Business Chief Asia: Why We Need More Female CFOs

The number of women in CFO positions in Fortune 500 companies reached a record high late last year, hitting 90, up from 65 just a few years ago.

Maggie Xu, Principal of Greater China Financial Services Practice at Oliver Wyman, said research shows that female CFOs are more risk averse and tend to adopt more conservative accounting policies. And for “those companies/industries with higher litigation risk, default risk, systematic risk, or management turnover risk, who are more focus on accounting conservatism, female CFOs may well do a better job”.

Roundtable: Why are women under-represented in senior financial positions, and the CFO role specifically?

Maggie Xu: In research, we identified four critical barriers for women seeking leadership. Men and women defined effective leadership very differently, while women leadership candidates tend to be evaluated by men. This misalignment in key leadership traits between the genders creates obstacles to women rising to leadership roles. In China, although significant increase in the ratio of companies with female executives has been observed during the decade, extensive research indicates that the rate for female CEO remains very low, and CEOs are critical in assessing the performance of CFO candidates.

Secondly, women’s focus or predisposition toward results, along with a dislike of “networking for networking’s sake,” may be causing them to miss an important dimension of what ultimately impacts leadership promotion decisions. We also discovered that qualified women are unintentionally left on the sidelines, partly because women are simply not top of mind, and so are less likely to self-advocate and must battle inaccurate assumptions related to their willingness to take on more intense roles.

Also, men and women perceive their readiness for the next role very differently, and most companies do not actively mitigate that bias at play. A woman often won’t apply to a job unless she feels she meets 100 percent of the described qualifications. In contrast, for men, this number is more like 60 percent. Raising one’s hand does not necessarily equate with capability.

Finally, research shows women are more likely to have ideas misattributed to others, be talked over in meetings, receive vague or unconstructive feedback, and be viewed negatively for visibly demonstrating the same confidence that is valued in male leaders. Many high potential women, weary of bias, exit the talent pipeline, either opting out of the workforce or choosing a different career.

How can organizations and leaders motivate, empower and facilitate women in reaching CFO status?

Maggie Xu: Organizations can be more purposeful in levelling the play field for women, and by changing the emphasis from fixing things bottom up to top-down, effects will take place faster. We believe there are three core elements in this effort: inclusive leadership starts at the top, so educate your existing leadership and motivate them to be change agents; target D&I like a business to get more results; and double down on sponsorship, improving the effectiveness of senior leaders’ sponsorship of the women.

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