Why there aren’t enough businesswomen at the top, and what Sallie Krawcheck’s doing about it

BY Sallie Krawcheck  August 5, 2014 at 2:23 PM EST
Sallie Krawcheck thinks women have been told to keep their heads down, but she hopes her relaunched women's network and mutual fund will help combat that tendency. Photo by Stuart Isett/Fortune Most Powerful Women via Flickr user Fortune Live Media.

Sallie Krawcheck thinks women have been told to keep their heads down, but she hopes her relaunched women’s network and new mutual fund will help combat that tendency. Photo by Stuart Isett/Fortune Most Powerful Women via Flickr user Fortune Live Media.

Editor’s Note: The financial institutions on Sallie Krawcheck’s resume read like a who’s who of Wall Street: Citigroup, Bank of America, Smith Barney, Merrill Lynch. She’s been near the top at all of them, climbing the ranks in an industry — that she’d be the first to admit — is full of white, middle-aged men. But three years ago, she left banking — not without taking another step toward diversifying the old boys club. She bought and relaunched a women’s network of Goldman Sachs alumni.

Listening to women in the group, she realized that they wanted not just to mentor and network with other women, but to invest in them. From there, she started a stock mutual fund that invests only in companies that promote women. That’s the subject of Paul Solman’s Making Sen$e segment on Tuesday’s NewsHour.

Much has been made of the so-called Queen Bee syndrome — the idea that high-powered women don’t want to mentor the younger women following them up the ladder for fear of competition. Hillary Clinton and Sheryl Sandberg, Krawcheck said, have helped to change that mentality, and she hopes her network will do the same. But with women holding less than 15 percent of executive slots at Fortune 500 companies, they remain woefully underrepresented in the upper echelons of American business, especially considering that women earn almost half of all advanced business degrees.

Returning to her South Carolinian roots, Krawcheck explains how the narratives spun in princess fairy tales sent a message to girls to keep their heads down and tells Paul Solman what kind of hard work — and luck — it took for her to raise a family and herself up the ranks of some of America’s top companies. The text of Krawcheck’s extended conversation with Paul below has been edited and condensed for clarity and length. Watch the segment from the NewsHour below.

Simone Pathe, Making Sen$e Editor


Paul Solman: So what’s the network about?

Sallie Krawcheck: About a year ago, I bought a recently named professional womens’ network. It was the old 85 Broads – cheeky name, great name for many years…

Paul Solman: But it’s because it was on Broad Street and Goldman Sachs…

Sallie Krawcheck: It was an informal Goldman Sachs female alumni network that started – you gotta love it, [with] eight women having dinner who had recently left Goldman and [wanted to] get back together again. Today, we’ve renamed it Ellevate — E-L-L-E-V-A-T-E (with a play on the French “she”). It’s 34,000 women strong; it’s across industries and around the world.

And the reason I became interested in it is the same theme [as the mutual fund]. Which is greater diversity drives better business results. And as I thought about how we could be helpful to the women themselves, networking has been called the number one unwritten rule of success in business. It’s not the schmoozing, go play golf, go drink a beer – though there’s something to be said for that – but instead the network of connections that one has that can drive information back to one that can enable one to be successful in business. So, as a result of that, as a means to try to have an impact on the women themselves, I bought the network and we’ve been investing quite a bit back into it to help women be more successful.

And after buying the network and engaging with the women, the majority of them told us that not only did they like the idea of investing in themselves and getting education for themselves and networking for themselves, but they actually want to invest in other women. That they want to put their dollars to work to help other women to succeed. And that was the genesis of the fund, or really the idea of the fund from my perspective.

“What you’re hearing from women is the pie can grow; this can be good for the economy; it can be good for individual companies; it can be good for ourselves.”

Paul Solman: They want to do it because of solidarity, or they want to do it because they think women will be better managers?

Sallie Krawcheck: Yes, yes, yes, everything. Emerging investors want to invest differently. They want to have their dollars — their investment dollars — do double duty. So this is a topic that these women say is important to them personally. Probably not surprisingly, they’re women in business. But it’s good for the economy overall. So we listened to these women, and we’re investing a portion of the Ellevate network revenues into the fund, thereby enabling the women to — in an indirect way — also invest in women. But they’re also putting their time into mentoring other women, to sharing their expertise.

The Queen Bee Syndrome

Sallie Krawcheck I was thinking the other day about the old Queen Bee syndrome — the idea, for so many years, that if a woman was successful, she wasn’t helping other women. And I think one of the sea changes here that we’re seeing driven by the attention Hillary Clinton has brought to the issue, driven by the attention Sheryl Sandberg has brought to the issue, driven by the attention Anne-Marie Slaughter has given to the issue, is there’s a national — if not global — conversation about this. And what you’re hearing from women is the pie can grow; this can be good for the economy; it can be good for individual companies; it can be good for ourselves. It’s not the choice of this one gets to make it, this one gets to be successful, and others don’t. But in fact, as we work together and pool our resources, there’s room for everyone to be successful.

What About the Men?

Paul Solman: Aren’t you at all concerned that since there are more women than men now in America’s colleges and universities that the last thing we’ve got to worry about looking ahead is the empowerment of women; It’s men who are in trouble?

Sallie Krawcheck: Woo, wow, are we really having this conversation?! First of all, I’d say, I prefer the word “engagement.” Instead of empowerment, it’s enabling women to engage in business. You know, what you’re making is implicitly the pipeline argument: if you have enough women at the beginning of the pipeline, you’ll have enough women at the end of the pipeline.

“When I started on Wall Street, there was pretty good diversity in those junior ranks. And you know what? It hasn’t made it to the top.”

I remember that argument in 1987 when I graduated from college. When I started on Wall Street, there was pretty good diversity in those junior ranks. And you know what? It hasn’t made it to the top.

Something happens in the middle when women are in their 30s, and we can start with an array of things that happen, whether it is — you hope this doesn’t exist any longer — but overt discrimination; whether it’s subtle gender discrimination, which absolutely does exist among men and women; whether it’s the fact that it gets hard to juggle at that point children, housework, etc. But people still have to go home and cook the dinner and clean the dishes and get the beds made and so on. And so, for a whole bunch of reasons, women tend to fall out in their 30s still today.

And somehow, in our corporate culture, because someone may have to take some flexibility because of family issues, somehow we continue to believe they aren’t fully dedicated. Instead of embracing the fact, “Geez, look at what this person is accomplishing in the course of a day!”; This is someone who, male or female, after they get through some of these very intense home years, is going to be an outstanding executive. Somehow, today, many of the cultures still sort of give a negative for that. If this were easy, this would be easy. If it were just about intelligence or effort, you know, we would have much more diverse teams. But globally, we’re still at 11 percent gender diversity [of corporate boards and senior management] despite the fact that the pipeline has been robust for as long as I’ve been in business.

How Did Krawcheck Strike the Balance?

Paul Solman: Well, you made it into an extremely high level of corporate America. So what was different about you?

Sallie Krawcheck: You know, there was a lot of hard work, and I don’t want to take anything away from that, because I worked my tail off…

Paul Solman:How long of days did you work?

Sallie Krawcheck: Well, who knows, because there was this constant juggling. I can tell you that I sat in that kitchen on more Saturday nights after my children were asleep than I can count getting work done so that I could switch and have time with them at “Mommy and Me Singalong” on Friday afternoons. So there was an enormous amount of hard work.

What’s Luck Got To Do With It?

Sallie Krawcheck: But there was also a ton of luck as well. I had great bosses. I got my first big promotion when I was eight months pregnant. I looked 17 months pregnant, but I was eight months pregnant. So I had very good bosses, very good companies for which I worked. I worked in industries where the results really mattered; it wasn’t the perception of results, it was just the facts.

Paul Solman: This was financial services?

Sallie Krawcheck: This was financial services as a research analyst where the clients would vote for your research or not, and there wasn’t one of them who cared whether it was done on a Saturday night at the kitchen table as opposed to a Thursday afternoon.

Paul Solman: Or whether you were pregnant.

Sallie Krawcheck: Or whether I was pregnant. But I will tell you what came to me loud and clear: I was lucky. My children didn’t have health issues, didn’t have big school problems, etc. And as I watched some of my peers go through this, you can see how quickly a family can get derailed when they are not lucky.

Women and Results

Paul Solman: But if results drive promotion in financial services, then how come there aren’t more women?

Sallie Krawcheck: No, no, no, no. I’ve seen the opposite occur. I remember in one job when I had a super intelligent, super nice, super wonderful gentlemen come to me and say that we had to winnow down the number of senior managers. And he came to me and he went through each of them. We started with a group this big, with X percent of females, and we went to a group that big, that had less than X percent females. And I remember sitting there, and he went through all the reasons. This guy really turned this business around; this guy had a really tough area; this guy walked on water. And at the end of it, by the way, he said, “I know there’s not as many women as we’d like, but the results are the results.”

And I said, “Super. Do me a favor: let’s go back — we have weekly performance sheets with the numbers on them.” I said, “I want you to bring those to me, and I want to sit down and go through them together. And how all these all fall out with their rankings on the statistics, versus your view of their ranking.” He came back a few days later, unbelievably sheepish. He said, “I can’t believe it, but my perception did not match up with the numbers. And in fact, I’m now changing my recommendation so that we’ve got a more balanced mix, based on the results and numbers.”

So what I would say, while businesses can think they’re being driven by the best decision, it can often be that we have these subtle views — who bragged the most eloquently, who presented themselves the best, who made the best case? And sometimes, those are people who have the best results, and sometimes they’re not.

The Power of Fairy Tales

Paul Solman: More often than not compared to women, it’s men who do that.

Sallie Krawcheck: Well, I would say my experience is the gentlemen tend to ask for more…

Paul Solman: More aggressive and more self-assertive…

Sallie Krawcheck: And the women, and I think because they gave us those fairy tale books when we were children – the Cinderellas and the Sleeping Beauties and the Snow Whites — you know, “Do your work, keep your head down, good things will come.”

Paul Solman: Do you really think that’s the reason?

Sallie Krawcheck: I don’t know what the reason is. It’s a hypothesis.

Paul Solman: It could be something innate, right?

Sallie Krawcheck: Well, look, I think it could be innate or socialization as well…

Paul Solman: Or presumably some of both, right?

“I do remember ‘Sleeping Beauty.’ I got the message loud and clear.”

Sallie Krawcheck: That’s the hypothesis. I can tell you that my experience has been that the gentlemen are more likely to come and ask for the order, ask for the raise, ask for the promotion, and that the women are less likely to do so.

Paul Solman: And you think that’s because they’re more likely to read the fairy tales and say, oh, Prince Charming took a lot of initiative…

Sallie Krawcheck: I know that happened to me. I do remember “Sleeping Beauty”; I got the message loud and clear.

Paul Solman: Really?

Sallie Krawcheck: Absolutely. Well, I grew up in Charleston, South Carolina some years ago. And there was definitely the [idea that] what is right for a young man may not be ladylike for a young lady. And I don’t think we can put that aside. And in fact, Sheryl Sandberg lays out in her book “Lean In” that women, if they ask too aggressively, can be viewed as unattractive and not get what they’re asking for. So there remains a fine line. Which again gets back to the research, or what I call the recovering research analyst in me – what are the numbers, what’s the performance, what does it say — to really shine a little bit of sunlight on the issue.

Do Women Favor Women?

Paul Solman: But if men subconsciously favor men because we have the same style, we have gender solidarity, isn’t there a danger that women would be doing the same?

Sallie Krawcheck: Oh totally! I totally favor women! Absolutely, I tell people all the time: when I have a tough job to do, I intuitively think to myself, who can do this job? Probably a southern, middle aged, financial services blonde woman! I do it all the time! I can’t help it! She is going to get this done, I’m telling you! Because I can picture in my mind exactly what she’s going to do. I have confidence in her. We all do it.

Paul Solman: You’re being lighthearted about it, but …

Sallie Krawcheck: But that’s why, if we’re looking for good performance, what we need as managers — what I used to say to myself was: be very aware not to put what I thought was the best person in the job. I think those can be dangerous words in business. And hard to argue with. “I just want to put the best person in the job, right.” Oh, oh – I’m not going to argue against that (laughter), because then I’d be hurting his mom, and apple pie, and the American flag. I mean, the best person in the job, that’s capitalism! What I used to say to myself is, I want to put the best team in place.

Are Women Better Team Players?

Paul Solman: But are women more effective in teams than men?

Sallie Krawcheck: Women tend to collaborate, in my experience, more easily than gentlemen do. And again, I know you’re trying to push me, and I don’t want to lose the point – it’s the mixture of things, again, whether it’s gender, or whether it’s that you’re the skeptic and I’m the optimist. And you’re the one with the marketing experience, and I’m the one with the science background. And you’re the guy that’s been at the company for 20 years, and I’m the gal who came in from the outside.

So for me, when I put together teams, it was all that kind of diversity. You have six math Ph.D. Caucasian gentlemen from the Northeast of the country, great. You put one more in the mix, you haven’t added much. It’s only when you add something different that you really are able to accomplish more.