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Power Struggle

Will the recession short-circuit women's advancement to the top spot in finance?

July 2009
by Kate O'Sullivan/CFO Magazine

This spring, 30 women gathered at Verizon Communications's operational headquarters in Basking Ridge, New Jersey, for Doreen Toben's retirement party. All had been either promoted or informally mentored by Toben, who spent seven years as CFO of the $97 billion communications giant and 20 years in all "tethered to my desk," as she puts it. She recalls her career in finance, and her efforts to help women, with pride. "Women [in finance] are in an entirely different spot now," says Toben. "From where we were 20 years ago, we've made great progress." But, she adds, "in the last five years or so, it's been very stagnant."

The numbers support Toben's observation. When CFO first counted the number of female finance chiefs in the Fortune 500, in 1995, just 10 women held the post. By 2006 that number had risen to 35, and this year's survey shows 44 women in the CFO seat at the country's largest companies. That's certainly progress. On the other hand, those 44 women constitute just 9% of CFOs at Fortune 500 companies, a figure that has hardly changed over the past three years.

Is this as good as it gets? Despite few, if any, signs of overt gender discrimination, are there subtle factors in play that mitigate against anything close to parity in the C-suite? And will the current economic crisis reinforce the stagnation that Toben describes, or provide its own form of stimulus, accelerating the pace of change?

Most women — 59% — say the opportunities for them in finance are excellent, according to a recent CFO survey, a notable sign of optimism, although perhaps less striking when you consider that their collective enthusiasm pales when compared with the 84% of men who rate women's prospects as excellent (see a link to more results at the end of this article).

And while some believe the recession will provoke a rethinking of not only risk, regulation, and capital structure, but also of the composition of executive suites and boardrooms, others fear that it will spell an end to corporate spending on diversity and mentoring programs. "I don't think there is any focus right now on diversifying the C-suite," says Wendy DiCicco, finance chief at Globus Medical, a biotech firm. Amy Hamilton, North American controller at insurance giant Marsh, agrees: "It seems like the whole concept of having a diversity task force has sort of gone out the window. At a lot of companies it's really about survival mode right now." (At Marsh, however, the company is stepping up its diversity efforts, naming a new VP of diversity and forming a partnership with Heidrick & Struggles to promote diversity in its recruiting efforts.)

Percentage of key finance posts held by women at the 500 largest U.S. companies

Victoria Harker, finance chief of AES, the $15 billion electric power company, says that the decimation of the financial-services sector in particular could be damaging to women's progress. "Dollarwise, [financial-services firms] were very big proponents of a lot of diversity programs," she notes. In a striking example of how times have changed, the Lehman Brothers Centre for Women in Business, a research center at the London Business School that focuses on gender diversity, faced closure this spring following the bankruptcy of its founding sponsor and major funding source, Lehman Brothers.

Of course, the path to the top job is narrow for men and women alike. Ann Ziegler, a former mergers-and-acquisitions lawyer who now heads up finance at office-technology supplier CDW, says there are many qualified women in the second tier of finance leadership (as treasurers and controllers and heads of financial planning), but notes that the four or five people reporting to the CFO ultimately get funneled down to just one person at the next level. "Those top jobs have to open up," she says. "And then you have to be in the right place at the right time."

Still, the issue of women's progress through the finance ranks strikes a chord with both men and women. Nearly 500 finance executives responded to CFO's survey on the topic, and many proposed their own theories for the shortage of women in the top job. Those theories generally fell into one of two categories: structural barriers or biases in favor of men, and women's struggle to balance work and family.

Beyond the Glass Ceiling
One quarter of women responding to the survey either strongly agreed or somewhat agreed that a glass ceiling for women exists in their companies' finance departments. That's a significant decline from the 40% who held that view when CFO last asked the question, in 2006 (the percentage of men who believe there is a glass ceiling declined as well, from 10% to 4%). But many finance executives said that women continue to bump up against something, if not many things, in their efforts to rise to the top.

One is tenure. Women have been in the workforce in significant numbers for only a few decades, and it takes time to rise through the ranks. Establishing networks and finding influential mentors, two widely cited keys to business success, can require years of effort. Still, some observers think women in finance haven't progressed rapidly enough. "You'd think we might have come further than we have," says Janice DiPietro, a former Big Four partner who is now a managing partner at executive-services firm Tatum. "I don't think we're catching up as quickly as you might have expected by now."

This article has been excerpted from CFO magazine.