British Journal of Management, Vol. 00, 1–20 (2017) DOI: 10.1111/1467-8551.12208 Symbolic Management and the Glass Cliff: Evidence from the Boardroom Careers of Female and Male Directors Brian G. M. Main and Ian Gregory-Smith1 University of Edinburgh, 29 Buccleuch Place, Edinburgh EH8 9JS, Scotland, UK, and 1University of Sheffield, 9 Mappin Street, Sheffield S1 4DT, UK Corresponding author email: [email protected] This paper uses archival board data to demonstrate that women who take positions as di- rectors of UK companies have shorter tenures than their male counterparts. The authors show that female directors face a much higher risk of dismissal as they approach nine years of service on the board, when their long service deprives them of the all-important classification as ‘independent’. At this point, their position on the board becomes pre- carious. Male directors do not suffer the same increase in boardroom exit. This gender- specific difference is clearly shown to be linked to the independence status. It isargued that these observations are consistent with the notion that female directors are being used in the symbolic management of corporate governance and that, at nine years, when the cloak of independence disappears, women directors are then exposed to the biases that arise from role congruity issues. Introduction Women tend to experience briefer tenures as boardroom directors than men do. The Sex Discrimination Act became law in the This points to a possible additional source UK in 1975. It was intended to eliminate labour of discrimination over and above those already market discrimination on the grounds of sex or identified and described by the epithets ‘glass marital status. In the year 2000, some 25 years ceiling’ (Hymowitz and Schellhardt, 1986), where after it came into force, only around 6% of board otherwise qualified women find it difficult to positions on FTSE 100 companies were held by make the same career progress as males, or the women. By 2015, this had risen to 25%, but only ‘glass escalator’ (Williams, 1992), where even in after considerable government pressure.1 The female-dominated professions such as nursing situation in the FTSE 250 and elsewhere is less and teaching males rise to the top jobs with encouraging. The analysis in this paper will show relative ease. One further such discriminatory that the challenge facing women on UK boards is mechanism that has gained considerable attention not only their under-representation, but also their and which highlights the often precarious nature subsequent experience once they are appointed of women’s employment in senior positions is to a board. Their position on the board is more the ‘glass cliff’ (Ryan and Haslam, 2005). The precarious than that of their male counterparts. glass cliff phenomenon occurs where women are more likely to be appointed to those boards that are contemporaneously experiencing periods Brian G. M. Main acknowledges research support under of underperformance or other turmoil. Conse- ESRC Grant: RES-062-23-0904. quently, the career prospects of such appointees 1See the BoardWatch website at http://www.boardsforum. are more risky and more likely to result in early co.uk/boardwatch.html. © 2017 The Authors British Journal of Management published by John Wiley & Sons Ltd on behalf of British Academy of Management. Published by John Wiley & Sons Ltd, 9600 Garsington Road, Oxford OX4 2DQ, UK and 350 Main Street, Malden, MA, 02148, USA. This is an open access article under the terms of the Creative Commons Attribution License, which permits use, distri- bution and reproduction in any medium, provided the original work is properly cited. 2 B. G. M. Main and I. Gregory-Smith failure. It is possible that, among other factors, UK Corporate Governance Code (FRC, 2014), the this glass cliff phenomenon is contributing to the independence status of directors and board-level under-representation of women on boards. decision-making regarding the continuing service There is an additional explanation of this short of directors. tenure of female directors, namely symbolic man- In order to analyse these issues, we use a agement. Westphal and Zajac (1994) outlined the database that captures boardroom appointments concept of symbolic management in the context of in FTSE-All-Share companies between 1996 and executive incentive plans serving a symbolic role 2010. This database offers an important advantage by publicly demonstrating a commitment to pay over the prior literature, namely it allows us to ob- for performance, rather than arising from any par- serve a large sample of female and male careers, ticular intent to align executive incentives with as they play out in the boardroom. The next sec- shareholder interests. This explanation of sym- tion of the paper reviews the literature in the area. bolic management suggests that, in the interests We then introduce the data and methods used in of self-preservation, the board may take actions to the analysis, before presenting the results. The pa- be seen to comply with the expectations of institu- per ends with a discussion of the implications for tional best practice. The appointment of a woman policy and theory. as an independent director enables the board to achieve two objectives. Such an action satisfies the call for increased gender diversity and, at the same Theoretical background time, can increase the proportion of independent Glass cliff outside directors. Appointments of this nature raise the possibility that at least some female par- The presence of labour market discrimination, i.e. ticipation in the boardroom reflects such symbolic the valuation in the labour market of personal management of corporate governance rather than characteristics such as gender or race that are a broad acceptance of the principle that gender di- unrelated to productivity in the job, has been anal- versity is good for business (Hoobler et al., 2016). ysed in depth by Becker (1957). Its persistence, A consequence of this perspective of woman of course, calls into question the efficacy of the directors being appointed as part of the symbolic market forces (Arrow, 1972) that should render management of the independence of the board is such irrational labour market practices unprof- that, when these directors lose their independence itable. Standard explanations of the empirically under the UK Corporate Governance Code, observed persistence of labour market discrim- which happens when the director ‘has served on ination include: human capital (Mincer and the board for more than nine years from the date Polachek, 1974); intergroup bias (Hewstone, of their first election’ (FRC, 2014, B.1.1), they Rubin and Willis, 2002); monopsony power will have outlived their perceived usefulness and (Manning, 2003; Ransom and Oaxaca, 2010); are likely to exit the board. Of course, both male occupational segregation (Bergmann, 1974) – and female directors are more liable to exit after leading to the notion of a glass ceiling (Powell and crossing the institutionally determined nine-year Butterfield, 1994); part-time working (Main, 1988; service boundary. But for women it will be a more Main and Reilly, 1992); and social role theory disruptive event if their presence on the board is (Eagly, 1987). disproportionately valued for their independence Recently, attention has been given to the lack status. In that case, the ‘explain’ option, available of progress of women in one particular area of under the UK’s ‘comply or explain’ corporate the labour market – the relative absence of women governance regime (FRC, 2014), is less likely to be in senior management positions. Explanations exercised for women in mitigation of longer board based on insufficient supply of talent have been service. questioned by empirical studies of boardroom This paper contributes to what will be seen be- appointments (Singh, Terjsen and Vinnicombe, low to be a growing literature (Bruckmuller et al., 2008). While there remains an ongoing debate re- 2014; Ryan and Haslam, 2007) that emphasizes the garding the added productivity of gender diversity precarious nature of women directors’ positions on company boards (Adams and Ferreira, 2009; on company boards. We are able to investigate the Ahern and Dittmar, 2012; Desvaux, Devuillard- interplay between institutional forces such as the Hoellinger and Baumgarten, 2007; Hoobler et al., © 2017 The Authors British Journal of Management published by John Wiley & Sons Ltd on behalf of British Academy of Management. Symbolic Management and the Glass Cliff 3 2016; Singh, Vinnicombe and Johnson, 2001), the between 2004 and 2006 to construct a matched evidence regarding restricted access to boardroom sample of companies separated by whether or not positions is well established (Farrell and Hersch, they experienced a loss in the prior two periods be- 2005; Gregory-Smith, Main and O’Reilly, 2014; fore being non-loss making. Focusing on the gen- Lyness and Heilman, 2006; Oakley, 2000). der diversity of the board, the authors then use a Traditional perspectives describe how the oper- difference-in-differences estimator to test the hy- ation of the labour market deprives women of de- pothesis that troubled companies are more likely sirable employment outcomes, such as promoted to increase their gender diversity after experienc- positions or higher wages (Kulich et al., 2011). The ing the initial loss. novelty of the glass-cliff model (Ryan and Haslam, Whereas these authors initially fail to establish 2005) is that it describes a situation