Why Capable Women are Leaving Organizations and What to Do about It (Part I)

They call it the “Great Breakup” in the report on “Women in the Workplace” (2022) by LeanIn.Org and McKinsey & Company, the largest study to date on the state of women in corporate America. According to this report, women leaders are switching jobs at the highest rate we have seen until now – and at a higher rate than men in leadership. To put the scale into perspective, “for every woman at the director level who gets promoted to the next level, two women directors are choosing to leave their company.”

Should organizations be worried? The short answer is yes, not only because they risk losing their current women leaders but the next generation of women leaders too. Women are still dramatically underrepresented in leadership, while they are becoming more ambitious, demanding more from companies, and are leaving their organizations at unprecedented rates to meet their demands.

Responding to this “Great Breakup,” what can companies do to attract and retain their female leadership and talent? In order to answer this question, we must first take a closer look at why many capable women are stepping away from their companies and positions of leadership.

In this week’s blog, we will first examine three reasons why, then in Part 2, we will discuss what organizations and their leaders can do.

Why Capable Women are “Breaking Up” with their Companies

1. Women are more educated and ambitious.

In both Canada and the US, women have overtaken men in the university-educated labour force. Women now outnumber men in pursuing university degrees (56.4%) according to Statistics Canada (2022), while data from the Pew Research Center (2022) reveals how women account for more than half (50.7%) of the US labour force with a bachelor’s degree or more education. 

Women are also just as ambitious as men in aspiring for senior and executive leadership roles and are actively switching companies for opportunities for career advancement. According to the McKinsey and LeanIn.org report (2022), nearly half (48%) of women leaders indicated that their reasons for switching jobs in the last two years include the opportunity to advance their careers. 

The report further shows that young women are even more ambitious today and care deeply about career advancement – more than two-thirds of women under 30 responded that they want to become senior leaders.

2. However, the “broken rung” is still broken.

At the same time, women still face persisting and disproportionate barriers to equal pay and treatment at work. 

In 2019, McKinsey and LeanIn published an earlier version of their insights on “Women in the Workplace” after 5 years of research with nearly 600 companies. In this report, they coined the expression the “broken rung” to highlight that it’s not all about the “glass ceiling” that prevents women from reaching senior leadership positions, but that the biggest obstacle that women face is actually much earlier – at the first step up to manager. 

The data revealed that for every 100 men promoted and hired as managers, only 72 women were promoted and hired, and much less for women of colour (ex. 58 Black women and 68 Latina women). This research motivated a shift in perspective for organizations to not only focus on their senior levels for gender parity but to expand this rigour to fixing the “broken rung.” Unfortunately, for the 8th consecutive year since 2015, this “broken rung” still remains in 2023.

This problem of the “broken rung” is not only about representation but has financial consequences too. The gender pay gap, the difference in earnings between men and women, has barely narrowed in the past two decades, in sharp contrast to the progress made in the preceding two decades. 

According to the Pew Research Center (2023), whereas the pay gap closed from women earning just 65 cents to every dollar earned by men in 1982 to women making 80 cents to the dollar in 2002, in the last two decades, there was only a two-cent increase in the earnings of women for every dollar earned by men. Case in point: in 2022, American women typically made 82 cents for every dollar men earned.

There are several reasons why this gender gap still persists, one of them being the discrimination in hiring and promotion faced by men, evidenced by the “broken rung” phenomenon. Another critical factor is parenthood. Women between the ages of 25 and 44 with children are less likely to be in the workforce than their female counterparts without children and are also likely to work fewer hours each week, if employed. This “motherhood wage penalty” contrasts sharply to the “fatherhood wage premium,” as fathers are more likely to be in the workforce and to work more hours per week than men without children at home.

The recent report by McKinsey and LeanIn concurs that women at all levels are much more likely to be responsible for most or all of the family, housework, and caregiving responsibilities than men. At the entry-level, women are almost twice as likely as men to be responsible for household and caregiving work than men, and this gap nearly doubles among employees in leadership.

3. Women are demanding more from work and are not afraid to leave companies to satisfy their needs.

According to McKinsey and LeanIn, in 2021, women leaders left their companies at the highest rate in years, and the gap between women and men leaving was also the largest seen yet. As explanations for this “Great Breakup,” their report cited 3 key reasons. 

First, despite women’s aspirations to advance their careers, they are facing stronger headwinds than men in the form of microaggressions and discrimination at opportunities for a raise, promotion, and other ways to get ahead. The microaggressions experienced by women include their colleagues questioning their judgment or implying that they aren’t qualified for their jobs. The report also cited that 37% of women leaders have had a coworker get credit for their idea, in comparison to 27% of male leaders.

Second, while women leaders do more to support employee well-being and nurture DEI, their efforts are not formally rewarded and recognized by the companies they are leaving. Despite their work being critical to employee retention and satisfaction, due to the lack of formal recognition, women are stretched thinner than men in leadership while being passed over at opportunities for advancement. Unsurprisingly, this further leads to a higher likelihood of burnout for women leaders than men.

Finally, women leaders are demanding a better work culture that prioritizes employee flexibility and is committed to employee wellbeing and DEI. 49% of women leaders in the McKinsey and LeanIn’s study responded that flexibility is one of the top 3 things they consider when making decisions about joining or staying with a company. This contrasts significantly with 34% of men leaders. Women leaders are also more than 1.5 times as likely as men at their level to have left a previous job in order to work for a company that has a greater commitment to DEI.

This combination of reasons shows why capable women today are leaving organizations at the highest rates seen to date. 

While there is much to be celebrated – the increase in women’s education, the steady closing of the gender pay gap, and women’s demands for more flexibility and inclusion at work – there are still frustrating and persisting realities that deter women from growing and thriving as leaders.

How can companies avoid losing talented women in the midst of this “Great Breakup”? What can they do to retain their women leaders and attract the next generation of young women? We will explore the answers to these questions in the next blog post.

In the meantime, take the time to read the McKinsey and LeanIn reports from 2019 and 2022 fully. Reflect on the experiences of women in your organizations and actively engage in discussions to gather feedback from the women on your teams. 

If quality L&D is needed to better support the promotion of women at your organization, explore our signature learning experiences on Inclusive Leadership and Taking the Stage on our website.