Episode Summary

Today, Mary Beth and Neela delve into the intricacies of the gender risk tax and the glass cliff phenomenon. They unpack these widespread challenges, delving into their repercussions for women in the corporate world and propose practical approaches to surmounting them. From dissecting the subtleties of risk assessment to unveiling the eye-opening statistics surrounding the glass cliff, Mary Beth and Neela illuminate the truths and offer guidance on how women can effectively navigate and prosper within these contexts. Tune in for empowering insights and a call to build a supportive network to pave the way for a more equitable future.

What You’ll Learn in this Episode:

• The financial stereotypes of women and where these stereotypes come from
• Why it is critical to build a trusted team, seek mentorship and self-promote
• What the gender risk tax looks like and how it impacts women
• The importance of balanced communications, embracing failure and learning from your mistakes
• The glass cliff phenomenon explained
• What a Harvard Business Review study showed on why women are more likely to lead struggling companies
• How to recognize the glass cliff and why we must have boundaries

Resources Mentioned on the Show:

• A Free Solo in Heels: Corporate Risk Taking Among Women Executives and Directors
• The Gendered Consequences of Risk-Taking at Work: Are Women Averse to Risk or to Poor Consequences?
• Why Struggling Companies Promote Women: the Glass Cliff, Explained
• How Women End Up on the “Glass Cliff”
• Who Thinks Women Might Make Better CEOs?

Stay Connected:

• Join the Abacus community by connecting with us on Facebook, Twitter, Instagram, and on LinkedIn
• Connect with Mary Beth on Twitter, Instagram, and on LinkedIn
• Connect with Neela on Twitter, Instagram, and on LinkedIn

Transcript of the Episode

Mary Beth [00:00:14]:

Hey, there. Welcome to the If Money Were Easy podcast, the show where we teach you how to expand what’s possible with your money. We’re your hosts, Mary Beth Storjohann

Neela [00:00:23]:

and Neela Hummel, 

Mary Beth [00:00:24]:

Certified Financial Planners and co CEOs of Abacus Wealth Partners. Today on the show, we are talking about the gender risk tax and the glass cliff. Neela, hello.

Neela [00:00:36]:

Hello, Mary Beth. Oh, my gosh, am I so excited for this one.

Mary Beth [00:00:40]:

I know. Like, which part specifically, the risk tax or the glass cliff? 

Neela [00:00:44]:

So originally, we planned this to be two episodes and then combined it together. And I think they’re actually very related. And so I’m just excited for us to dig into the kind of nitty gritty because I think these are two concepts that don’t get that much attention but are so pervasive. 

Mary Beth [00:01:03]:

Super pervasive. Okay, so let’s start then. Gender risk tax, what is it? How does it impact us? 

Neela [00:01:09]:

Yeah, so essentially women get the reputation. And again, we’re going to go just broad generalizations here, but from a reputation standpoint that we are risk averse. And so women are often underestimated in what we bring to the table or are stereotyped as being very risk averse. And so we end up needing to take on extra risk to achieve top positions and or to get the results that we want in those positions. 

Mary Beth [00:01:41]:

So let’s say there is an executive woman looking to grow her career from vice president to executive. What does that look like? 

Neela [00:01:49]:

So, I mean, it’s essentially overcoming the biases that she might face coming into the role, that she’s going to play it too safe. And so, for example, she might have to do something like launch a new initiative versus iterating on an existing one. It’s almost, she needs to double down on splash. 

Mary Beth [00:02:06]:

It’s like, go big or go home. 

Neela [00:02:08]:

Go big or go home. Right. We don’t have time or patience to let you marginally, incrementally improve and that you really got to go big, show the results in a really big way to move the needle in terms of perception. 

Mary Beth [00:02:23]:

So what does this do to women? What’s the impact of, what are we seeing here? 

Neela [00:02:27]:

We’re in financial services, and the way we invest is that your risk is correlated with your return. You pick up extra return when you take incremental risk. And so over time, you would think that women are able to recoup more of that return and they’re able to have more effective outcomes. But I think the question is, at what cost?

Mary Beth [00:02:49]:

Right. Burnout, stress, mental health issues. 

Neela [00:02:53]:

Yeah. And the idea of not almost coming from an even playing field. If you start a role and you’re standing in a hole that’s one and a half feet deep versus, say, your stereotypical male counterpart, you’re not starting at the same level. And so it’s like when we talk about equity and equality are two different things. 

Mary Beth [00:03:15]:

Right. So there’s one side of this where women aiming for top roles are fighting gender stereotypes. We’re not risk adverse. We have to show that we’re aggressive. We have to show that we’re go getters. You’re doubling down and you’re taking calculated risks. Right. And then the other side of this, I know you had this in the notes, which is another study, psychology of women quarterly found that there is no difference in how men and women take risks at work. But it did find that women suffered more negative consequences for taking those risks. So, such as asking for a pay raise, but then were viewed as arrogant or entitled or asking for support with a difficult task. But then we’re viewed as lacking independence. So you basically are hit on both sides, right? 

Neela [00:03:56]:

Yeah. So we both have young girls and we’ve all heard this. Where, how many times has anybody called your son bossy? 

Mary Beth [00:04:06]:

Bossy?

Neela [00:04:07]:

And how often does your son get called assertive? Those are the same thing. So how that relates really to the risk tax is that the risk aversion is the same. But who experiences more blowback? There’s no natural or biological behavioral pattern that we can pinpoint. But who pays the price when things either don’t work out or when the target isn’t achieved? 

Mary Beth [00:04:37]:

It’s women, just in case you didn’t know the answer to that question. It’s women.

Neela [00:04:41]:

There’s a multiple choice and it’s A, women, B, women, C, all of the above.

Mary Beth [00:04:46]:

Exactly. So you and I have talked about this, the gender risk tax, for quite some time. Right. Especially as we’ve moved into these leadership roles and even the glass cliff that we’re going to tackle in just a moment, which can be a little bit defeating. We’re putting it all out there. Obviously, women face a lot in terms of their financial landscape, in terms of the leadership landscape, corporate landscape. So what are the options? What can we do to overcome this? Because, yes, Neela and I are great at identifying the problems. We’re not just going to leave you hanging and say, and that’s life. So what can we do to move forward and push past this and change the landscape in some ways?

Neela [00:05:21]:

Yeah, I mean, I think at the end of the day, we need to continue to act like good business people. And part of that is building your trusted team. So that’s the trusted team of mentors who you’re going to be able to float ideas on. Hey, I want to take on this new endeavor, or I want to launch this new initiative, or I want to go for this role. People that you can genuinely bounce ideas off of and perhaps build support or really just get honest opinions so that you can continue to take smart, strategic risks. I think another one is self-promote when things go well. So how often are women complimenting? You’re like, oh, no, it was just my team. It was this, I was this. And just like stepping back. And I think that, again, massive generalizations. I know this is not the case with every single woman, but we’re kind of looking at societal trends that we’ve seen and what they’ve actually been able to study. But really call out your wins, talk about them. Talk about them at the company level, talk about them with your friends. But let’s celebrate each other for more than weddings and babies. 

Mary Beth [00:06:31]:

Yes, the self-promotion is huge. That’s a big one. I think getting comfortable talking about yourself and getting comfortable sharing the things that you’ve been able to accomplish just for yourself, even if you’re not sharing publicly, totally writing about it, journal about it, but documenting those things so that you can keep those in mind and at heart in terms of being able to push yourself forward, because when things do go well, you are more likely to take the next step and you are more likely to take that next risk, however calculated it needs to be. But seeing and documenting your successes keeps you moving forward. Right. Some cases, I think it also makes you afraid of failure, but there’s that too. 

Neela [00:07:08]:

Absolutely. 

Mary Beth [00:07:08]:

The next thing that you can do, though, is to fail quickly, try things, fail quickly, learn iterate, keep moving forward. And so that’s one of the things that you and I, I think we’ve had to really balance and navigate through, because coming into this role and even with clients as well, the idea of communication and clarity, transparency, and so when you want to fail quick and you want to try new things, you also have the communication that needs to happen with it. 

Neela [00:07:33]:

Right. 

Mary Beth [00:07:33]:

So there is a balance that we walk right in terms of making sure the team’s on board, that we’re going to try this thing and if it fails, that’s okay. So we’re not going off into a silo and trying things and not telling anybody and bringing the company along for a whipsaw. But we are communicating, hey, we want to push this thing. If it doesn’t work out, it’s on us, but we want to push it. Do we have the buy in? And then we go into it and sometimes, even if we don’t have the buy in, we still ask for the support in those ways and we own those things. But I think failing quickly and learning and taking time to observe and what are the lessons? Sometimes we fail and then we just beat ourselves up and that’s not totally productive. But if you fail, and I think you’re really good at this Nee, if you fail and you think, okay, what can we learn from this? What do we want to do to get it right next time you’re taking those things and then you’re taking the next risk, it’s a little bit more calculated. You’ve learned something. You’ll try again. 

Neela [00:08:21]:

Yeah, well, I’m just going to start by saying thank you because we’re going to take compliments. 

Mary Beth [00:08:26]:

No, you’re welcome. 

Neela [00:08:29]:

I really love your point. Failing quickly and learning from it because it takes courage to do that because you’re kind of putting yourself out there and being like, look, I don’t know. I don’t know if we have all the answers, but we want to try this thing and we’re going to see if it sticks. And if it doesn’t, well, then we’re going to get some valuable lessons and we’re going to be able to continue to iterate. And doing that in a communication healthy way is critical, too. Otherwise people are like, you’re just changing everything. Are you guys just addicted to change? And it’s like, well, no, we’re addicted to growth and evolution and change is part of that.

Mary Beth [00:09:01]:

Right. And I think the transparency, especially with your team, when you’re failing as well, I think owning those things or talking about those things, because as perfect as Neela and I sound behind these microphones, we do make mistakes, dear listeners. 

Neela [00:09:14]:

So many. You know one thing that I was just thinking about, too, when it comes to the gender risk tax, and when we’re talking about really any of these biases, is the value of calling them out and challenging them is like when you’re like, oh, is this? It’s like when you go to a conference and people are like, who are watching the kids while you’re at this conference?

Mary Beth [00:09:38]:

So lovely. 

Neela [00:09:39]:

Would you ask my husband the same question? 

Mary Beth [00:09:41]:

My grandmother recently asked me if my in-laws were here to help Brian watch the kids when I was gone for the weekend. And I said, no, grandma. 

Neela [00:09:52]:

Brian is looking forward to continuing to be a father throughout the whole weekend. 

Mary Beth [00:09:56]:

She’s 93, so I gave her a pass. But anyways, she did ask. 

Neela [00:10:00]:

So just a funny anecdote. We were doing a walk through, we just finished the renovation on my house, and we were walking through with my husband, architect, contractor, and family friend who has a background in construction. Four guys, and we’re doing the walkthrough and they’re like, okay, well, who’s going to take notes? And I said, whoever it is, it’s not going to be me because I refuse to be the only female in the group that is also taking the notes. But I support any one of you for being that person. 

Mary Beth [00:10:26]:

Good for you. 

Neela [00:10:27]:

But it was the kind of thing where I’m like, not everybody recognizes that. But if you look around, if there is a group situation happening and people are like, who’s going to take the notes? How many times is it a woman being like, I guess I will. I’m good at note taking, so I’m going to take the notes. Don’t play. 

Mary Beth [00:10:43]:

Call it out. We hired somebody recently to give us a quote for our backyard, for a remodel. And I reached out to him. I reached out to the company online. I did the initial conversation, the scheduling, and he talked to my husband the whole time and emailed my husband calls my husband, like, you know, Okay. 

Neela [00:11:03]:

Not hired. 

Mary Beth [00:11:06]:

Not hired. 

Neela [00:11:07]:

Just so we’re clear, mama writes the checks. I know we’re going to go on to the glass cliff, but one thing that we encounter a lot, and we hear this a lot in financial planning, is that women are risk averse. Women don’t want to own stocks. Women don’t want to take risks in the market. And we just need to stop saying that women are risk averse. 

Mary Beth [00:11:32]:

It’s not true. It’s absolutely not true. It’s just not true. 

Neela [00:11:35]:

Not the case. So let’s stop saying that. 

Mary Beth [00:11:37]:

Yes. If there’s one takeaway, stop saying it. 

Neela [00:11:40]:

Stop saying it. 

Mary Beth [00:11:40]:

Risk aware. Definitely. Risk averse. No. For me, I always say it’s about education. They’re aware of risk. They’re risk aware, and they need additional education around it. They’re not afraid of taking risk. 

Neela [00:11:52]:

Right? Love that. 

Mary Beth [00:11:54]:

It’s a rebrand. So going back to the gender risk tax, if you’re listening, thinking about your own career, the risks you’ve had to take. How has this impacted you? Because we share some of our personal stories here and there, but we’ve seen it throughout the lives of our friends and of our clients. And if you’re listening, you’ve likely experienced this in some way as well. Yeah. So let’s pivot to the other very interesting topic of the glass cliff. Tell me. Tell me about this. I know what it is, but I’m super excited to hear about it. 

Neela [00:12:27]:

It’s awful. Brutal. 

Mary Beth [00:12:29]:

I’m excited because… masochist. I don’t know. 

Neela [00:12:31]:

It’s exciting to talk about it. Because if we’re not talking about it, then you almost feel gaslit. And the glass cliff, in very simple terms, is the fact that women are more likely to achieve the top position in a company when companies are struggling. And it’s a cliff, essentially, because it’s almost perfect adverse selection. If women are running more companies that are struggling, statistically, there’s going to be a higher failure rate, thus tumbling off the glass cliff. There is this incredible Harvard Business Review article that we’re going to link in the show comments, and it basically had a study group of people in, I think it was like an MBA course, and they basically had these students opine on who should be leading a company, and it’s this fictional company. And when the company had been led by men and was doing well, 62% of the students who read that scenario chose a male candidate to continue running the company. However, when the male led company was in crisis, those numbers completely reversed, and 69% chose the female candidate. And when the company had been led by women, there was actually no difference, and the glass cliff disappeared. So what does that tell us is, essentially, there’s a bias toward the status quo, so that as long as a company headed by men performs well, there’s no perceived need to change its pattern of male leadership. Only if the male leaders had maneuvered an organization into trouble is a switch to a female leader preferred. So if you think about that, if the default is for the guy to run the company, and then it’s like we’re saying, hey, we need more diversity. But then you’ve got a lot of board of directors who are like, it ain’t broke. Why fix it? 

Mary Beth [00:14:18]:

Why fix it? 

Neela [00:14:19]:

Let’s not upset this apple cart. However, when things are not going well, they’re like, well, this isn’t working. Let’s try something wacky. Let’s do something crazy, and let’s get some women to run this show. 

Mary Beth [00:14:35]:

Lucky, lucky women. 

Neela [00:14:39]:

And that’s essentially it. It’s bringing on women to right the ship. And we just saw this with Twitter, or the artist formerly known as Twitter, X. 

Mary Beth [00:14:48]:

Exactly. So let me get this straight. So there’s a struggling company. They are looking for something new, basically. Like, hey, we’re struggling. We need to shake things up. We need basically non-white male to run this thing. And so they’re like, hey, let’s get a woman in here. Women are better communication skills. They’re cooperative. They’re going to be able to turn this thing around. And we’re already struggling. And so even if she can’t turn it around, we’ll just go back to what we were doing anyways. She’ll just take the fall.

Neela [00:15:21]:

Right. 

Mary Beth [00:15:22]:

So that’s the glass cliff that women executives are falling off of is basically, you’re brought into a struggling company. Yay, you’ve earned the promotion, but the company is already struggling. And so if you are unable to be successful in turning that around off the glass cliff. 

Neela [00:15:38]:

Right. Which there’s two ways that it really impacts women as a whole. One is you, in theory, would have a higher failure rate because you’re coming into an unstable organization. And so not everybody’s going to be able to turn that ship around. So that’s the tumble off the glass cliff. And then I think the other piece is, are those our only options? We just get fewer options to take those opportunities. So it’s like, when you see the statistics, the numbers of getting more female leadership, it’s going to take a really long time at this rate. 

Mary Beth [00:16:12]:

Yeah. What was the one statistic? Only recently did the number of female CEOs outnumber the number of CEOs with the first name of John?

Neela [00:16:20]:

Yes, that would be it. That was the milestone that we crossed in 2023. So we now have more female CEOs running Fortune 500 companies than men whose first name is John. So John’s are about 3% of the population. Women are 50%. Let’s just let that simmer. 

Mary Beth [00:16:41]:

So what are the ramifications of this? We have the gender risk tax is one thing. We have the glass cliff. What’s the ramification on women when these are the opportunities? Are these the only opportunities or what else is out there for us? And where is the success? Where can we find the success? 

Neela [00:16:53]:

We take the opportunities where we can get them. And we also need to continue to create our own opportunities.

Mary Beth [00:16:59]:

Right. 

Neela [00:17:00]:

And we could even get started in talking about VC funding and how much VC funding to women. That’s a whole nother episode.

Mary Beth [00:17:06]:

That’s another sad episode. We need to space out the sad and the happy, right? 

Neela [00:17:12]:

But I think it’s calling it out when we’re seeing it. Take the opportunities that we can pick a company where you feel like your values are aligned with again or start your own and kind of more of the same of calling out the wins and calling it out just so you also feel like you’re not gaslit. Like, hey, I came into this situation, this is going to be a tough turnaround. This is what we’re hoping is going to line up and this is hard to do, but almost communicating along the way of the state that the company’s in and doing your best there and knowing that no one’s perfect. 

Mary Beth [00:17:45]:

Yeah. The best that you can, going into positions like this, knowing what you’re getting into, calling it out, knowing that the glass cliff exists. I think Glass Cliff is something that you and I discovered the past twelve to 24 months, or we didn’t discover, but we’ve been reading more about it and exposed to it more because due to our exposure to more leadership articles and just content that’s out there. So I think you and I are seeing it more and it’s just really intriguing and that what we’re learning about what women continue to face in the workforce and we have made a lot of progress. However, there is still a lot that stands in our way as well. And so, as you said, calling it out, I also think it’s totally okay to have boundaries. It’s perfectly acceptable to have a boundary when you get into the role, knowing what’s ahead, knowing if it’s doable, if you find out it’s not doable, how do you exit gracefully if it’s not for you? Not burning yourself out and crushing your mental health for some of these positions as well. And I think that being able to not mentally burn yourself out during these types of things, because as women, we’re talking about the position you’re in from a career standpoint. We’re not talking about the mental load that you’re carrying at home. Women are carrying it the whole time as well. So when you’re putting all of these pieces together, being career hungry, being ambitious, wanting to create an impact, they’re huge. And it’s also okay to say no and to have boundaries and to say what you will tolerate and what you won’t, and to find companies that align with your values totally okay, start your own company if you can’t find one that aligns with your values, but being aware of these things and just having your eye on it. Neela and I aren’t walking around day to day, like looking out for the glass cliff. But the more that you become aware of these situations, the more that you’re looking out for other people, the more that you kind of reflect on your own career in different ways. You notice these storylines in other areas as well. So again, all just power is really what this is about. And also the most powerful thing you can do for yourself is creating those boundaries and knowing what you will and will not do. 

Neela [00:19:33]:

And also what you’re capable of. If you want to get something done, give it to a busy mom, because she will get that done. She will destroy that. And I think, to your point, on boundaries, it’s also pacing yourself, because if you’re in a tough position, if it’s a role that maybe is asking more of you or is asking more of whoever would come into that role, Rome wasn’t built in a day. Like, are you moving in the right direction? And actually, one of the reasons that various studies that they’re speculating that the number of female CEOs has increased over the last couple of years is because of COVID and the impact that that had on how businesses were run, that this command and control leadership style was going out the window because all of a sudden, CEOs were sitting in front of a bunch of employees in a remote setting who needed to be reassured. So, you know, we talk about those girly attributes that the Forbes article that we’ll reference in calls it, but it’s basically girly. That’s girly. Said no one ever. I shared clothes with my brother until I was in 8th grade anyway. But like, communication, respect for employees, empathy, inspiration, that those gained more of a foothold during remote work and as people started to really reevaluate their relationship with the workplace. 

Mary Beth [00:20:57]:

Right. I think from the vulnerability standpoint and for leadership, there’s a lot that’s come since COVID in terms of being able to emotionally connect with your employees and to show empathy and caring for what they’re experiencing. The benefit is that we have more women that are entering the CEO ranks that is positive,just in terms of the financial wealth coming down the pipeline and what they’re holding now. But there is still work to do. So making sure that you’re aware of these things. Evaluating your own career again. Yeah. And just making sure you’re living a life aligned with your values. Yeah, that’s it, y’all.

Neela [00:21:32]:

Glass cliffs, gender risk tax. They exist, but they are things that we can fight back from. And I think one of the big takeaways that I’ve come to as we’ve done all this research on these two phenomena is find your trusted team and look out for one another. Make space for those behind you, for those beside you, and let’s build our tribe of the people who want to make this better, because there’s a lot of men and women who want to ship this. So those are the people that you want to work with. 

Mary Beth [00:22:06]:

Yes. And bring up these two topics at your next cocktail hour or girls night out. It’s fun. Spread the news. 

Neela [00:22:14]:

Love it. 

Mary Beth [00:22:15]:

See you next time. 

Neela [00:22:16]:

Thanks everyone. Thank you for listening to today’s episode of If Money Were Easy. If you’re looking for more information on how you can expand what’s possible with your money, head to abacuswealth.com. That’s abacuswealth.com for more analysis and resources created by our team.

Mary Beth [00:23:01]:

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