Definition
The term “Glass Cliff” in finance refers to a situation where women or minorities are appointed leadership roles during periods of company crisis or downturn, the fall from which can be as sudden and dramatic as falling off a cliff. This stems from researching showing such individuals being placed in high-risk, high-stakes roles markedly more often than their white male counterparts. It is distinct from the “Glass Ceiling” , which refers to an invisible barrier that prevents women and minorities from advancing to the top levels of a company.
Phonetic
The phonetic transcription for this term would be: Glass Cliff: /ɡlɑːs klɪf/Definition: /ˌdɛfɪˈnɪʃ(ə)n/Research: /rɪˈsɜːrtʃ/Examples: /ɪɡˈzæmpəls/Vs.: /vɜːsəs/Glass Ceiling: /ɡlɑːs ˈsiːlɪŋ/
Key Takeaways
Main Takeaways about Glass Cliff
- Definition: The term ‘Glass Cliff’ refers to a phenomenon where women or individuals from minority groups are more likely to be placed in leadership roles during times of crisis or downturn, where the risk of failure is highest.
- Research: Research suggests that this phenomenon exists due to stereotypes that associate women and minorities with crisis leadership and collaborative efforts. It reflects unconscious bias more than deliberate discrimination. These leaders often experience heightened scrutiny, criticism and a higher risk of failure, as they take charge under already challenging circumstances.
- Examples and Comparison with Glass Ceiling: An example of a Glass Cliff scenario is Carly Fiorina at Hewlett Packard, who was appointed CEO in the midst of a crisis and later forced to resign. This is distinct from the ‘Glass Ceiling’ phenomenon, which refers to an invisible barrier that maintains a dominance of male leadership in organizations by limiting the advancement opportunities available to women and minorities.
Importance
The term “Glass Cliff” is significant in business/finance due to its implications for gender equality and diversity in leadership. It refers to a precarious situation where women or minorities are promoted to leadership roles during periods of organizational distress, facing higher risks of failure due to the challenging circumstances they inherit. This phenomenon, when persistent, can perpetuate harmful stereotypes and discourage future inclusion initiatives. Comparatively, the term “Glass Ceiling” refers to the unseen barriers preventing these groups from reaching upper management levels in the first place. Both terms are critical in understanding systemic biases in the corporate world, prompting more informed strategies towards achieving genuine equal opportunity.
Explanation
The concept of the glass cliff addresses the phenomenon where women or individuals from minority groups are more likely to be appointed to leadership positions during periods of crisis or downturn, when the chance of failure is highest. The purpose of this term is to explore a subtle form of discrimination that puts these individuals in high-risk, high-stakes positions, making it more likely for their tenure as leaders to be brief and precarious. It therefore serves to improve our understanding of the challenges that these leaders face, beyond the widely acknowledged barriers to their advancement, encapsulated in the term “glass ceiling”.The glass cliff concept contrasts with the “glass ceiling” , which refers to an invisible barrier that prevents women and minorities from rising above a certain level in the corporate ladder, regardless of their qualifications or achievements. Where the glass ceiling concept emphasizes a barrier to the advancement itself, the glass cliff concept highlights the additional challenges and risks that women and minority leaders often encounter after they have broken through the glass ceiling. This can be seen in various industries, where women CEOs are often appointed in struggling companies, making their positions more vulnerable. Through research and awareness about the glass cliff, organizations can better address and mitigate these discriminatory practices.
Examples
The term “Glass Cliff” refers to a situation where women or minorities are appointed to leadership positions during periods of company turmoil or downturn, where the risk of failure is highest. The concept was developed by Professors Michelle Ryan and Alexander Haslam of the University of Exeter, England. This is often seen as a sibling phenomenon to the “Glass Ceiling,” where women or minorities struggle to reach higher positions within a company due to invisible barriers. 1. **Yahoo and Marissa Mayer**: In 2012, Marissa Mayer took the helm at Yahoo when the company was in a period of severe crisis. Prior to her appointment, Yahoo had gone through five CEOs in five years and was struggling to keep up with competitors like Google. Despite her efforts, Mayer couldn’t turn around the company’s fortunes and she resigned in 2017. She seemingly walked off the ‘glass cliff’ , signalling her appointment was set for a high likelihood of failure from the beginning.2. **HP and Carly Fiorina**: As the first woman to lead a Fortune 20 company, Fiorina took over HP at a challenging time. The dot-com bubble had just burst and HP was facing declining sales and layoffs. Fiorina made the controversial decision to merge with Compaq, which many believe led to her dismissal in 2005. Although Fiorina’s leadership abilities have been criticized, many consider her another victim of the ‘glass cliff’ phenomenon, because she was set up in a precarious position from the start.3. **Royal Bank of Scotland and Alison Rose**: Alison Rose took on the role as CEO of RBS in November 2019, making her the first woman to lead a major UK bank. She has taken the helm amid Brexit uncertainty and challenging times for the bank, with its shares having dropped significantly in value prior to her taking up the role. The future of RBS under her leadership will determine if this is another case of the ‘glass cliff’ phenomenon. In all these examples, the ‘glass cliff’ sees women holding leadership positions during periods of turmoil or crisis, increasing the probability of a ‘fall’ or unsuccessful tenure.
Frequently Asked Questions(FAQ)
What is the term Glass Cliff in finance and business?
The term Glass Cliff refers to a phenomenon where women or minority groups are more often appointed to leadership positions during periods of company crisis or downturn when the risk of failure is highest.
How does the research define the Glass Cliff phenomenon?
Research indicates that this trend is due to a multitude of factors such as bias, stereotyping and systemic societal issues. In most cases, women or minorities are appointed to these precarious positions because of unnecessary stereotyping that they are better ‘crisis’ managers.
Can you give an example of the Glass Cliff situation?
A classic example of a ‘Glass Cliff’ situation was when Marissa Mayer became Yahoo’s CEO in 2012 at a time when the company was struggling. Although Mayer had a strong strategic vision for the company, she was unable to turn around the failing fortunes of Yahoo and left the company five years later.
How does the Glass Cliff compare to the Glass Ceiling?
The Glass Ceiling is a metaphorical barrier preventing women and minorities from advancing to higher positions within a company, regardless of their qualifications or achievements. The Glass Cliff, on the other hand, refers to the precarious leadership positions to which women and minorities are often appointed, with a higher risk of criticism and failure.
Could the Glass Cliff phenomenon be seen as discrimination?
Yes, the Glass Cliff phenomenon could be seen as a form of discrimination as it places women and minorities in positions where they are more likely to fail, which can perpetuate stereotypes and keep them from gaining further leadership opportunities.
How can the Glass Cliff effect be mitigated?
Awareness and transparency about the existence of the glass cliff is the first step. Secondly, appointing women and minorities to leadership roles during stable periods, and providing them genuine support and resources to succeed can also play a significant role in mitigating the Glass Cliff effect.
Related Finance Terms
- Definition: The term ‘Glass Cliff’ refers to a phenomenon where individuals from underrepresented groups are more likely to be placed in leadership roles during times of crisis or downturn when the risk of failure is highest.
- Research: It originated from academic research conducted by Professors Michelle Ryan and Alexander Haslam from the University of Exeter, who found that women and minority groups are often appointed to top positions when the company’s performance is declining.
- Examples: Notable instances of the glass cliff phenomenon include Carly Fiorina at Hewlett-Packard, Marissa Mayer at Yahoo, and Mary Barra at General Motors, all of whom took leadership roles during times of turmoil within these organizations.
- Vs. Glass Ceiling: While the ‘Glass Ceiling’ refers to the invisible barrier that prevents underrepresented groups from rising above a certain level in a hierarchy, the ‘Glass Cliff’ is about the precarious and risky positions they may occupy once they break through this ceiling.
