Why Growth Index CEOs are more diverse than FTSE CEOs

Growth Index analysis of the UK’s 100 fastest growing companies has revealed that 17% are led by women.

You may think that 17% isn’t much – it’s certainly less than the half you’d expect to see in a society where opportunity was equally distributed. Yet 17% is still significantly better than the 8.2% of Fortune 500 CEOs who are female, the 8% of FTSE 100 CEOs and the 4% of FTSE 250 CEOs.

It’s interesting to consider why that might be.

You might jump to the conclusion that career sexism is more prevalent in public companies for some reason, but the numbers don’t back it up: the proportion of female private equity CEOs in Britain is also estimated at about 5%.

You could flip it round instead – the companies where there is more equality between men and women perform better on average, which makes them more likely to end up on a list of highly successful companies like GX.

That’s a tempting thesis, given the ample evidence that diverse businesses do indeed outperform homogeneous ones, owing to a more varied mix of perspectives and to the fact that their available talent pool is substantially larger.

It may play a role in the high female representation among Growth Index leaders, albeit a hard one to quantify. But there also may be a more prosaic explanation.

Women are better represented among the ranks of small and medium sized businesses (16% of CEOs) and entrepreneurs (33%)

SMEs vs the glass ceiling

Women are better represented among the ranks of small and medium sized businesses (16% of CEOs) and entrepreneurs (33%) than they are in larger corporations, and unsurprisingly Growth Index contains a substantial number of founder-led firms and smaller firms, with about two thirds turning over less than £50m.

This alone would account for much of the discrepancy in representation between GX and FTSE leaders.

Why that should be is a different matter. The implication appears to be that the glass ceiling is tougher to crack in larger organisations, with the odds stacked against advancement for women, in particular as they enter the middle and later stages of their careers.

According to the latest ONS statistics, the median gender pay gap is only 1% for people in their 20s, 3% for people in their 30s, but 12.3% for people in their 40s and 50s.

One explanation is that there is a particular promotion penalty for mothers. For example, according to the 2013 book Do Babies Matter? : Gender and Family in the Ivory Tower, academics who were married mothers of young children were one third less likely to get university tenure than married fathers of young children, while unmarried, childless women were 4% more likely to get these roles than their male counterparts.

Whatever the explanation, the promotion barrier clearly exists, and one way around it is to stop aiming for promotion at all and instead strike out on your own, hence the higher proportion of women founders and start-up CEOs.

But 17% is still too low…

Yes it is – there is still clearly much room for progress in smaller and founder-led companies too.

Female entrepreneurs for example face colossally worse odds getting VC funding – only 2.3% went their way in 2020 – which may have something to do with how male dominated venture capital itself is (only 15% of VC general partners in Europe are women).

The bottom line is that there isn’t a single cause that can be addressed. Instead, there are  complex, multifaceted, interlocking social and cultural factors that maintain disadvantage, from myriad unconscious biases to the thousands of years of conditioning that encourages men to take risks from infancy, while discouraging women.

The patriarchy dies hard. Most trajectory-based estimates for how long things like the gender pay gap will take to disappear make equality feel depressingly distant – the World Economic Forum says it will take 136 years at the current rate, for example.

Yet our hope is that change can be led by the high-growth companies of tomorrow, such as those featured in Growth Index. The more these firms have women in senior and leadership roles, the more the factors underpinning inequality should start to unravel, and the more the boys’ club will finally start resembling the everybody club.

We look forward to the future – it would certainly be a great disappointment if in the 10th Growth Index the picture weren’t more balanced.