The Prototype

Many organisations mistake familiarity for leadership potential, using biased “prototypes” rather than real performance, causing high-performing women and other overlooked talent to be undervalued, even though the evidence shows they often outperform once promoted.

Researchers at MIT, Minnesota, and Yale studied almost 30,000 performance evaluations of managers and found that, on average, women received significantly higher ratings on performance but lower ratings on potential.

The researchers considered whether the women did in fact have poor longer-term prospects and if the evaluations were accurate. But what they found was that the women not only matched their male colleagues' performance when promoted into the same jobs, but they also frequently exceeded it.

S&P Global quantitative researchers studied every EO and CFO hire across the Russell 3000 group over 17 years. 5,825 appointments. Firms that hired women CFOs significantly outperformed those that hired men by more than eight per cent in risk-adjusted returns within two years. Whilst female CEO hires created value, male hires did not materially deviate from industry norms. Their research was called 'When Women Lead, Firms Win'. It speaks for itself.

Notably, the researchers asked whether the women were better leaders. Not necessarily - they found that the leadership experience and biographies of the women appointed tended to match the top decile of the male appointments. They concluded that boards in their appointments held women to a much higher standard, and they described the talent pool as 'overfished'; by selecting from the same pool of male candidates for so long, the pool had become shallow.

This system did not, therefore, identify the best person for the job.

So, what is the system selecting for?

In every organisation, there is an image of what a leader looks like. It's more than a competency framework, or job description and is better understood as a sense: a feel for 'that kind of person'. Something quite vague, but an image understood by the people charged with finding the next wave of leaders who are 'ready'.

This image evolves, and as years pass, and as the same kind of people are promoted, eventually the pattern becomes the (unspoken) definition of leadership itself.

But if the objective is to find 'the best', then the image is very often wrong. It's actually just a record of all the people who were allowed to try, and this is survivorship bias. The people who made it were studied, and the model of excellence was built from them; the ones who didn't progress are not in the dataset.

Once we have established this 'prototype', it sees and judges everything else. Certain people are clearly a match, and others, whilst close, need translation and someone willing to take the extra step to explain why they are the best choice. In most systems, as that step doesn't exist, those people don't get considered. The prototype creates the path of least resistance, and organisations flow down that path. After long enough, the two things that are familiarity and excellence become so entangled that the people can no longer tell them apart.

For thirty years, I worked in financial services. Most of which I spent in senior roles, including at the Board level. I was part of that process, often with other leaders, of deciding who we wanted to push forward. In hindsight, I suspect I sometimes held women to a different (higher) standard. I wanted those women and those people, men that didn't quite match the mould either, to succeed and thrive, but I stumbled over my own mental frame. I couldn't see them in positions, and I didn't see others that looked like them.

That is what the stats look like: better performance reviews, lower potential. So, it's not a failure of respect or appreciatiation, it's a failure in imagination.

There were many moments when I could have questioned the pattern, the one in my head and in the system. Although, of course, the system served me well enough that I did not need it to be accurate.

It’s a wicked problem

Organisations have, with good intentions, tried to address the disparity at the top. But, at best, they have seen inconsistent results. Despite how hard we have tried to solve this wicked problem, the research shows us exactly where we have gone wrong.

Studies show that women managers also rate top-performing women - as having low potential at almost the same rate as men managers.

According to Emilio Castilla & Benard at MIT those firms with formal meritocracy policies have larger gender and racial pay gaps than those without.

When employees think that their organisation already values equality, they tend to scrutinise their decisions less. The very idea of meritocracy became the justification for not looking.

The problem is not who is undertaking the evaluation, but what they have been taught to look for in the process. If we keep the template, but change the evaluator, the result will stay the same. This isn't bad people with nefarious intentions. Swap men out for women, put nicer people in the room, have structured interviews, all of it matters, at the margins.

For those who have been evaluated like this, with a reputation for excellence at what you do, but told you were not ready for the next step, the chances are that they weren't judging your potential at all. What it probably boiled down to was this: you were being held up against an outdated metric, developed by observing successful people and then, erroneously, making them the gold standard.

"Presence," "Influence," and "Executive readiness" were not areas of feedback on which you could improve. You believed it because you are a professional and most likely went home and looked in the mirror as if you could fix it. You tweaked, you took up more room, then less, then more again, and tried, and tried, but the bar kept moving.

This might not make you feel better about the years spent trying to fix yourself. However, it might inform you of what you do from here forward. The question now is not what else do you need to work on? The question is, does the institution have the ability to recognise what you have to offer?

The prototype is broken, and it's manifestly expensive. And it's the people who have benefitted from the prototype, including me, who have to interrogate it. Where did this come from? How do I know this is the most qualified person and not just the person I know best? It's not going to happen because it's the right thing to do. What organisations care about is money. Billions of pounds of value creation are unclaimed and that's not a diversity factoid; that is value left on the table by people who are so confident in their own capabilities that they don't think to question them. They should.