Alpha-females

On 1 October Indra Nooyi took over as chief executive of PepsiCo. But she is one of very few women who leads a major global corporation.

Which is not to say that she is unique. Companies as vast and varied as Kraft Foods, Hewlett Packard, Lucent Technologies, Pearson, French nuclear energy company Areva, and the London Stock Exchange are, or have been, led by women but they are very much in the minority.

The 2005 Catalyst Census of Women Corporate Officers and Top Earners of the Fortune 500 released in July this year finds that, on average, Fortune 500 companies have 22 corporate officers but typically fewer than four of these are women. Worse, less than 10% of senior positions higher than vice president are occupied by women. Moreover, only eight Fortune 500 companies had CEOs who were women and none of those are in the Fortune 100.

The picture is no brighter in Europe. According to June 2006 research by the Paris-based European Professional Women’s Network, women occupy only 8.6% of boardroom seats in Europe’s top companies. Even in Scandinavia, where proactive policies to encourage women’s boardroom participation appear to be bearing fruit, only 25% of board members are women. In the UK, while 86% of companies have a woman board member, overall only 11% are female.

So when Indra Nooyi took up her new post at PepsiCo it was newsworthy because she was a woman. But even more so because she was a foreigner heading a major US corporate, and Indian as well, where women business leaders are very rare indeed. Moreover, much of the company’s recent success both in boosting sales and in share price progression has been down to her financial skills; her pervious job was chief financial officer. Her ability to cut acquisition deals such as those of Tropicana and Quaker, that took the company’s products in a new, healthier direction, proved to be a huge success.

But to those women with accountancy or other financial or business administration skills (or who are in the process of developing them), Nooyi and other successful women corporate leaders such as those in our panel (see overpage) can offer some encouragement. Many started out with non-business degrees but went on to take MBAs and made their way up the corporate ladder and into general management. Others who later went on to join major family businesses, such as Ana Patricia Botin, worked in the financial sector and gained broader experience that way. Botin was an executive at US banking group JP Morgan.

However, setting aside the personal CVs of particular successful women, there are some powerful arguments to suggest that companies would do well to employ more women in senior executive positions. 2004 research, again from the New York consultancy Catalyst, found that ‘Fortune 500 companies with the highest percentages of women corporate officers yielded, on average, a 35% higher return on equity and 34% higher total return to shareholders than those with the lowest percentages of women corporate officers’.

A study entitled The DNA of Women Leaders conducted in the UK and the US by London-based Aurora and New Jersey-based Caliper found firstly that women leaders in both the UK and US shared similar traits. They discovered that women leaders were highly persuasive, that they had an ‘inclusive team-oriented style of problem solving and decision-making’ and that ‘women leaders are more likely to ignore rules and take risks’.

Aurora’s Glenda Stone adds: ‘I think when things get a bit argumentative or turbulent in a business it will often be the women that remind people of the bond they share and try to get everyone moving in the same direction. Some subscribe to the view that “women unite and men compete”. In addition to their sharp business minds and grasp of the numbers, women often bring with them the people skills.’

And why does this matter? Regina Sacha, Vice President of Human Resources for FedEx Custom Critical and quoted in the Aurora/ Caliper research, says: ‘We’re looking at a different paradigm of leadership, and it plays naturally to the strengths of women. The tide has turned. The leadership skills that come naturally to women are now absolutely necessary for companies to continue to thrive. It certainly is the reverse of how it was when I first started out in the workplace. It seems like poetic justice.’

Poetic justice perhaps but it also makes marketing common-sense. Various research has come up with figures to the effect that women influence anywhere between 60% and 80% of all consumer purchases, including those of electronic goods such as computers and automobiles. There is a compelling logic to the argument that women should run companies the majority of whose customers are women. Part of Indra Nooyi’s success has been that of taking PepsiCo down a path which best suits the company’s customer buying preferences. Another spectacular success story has been that of Irene Rosenfelt, CEO of Kraft Foods, said to be the world’s largest company run by a woman, who has also been involved in several high-powered acquisitions that matched consumer preferences for healthier eating.

So while women in boardrooms may still be rarities and still, therefore, news, there would seem to be underlying reasons why this should change. Whether a story like this will lose all validity in the short-term is debatable however. It will be a while yet before people start writing about men running major companies against all the gender odds.

Richard Willsher is a financial and business writer with a background in investment banking.