Female CEOs Face 'Greater Penalties' Than Male CEOs for Ethical Transgressions

Widely-held gender stereotypes mean people tend to judge a company more harshly for ethical blunders if the CEO is female, say researchers writing in the Journal of Personality and Social Psychology.

"Women incur greater penalties for ethical transgressions because of persistent gender stereotypes that tend to categorize women as having more communal traits than men, such as being more likable, sensitive and supportive of other," lead author Nicole Votolato Montgomery of the University of Virginia said in a statement.

"Even in leadership settings, women are still expected to be more communal than their male counterparts."

Montgomery and co-authors came to this conclusion following three experiments designed to measure how the gender of the CEO influences people's perception of the company following a product flaw or ethical failure.

In the first, volunteers were presented with one of three scenarios and asked how likely they were to buy a car from the auto-company described as well as their trust in the organization.

Roughly a third of the 512 volunteers read a business news article about a manufacturer that had committed an ethical failure—the company had been made aware of a problem with the fuel sensor but chose not to take immediate action. Another third read about a manufacturer that had committed a competence failure—the company was unaware of the problem. The remaining third (the control) read only a company description.

The responses relating to the ethical failure were harsher when directed towards an organization led by a female CEO as opposed to a male CEO, with volunteers expressing a greater reluctance to purchasing the company's product—female-led organizations achieved a purchase intent score of 2.36 out of a possible 5, whereas male-led organizations achieved 3.24.

The reverse was true when the failure was a competency issue—3.66 for female-led versus 2.96 for male-led. While there was no significant variation in responses among the volunteers who only saw a description.

The second study, involving 416 volunteers, was a repeat of the first, but included descriptions of the CEO that either emphasized traits that are stereotypically feminine ("helpful, sensitive to the needs of employees and customers, and able to listen carefully to customers' concerns") or stereotypically masculine ("skilled, strongly independent, able to work well under pressure").

Respondents were also invited to describe their attitudes towards the brand, the CEO's effectiveness, their reaction to the company's online advertisements and whether or not they would recommend the organization.

"When leaders are described in ways that reinforce stereotypes, we continue to find that people penalize female-led organizations more for ethical failures, but we can reduce these penalties for female-led organizations by highlighting agentic traits of their leaders," co-author Amanda P. Cowen, an associate professor of commerce at the University of Virginia said in a statement.

In the third and final experiment, the task was repeated but the company in question traded in a more stereotypically female market—child's products as opposed to cars. The responses suggest people are, again, more likely to judge a company led by a female CEO more harshly in response to ethical failures, but they were also more likely to judge them harsher than their male-led counterparts for competency failures.

"In the auto industry, which is typically viewed as more male, participants penalized female-led organizations less than male-led organizations for competence failures," Cowen explained. "However, the opposite was true for a child products company."

These results support previous studies that show women tend to face greater penalties for ethical failing, even when they hold the same title and position as their male colleagues.

In the real world, it could be seen in polls conducted during the 2016 presidential campaign. Some (such as this covered by The Washington Post) show Donald Trump was deemed more trustworthy than political opponent Hillary Clinton—even though he made more misstatements and had been awarded Politifact's Lie of the Year only the previous year.

Montgomery and Cowen say this research is important as CEOs are increasingly the ones to represent their companies during crises, as was the case for Starbucks' CEO Kevin Johnson's response to the arrest of two black men at a Philadelphia store.

"Our research suggests that when ethical failures occur, female leaders may aid their organizations' recovery efforts by exhibiting agentic traits that are more consistent with male stereotypes," said Montgomery.