Leadership Selection: Can Changing the Default Break the Glass Ceiling?
Gender leadership gaps could be reduced by giving women the choice to opt out of rather than opt into a leadership role.
Gender gaps in leadership persist across sectors, even when individuals know they are the top performers. Research shows that women make up 44.3% of the labor force in S&P 500 companies, but only 25.1% of executive and senior management ranks. Similar gender gaps exist in political representation and academia. Academic research does not suggest that interventions like diversity programs aimed at encouraging women’s participation in leadership result in significant progress. More heavy-handed interventions, such as quotas for women, also show mixed evidence of impact and are less supported by organizations. It thus remains a challenge to promote women to leadership positions.
This study examines whether changing the default in the leadership selection process from an opt-in to an opt-out mechanism is effective in closing gender leadership gaps. Leadership selection is largely determined by an opt-in mechanism, where potential candidates must actively choose to indicate their interest in a leadership position. This opt-in mechanism relies on the default that individuals are not in the leadership selection process unless they put their hands up to show their interest in the position. This research proposes an alternative process for leadership selection, the opt-out mechanism, in which all qualified individuals are considered for the leadership position unless an individual withdraws their candidature. The opt-out mechanism works by changing the default, or by providing a nudge to encourage a more diverse pool of applicants for leadership positions.
The authors hypothesize that the opt-out mechanism will encourage women’s participation and mitigate the gender leadership gap, suggesting that the prevalence of the opt-in mechanism may contribute to the existing gender gap in leadership roles in organizations.
Researchers find that the Opt‐out mechanism of leadership selection leads to higher participation rates and promotes gender equality in leadership selection without sacrificing the effectiveness of leadership. Across four studies, they show that when the selection process is competitive or when the leader bears a significant level of financial responsibility, the Opt-out mechanism increases women’s participation in the selection pool and reduces gender gaps in leadership selection.
With the Opt-in mechanism, men are significantly more likely to participate in a competitive leadership selection process than women. The Opt-out mechanism leads to higher participations rates and promotes gender equality in leadership selection without sacrificing the effectiveness of leadership.
When leaders are not selected through a competitive process, the Opt-in mechanism does not create gender gaps in leadership participation. However, the Opt-out mechanism still significantly increases the participation rate for both men and women as compared with the Opt-in mechanism.
Attitudes towards the Opt-out mechanism are evaluated. The Opt-out mechanism is not perceived as inferior to the Opt-in mechanism either by those concerned with fairness or by those attempting to maximize their chances of being selected as leaders. It instead is viewed as an option for ensuring quality leadership.
A different leadership environment focusing on leaders assuming a significant level of responsibility (vs. the more conventional leadership role of providing advice) is tested, and the Opt-out mechanism is shown to improve the likelihood of women’s participation in leadership selection in this context also.
In summary, the authors recommend the use of the Opt-out mechanism to promote equal participation in the leadership selection process, particularly in leadership searches focusing only on internal candidates. They suggest that an institutional change in how leaders are selected can increase the number of women considered for leadership positions, promote diversity in leadership, and positively impact organizational performance.
The authors conducted experiments with more than 1000 participants to study the role of traditional leadership selection processes in leadership gender gaps that exist across organizations. In addition to comparing the Opt-Out and the Opt-in mechanism, they also sought to understand how the leadership gender gap is dependent on incentive structures like monetary incentives, personal satisfaction, altruism, and appetite for competition. The experiments were conducted with mainly students, at the Experimental Economics Laboratory at the University of Melbourne. Participants earned on average $38, including a show‐up fee of $10
Study 1 consisted of two experiments. Experiment I studied performance levels by assigning and assessing two real-effort tasks: a slider task and an encryption task. Experiment I also asked participants to report their perception of how they performed to collect data on competence beliefs and understand the correlation between these beliefs and decisions to participate.
Experiment II consisted of completing one real-effort task in six treatments in a 2x3 design and in two stages to assess the differences that arise from Opt-In and Opt-Out mechanisms in leadership participation. Stage 1, the leadership selection stage, randomly divided participants into groups of 4 under Opt-in and Opt-out mechanisms, with an even gender split across treatments. In Opt-In, members had to express interest to be considered for leadership. In Opt-Out, all subjects were in the competition by default and could express the desire to not be considered. In both mechanisms, the leader was selected based on performance results of Experiment I.
In Stage 2 of Experiment II, participants were monetarily incentivized to complete tasks beyond the minimum of 20. Each member suggested the number of additional tasks group members should complete, should they become the group leader. Once selected as leader, this non-binding suggestion was passed on to each member, akin to real world situations where leaders make suggestions and community members choose to follow. Under both the Opt-In and Opt-Out mechanisms, three leadership incentive structures were designed. These incentive structures vary based on who receives the profits generated by the additional tasks the group members complete. In structure N (No Monetary Incentives), profits generated were transferred to charity. In structure S (Shared Monetary Incentives), profits generated were shared amongst group members. Finally, in structure L (Leader Monetary Incentives), profits generated were accrued by the leader alone.
Study 2 studied the effect of differing competition appetite of men and women on the gender leadership gap under Structure N. Instead of relying on performance, the leader was chosen at random from the subjects who chose to participate under Opt-in and Opt-out mechanisms.
Study 3 allowed the participants to choose between the Opt-in and Opt-out mechanism and participants were asked to explain their considerations of the leadership selection mechanisms.
Study 4 considered a different leadership environment, where the leader’s role is to make decisions for the group by choosing how to allocate the group assets between a risky and a riskless option. Participants decided whether to take the leadership position under Opt-in and Opt-out mechanisms.