organizations, levels, and even roles. What some are discovering: a loss of thousands and even hundreds of thousands of dollars as a result of being underpaid for decades. For these women, the numbers are too big to overlook or ignore, making it untenable to stay in their current organizations.
What leaders can do: Reversing the exodus
Good organizations are committed to the advancement of women, but they'll need to do even more if they are going to retain talent, given the issues raised earlier. Consider these steps:
1. Say more, not less, when it comes to pay, promotions, and flexibility.
When it comes to pay rates or promotion opportunities, the information is out there. Though laws around reporting or salary transparency might differ by state, organizations should consider their approach to addressing matters like these in the context of a broader, global conversation taking place.
In other words, the train has left the station: Even if your own company has decided to stay quiet on compensation matters, it won't stop the questions from coming, particularly when women can see how other organizations are addressing these issues in more transparent ways.
2. Lose the stale script and corporate-speak.
Don't risk losing talented women by sticking to a stale script about your compensation strategy or sidestepping the real issues around women and promotions. How you respond to questions will make a big difference in whether women trust in leadership and see a future for themselves inside their organizations.
For instance, is your company cagey when a woman asks a question about your organization or her position in it? Do leaders delay or avoid responding to direct questions? A company that is open to transparent discussions promotes trust; a company that hedges and says, "I wish I could share more with you," should not be surprised when women lose patience and start looking at other options.
3. Make it easier for women to advocate for themselves.
A C-level executive recently left her role at a Fortune 50 company. One key reason for her departure? Compensation. Here's what she told me when she learned that she had been paid less than a male colleague in a comparable role for more than 25 years: "I'm furious that I didn't learn about this sooner. What bothers me is how long this went on, and nobody ever thought to address it. Why didn't I realize this sooner?"
Here's a radical idea: Rather than keep information hidden or hope that women won't ask tough questions about compensation, promotions, or opportunities, make it very, very easy for them to do so. For companies that are truly committed to equality, inclusion, and diversity, there's a chance to walk the talk in a very real, tangible way. Set up forums that openly discuss where women are in your workplace. Show salary ranges, discuss the rationale behind them, and answer questions. Help the women on your team have productive discussions about money. Coach them on the right questions to ask and how to advocate for themselves. Discuss why some people get paid more than others in tangible ways.
Rather than talk about your commitment to women, show them what you will do to close pay gaps where appropriate or share what it really takes to get promoted. Be honest about what isn't working and get rid of the standard fare that might not be having enough of an impact inside your organization.
If women are leaving your workplace in higher numbers, chances are good they found other options that are giving them what they asked for when they worked for you: fair pay, transparent communication, and opportunities to advance. In 2023, take even more action to address these areas for the talented women in your organizations. Don't let them walk out the door while you still have a chance to keep them.
Elizabeth Freedman is head of consulting at BTS Boston, a management consulting and professional services firm. Elizabeth advises CEOs, C-Suite leaders, and teams at some of the best-known companies in the world, including Dow, Disney, Infosys, Boeing, ABB, and State Street. She is also a Forbes Leadership Contributor.