By Tracy Tsai, PCC, CPC
The COVID-19 pandemic introduced several unique challenges for organizations that continue to play out today, including the ability to find and retain skilled talent. According to a global survey conducted in 2023, nearly 4 in 5 employers reported difficulty finding skilled talent, up 2 percentage points from 2022 and representing a 17-year high in talent shortages. At the same time, a substantial number of employees are also leaving their companies, with women leaders resigning at a much higher rate than men.
McKinsey’s 2022 Women in the Workplace report showed that women in leadership positions are leaving their companies at the highest rate we’ve ever seen. For every woman at the director level who gets promoted, two more women directors choose to leave their organization. While the pandemic is now mostly behind us, retention for women leaders will continue to be a challenge going forward.
Why Retaining Women in Leadership is Crucial
It is critical for companies to retain women leaders for a number of reasons, including:
Diversity in Perspective
Women bring a unique viewpoint and experiences to leadership roles, which leads to more innovative problem solving and effective decision making. Ultimately, this is a benefit for companies’ bottom lines, as several studies have shown that a diverse workplace leads to better business outcomes.
Greater Employee Engagement
Compared to men at similar levels, women in leadership are consistently doing more to promote employee well-being (e.g., checking in on team members, helping to manage workloads, and providing support for those navigating work/life challenges). It’s no surprise then, that a study by Harvard Business School shows that women leaders drive better job performance and have more engaged teams.
Women managers are also up to twice as likely to spend substantial time on efforts outside of their formal job responsibilities, such as advancing diversity, equity and inclusion (DEI) and taking allyship actions such as mentoring and sponsoring. So when organizations fail to keep women in leadership positions, the impact is significant, as it can lead to other employees feeling less engaged and included.
Why Are Women Leaders Choosing to Leave?
Here are some of the common reasons women leave organizations:
|Reasons Women Leaders Leave Organizations||Solutions to Retain Women Leaders|
|Lack of Recognition & Advancement||
|Company Culture Misalignment||
Many of our program participants have noted that they feel burnt out from long hours and not being in control of their workload. Because many organizations now have to do more with fewer people, it creates a scenario that is ripe for stress and overwork. When managers don’t reallocate the work or adjust job responsibilities in a way that is realistic and achievable for employees, it can make the situation untenable.
McKinsey’s Women in the Workplace report shows that the effects of the pandemic continue to take a toll on women in particular, and it’s not improving. Women report feeling even more burned out than they were a year ago, and their level of burnout is increasing faster than that of men. As a result, one in three women says that they have considered downshifting their career or leaving the workforce this year, compared with one in four at the beginning of the pandemic.
What can be done?
In recent years, many companies have increased their focus on employee well-being, but addressing burnout goes beyond offering gym memberships and meditation apps. It’s important for organizations to be aware of the root causes of burnout and to create working environments that support women leaders. For example, to prevent the stress of being “always on” 24/7, companies can encourage managers to create guardrails around work hours and personal time.
It’s important to note that women often juggle a larger proportion of household responsibilities, so providing flexible work arrangements can help retain women leaders. Of course it’s critical that women who choose flexible work options are not penalized when it comes to promotions.
2. Lack of recognition and advancement opportunities
Another reason women leaders choose to leave is because they feel their accomplishments are not being recognized, and/or they are not being promoted.
While women leaders are as likely as men at their level to want to be promoted and aspire to senior-level roles, they often experience microaggressions that undermine their authority. Women leaders also are twice as likely as men to be mistaken for someone more junior, and compared to men, their personal characteristics (e.g., being a parent), plays a bigger role in being denied or passed over for a raise, promotion, or key assignment.
In addition, women are often doing the additional work of supporting employee well-being and advancing diversity, equity and inclusion initiatives, but relatively few companies formally recognize those who go above and beyond in these areas. It’s often viewed as “office housework,” or that which contributes to the business but doesn’t typically lead to advancement or compensation.
What can be done?
Recognition is a key factor when it comes to employee retention. In a 2022 report by Achievers Workforce Institute, 52% of employees say they stay in a job because they feel valued and supported. In a separate survey, a lack of recognition was cited as the third-most common reason employees choose to leave their employers. So while it’s important to express general appreciation for the value that women leaders bring to the company, formally recognizing their accomplishments (both within and outside of their stated job description) with financial rewards or career advancements makes a big difference in retaining women.
In addition, organizations can identify high-potential women leaders early on, and give them the opportunities they need to develop and advance. This is important, as men tend to be promoted based on potential, whereas women are often promoted based on repeated success. This puts high-potential women on a slower career trajectory and also represents a missed opportunity for organizations to leverage talent.
According to research by Gallup, organizations who select leaders based on reputation or tenure fail to pick high-potential talent 82% of the time. So instead, recognize women’s potential, promote them, and give them the mentoring and sponsorship they need to succeed.
3. Company culture
Another reason women choose to leave is a company culture that is not in alignment with their values. In industries where the work environment is male-dominated, women can tend to feel like they don’t “fit in,” and that their leadership style is not valued. Increasingly, women are also choosing to leave their company if the company doesn’t prioritize inclusivity.
McKinsey’s report showed that women leaders are much more likely than men to leave their jobs because they want to work for a company that is more committed to employee well-being and DEI. McKinsey’s research shows women are more than 1.5 times as likely as men at their level to have left a previous job because they wanted to work for a company that was more committed to DEI. In addition, the next generation of younger women leaders are more likely than current women leaders to prioritize work flexibility and their company’s commitment to DEI and well-being.
What can be done?
Organizations that don’t recognize the importance of an inclusive company culture may struggle to keep women leaders, especially younger women. Companies can retain more women by creating an environment where employees feel safe to express themselves, as that helps to build a sense of belonging. In addition, when organizations invest in women’s development and offer opportunities to meet other women leaders, they create safe spaces where women are no longer the “only’s” in the room.
Based on our experience with women-only leadership development programs, when women have a safe space to share their challenges and strategize with other women, they are more likely to stay at their jobs. Moreover, when women feel that their company is recognizing them as a high-potential leader who they want to develop, that goes a long way towards retention as well.
Over the years at Her New Standard, we have seen participants in our women’s leadership programs experience this impact, which affirms our belief that investing in women’s development is a key driver of retention. We find that women feel more connected to their organizations after attending one of our programs. They have a greater sense of their growth potential and know that their contribution is valued. As they learn how to show up more powerfully as leaders in their organizations, it’s not unusual for these women to receive new opportunities and promotions and stay with their companies longer as a result.
The Way Forward: Investing in Women Leaders for Future Success
In today’s rapidly evolving post-pandemic landscape, organizations are facing greater challenges in keeping talented women leaders on board. Understanding the reasons why women are leaving is just the first step – it’s imperative that organizations take proactive measures to address these issues head-on.
We believe investing in women leaders should be at the forefront of every organization’s strategy. Preventing burnout, recognizing accomplishments, and creating an inclusive work environment are key to fostering a workplace where women leaders can thrive. Retaining women leaders isn’t just a matter of good practice; it’s a strategic imperative that leads to diverse perspectives, enhanced employee engagement, and ultimately, better business outcomes.
Interested in learning how HNS can support your women leaders?
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