Corporate America's 'broken rung' problem

Good morning,

In America, one of the flaws in the corporate ladder for women is a “broken rung” at the first step up to manager, according to the new report Women in the Workplace 2021. The comprehensive research by LeanIn.Org and McKinsey & Company was released on Monday.

I had a conversation with Lareina Yee, senior partner at McKinsey, and Rachel Thomas, co-founder and CEO of Lean In, about the findings. For every 100 men promoted to manager, on average, only 86 women were promoted, Yee says. This gap has been persistent for the past last three years and hampers sustained progress of promotion to more senior levels like VP, she says. Looking at the practices of middle management may make a difference.

“It’s managers that are on the front lines of a lot of these hiring and promotions decisions at the broken rung level,” Thomas says. “Accountability is so critically important.” But only about a third of companies are holding managers accountable for progress and implementing diversity, equity, inclusion (DEI) metrics, she says. Meanwhile, two-thirds of companies are holding senior leaders accountable. Even so, “far fewer are putting teeth” behind the metrics, such as “hard expectations in place around what success looks like” or financial rewards for progress, Thomas says.

CFOs can invest in programs and processes to give managers the training they need, but they also “have the power of the scorecard,” Yee says. “They can create transparent metrics that go all the way down to front line managers, in terms of how are they’re doing on their gender and diversity metrics,” she says. “CFOs, understandably, care about the bottom line of their business, as they should,” Thomas says. “That means they’ve got to get diversity right. And many organizations are making slow progress on that front.” I recently spoke with Maria Ferraro, who is both the CFO and chief inclusion and diversity officer at the technology company Siemens Energy AG. As finance chief, Ferraro provides “tangibility” of the fact that DEI is fundamental for sustainable value creation, she told me.

Data detailed in the report is based on a survey of 65,000 employees across 423 companies. Although 90% of companies said DEI is a top or very important priority, it’s been a slow process of meeting goals. “McKinsey research calculates that corporate America has committed $200 billion to racial equity over the last year,” Yee says. “Even though we’ve made this huge commitment, we still need to do the day-to-day work. Black women, Latino women, and Asian women are not seeing that day-to-day and not experiencing an improvement in belonging and inclusion. That’s a worrying sign.”

In every level of the corporate pipeline, representation of women of color falls off relative to white employees and men of color, the report found. “We need mentorship, sponsorship, and allyship,” Yee says. “This year, we saw more men and women managers say that they wanted to be allies—close to 80%.” But about 21% who said they were allies actually did the work daily, she says.

The research also found that as senior leaders, women are 26% are more likely than men to help team members navigate work/life challenges, and 60% more likely to provide emotional support to their teams. “This is just kind of a new style of people-focused leadership that we need,” Thomas explains. Women in leadership have focused on wellbeing and DEI, she says. “And a lot of this work is going on unrecognized and unrewarded,” Thomas says. As a result, women are significantly more burned out than they were last year, she says.

See you tomorrow.

Sheryl Estrada
sheryl.estrada@fortune.com

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