DETROIT (Bloomberg) -- Mary Barra made corporate history seven months ago when she became the first female CEO of a major global carmaker.
Yet for all the gains made by women in the highest levels of U.S. companies, most are still in the wrong jobs if they want to follow Barra’s career path.
That’s because unlike Barra, who’d been in charge of General Motors' product development for two years before her appointment, a majority of top-ranked women in the Standard & Poor’s 500 Index aren’t in the kinds of operational jobs that lead to the corner office.
Rather, 55 percent of them are finance chiefs, top lawyers or heads of human resources, according to data compiled by Bloomberg.
About 94 percent of S&P 500 CEOs held top operations positions immediately before ascending to the top job, and the relative scarcity of women overseeing product lines or entire businesses risks slowing their advance to the very top. The data show that the next generation of female executives is poorly positioned to capitalize on recent progress at a time companies from Google Inc. to Apple Inc. are laying bare their lack of diversity to help raise the number of women and minorities in the workforce.
Why women are left off the CEO track finds its roots in all echelons of the corporate career, recruiters say.
Women, lacking role models, tend to start in functional positions, and companies are still more likely in 2014 to promote a man in a line job than a woman. Then boards, which are predominantly male, fail to identify promising female executives who could be moved into operational functions and prepared for the top job as part of succession plans.
Dawn Lepore, now a director at multiple companies, says she probably wouldn’t have been hired as CEO of Drugstore.com Inc. in 2004 if she hadn’t first run a Charles Schwab Corp. unit.
“It’s very hard to move from a functional role to a CEO job,” Lepore said. “You usually can’t just go from CFO or head of marketing to CEO. More women need to get into these operating jobs. The fact that I’d run a revenue unit with revenue of $1 billion made a huge difference.”
The 24 female CEOs in the S&P 500 today is a record, yet that’s still less than 5 percent of the total, while women make up about half of the total U.S. workforce.
In the layers just beneath the top job, women account for about 8 percent of the more than 2,000 top five highest-paid executives at each S&P 500 company, according to 2013 proxy filings. About 42 percent of those top-ranked women who were not CEO were in operating jobs, based on the data compiled by Bloomberg.
The only way to get more female CEOs is to get a conscious effort within corporations to spot future leaders early in their careers and push them toward operational jobs, according to labor experts. Boards also need to be more aware and pro-active: They need to groom more female presidents, COOs and heads of units who will, in turn, become role models for the next generation.
In other words, more Mary Barras.
An engineer by training, the 52-year-old spent more than 30 years at GM, which entrusted her with increasing responsibilities, including plant manager and vice president of manufacturing engineering.
Another example is Susan Cameron, who returned at Reynolds American Inc. in May after leading the maker of Camel cigarettes from 2004 to 2001. She is a seasoned manager at 55. From 2001 to 2004, she was CEO of Brown & Williamson before it combined its U.S. businesses with Reynolds, and she will stay on as Reynolds chief after the close of its $25 billion purchase of Lorillard Inc.
Other recent appointments to the top job included two former female COOs last year: Lockheed Martin Corp.’s Marillyn Hewson, 60, and General Dynamics Corp.’s Phebe Novakovic, 56.
“Women need to get into these line roles, demand it, and focus on it as their career path,” said Lepore, who is now a director at AOL Inc., RealNetworks Inc. and Coupons.com Inc. and past director at Wal-Mart Stores Inc. and EBay Inc.
Companies are still more likely to groom a man for a higher job when he shows potential, said Doreen Wright, former CIO of Campbell Soup Co. and Nabisco Inc. and a current board member at Crocs Inc.
“It’s not the step of the president to CEO, it’s the step before that,” said Wright, who wasn’t personally interested in the top job. “There’s plenty of women, so why aren’t they making it to the business president role? That’s the problem.”
To some degree, companies fail to think far enough in advance about future CEO candidates, said John Wood, vice chairman at executive recruiter Heidrick & Struggles in New York. Women often become head of non-operational businesses because they started in those areas. The board needs to ensure that executives who show promise are given a chance at a line job sooner, regardless of their gender, he said.
“I don’t think there is a bias, a lot of companies are specifically looking for women to put into these jobs,” said Wood, who has helped place more than 200 CEOs and directors. “If you haven’t been thoughtful about evolving and developing your talent, you may find that you narrow your choices beyond what you should if you had more actively managed people getting new assignments.”
The lack of operational experience is also hurting women’s chances to sit on boards in the S&P 500, where female directors account for 18 percent of the total. Companies rarely pick heads of HR to be directors, said Julie Daum, who leads the North American board practice at executive-recruiting firm Spencer Stuart in New York.
'Nothing has changed'
“People have been talking about it for a long time, and clearly nothing has changed,” said Daum, who has recruited directors for General Electric Co., Amazon.com Inc. and Wal-Mart. “The question is, do women opt into those jobs or is that where people allow them to succeed because it’s OK to have an HR person who is a woman?”
Facebook Inc. COO Sheryl Sandberg’s book “Lean In” is resonating with women precisely because not enough women are taking the risk and getting to operational jobs, said Jane Stevenson, who leads the global succession practice at recruiter Korn/Ferry International.
“Generally speaking, when a man gets into a new job, he’s already thinking about the next job and what he needs to get the next job,” said Stevenson, who is co-author of the book “Breaking Away: How Great Leaders Create Innovation that Drives Sustainable Growth -- And Why Others Fail.”
“Women, on the other hand, when they are appointed to big jobs, are out to prove they deserve to be in the job they’re already in. That presents a different way of looking for career progression.”
Signs of thaw
There are signs of a thaw.
At the turn of the century, the S&P 500 had six female CEOs and the total didn’t top 10 until 2006, according to Spencer Stuart. They reached 24 after Barbara Rentler’s promotion at discounter Ross Stores Inc. in June. And 11 of those CEOs took their jobs since 2012.
There are also two notable counter-examples to the traditional career path: PepsiCo Inc. CEO Indra Nooyi was CFO before taking the top job, as was Lynn Good at Duke Energy Corp. They are among the 6 percent of S&P 500 CEOs -- men and women -- who had a non-operational job immediately before their access to the top, according to data from Equilar.
Still, role models stay rare for women motivated to succeed, said J. Veronica Biggins, managing director at Diversified Search in Philadelphia and a director at Southwest Airlines Co.
“Only recently have women been able to see other women in roles where they could say ‘Wow, I could be the CEO of this company,’” Biggins said. “It hasn’t been that long where you could see that.”