When Janet Truncale was named as the next CEO of Ernst & Young LLP (EY) in November 2023, she made history by becoming the first woman to lead one of the firms the industry calls the Big Four — Deloitte, KPMG, PwC, and EY, the four largest professional services firms in the world by revenue. This major advancement contributes to an S&P Global Market Intelligence projection that, by 2030, half of corporate leadership will consist of women. 

Yet, major corporations in the finance and accounting sectors remain far from achieving gender parity and equal representation in the C-suite — a company’s senior executive positions. This underrepresentation has trickled down to entry-level and middle-management roles; the talent pipeline of woman employees continues to experience delayed progress. 

Record numbers of women leaders are exiting companies to pursue better opportunities, particularly to join organizations where professional development and diversity, equity, and inclusion (DEI) — three core values that organizations adopt to support diversity in the workplace — are prioritized through fair pay, performance review practices, and organized educational company events about sexism, racism, and homophobia issues.

The rising importance of DEI efforts within organizations is part of a post-pandemic effort to combat the workplace inequities faced by women and racialized employees, which were exacerbated by the COVID-19 lockdowns. The term “she-cession” is used to refer to the high unemployment rates all women, in comparison to white men, have seen in the financial services sector in the past three years — a major contributing factor to the persistent gender wage gap. 

A 2015 study conducted by Rotman’s Gender and the Economy Department affirms that senior decision-makers are influenced by gender stereotypes when determining compensation, and this has continued to be a major obstacle women face on the path to senior leadership positions. 

The glass ceiling is cracking, but the rung is still broken 

A common phrase used to describe the inequalities faced by women and minoritized workers in achieving promotions to executive and upper management roles is the ‘glass ceiling.’ We can see positive signs of overcoming its effects in some areas. More women getting hired at the level of directors of departments or divisions and above. Women in senior-level positions — such as CEO, president, or general manager — have a higher average promotion rate than men. 

Though these are stepping stones in the right direction, the glass ceiling is no longer the biggest obstacle women face on the path to the C-suite. The largest gap between the total number of women and men employees is at the manager level, acting as a broken rung on the ladder toward the glass ceiling. Once again, this underrepresentation has detrimental impacts on all levels of management.

This is the long-term impact of the broken rung: the low number of women in manager positions results in fewer women being promoted to senior manager, and the pattern continues with every subsequent level above that. The management consulting firm McKinsey & Company describes this broken rung as the foremost barrier preventing women from becoming managers and progressing beyond entry-level roles. Because of the broken rung, all women lose ground. If left unaddressed, it will only widen the gap in leadership and compensation between men and women.

Government and corporation efforts to advance gender equality

To narrow the gender pay gap, the Canadian government established the Pay Equity Act in 2021. It required all federally regulated employers with 10 or more employees to create pay equity committees, with institutions set to publish comprehensive pay equity plans and increase employee compensation starting September 3, 2024. 

According to Morningstar DBRS, the Act’s approval was — at least partially — influenced by the increased value investors and regulators have placed on gender diversity and pay equity practices after the pandemic. This has also led to the emergence of gender lens investing, an approach that can improve both financial and social returns for companies and investors. 

According to Rotman Professor Sarah Kaplan, investing with a gender lens is about addressing the implicit biases of men and women in the workplace, allocating capital to develop more “gender-positive, diversity-positive policies,” and creating products and services that benefit the women and girls impacted by gender inequality. 

Jackie VanderBrug, a managing director at Bank of America and the key researcher in introducing this approach to the industry, asserts that gender lens investing is not about excluding men or limiting investors; it allows investors to recognize the experiences and needs of both men and women. By using the approach to increase women’s access to capital and financial services, companies contribute to achieving gender equality while strengthening future business opportunities. However, this is only one element of the solution. 

In the end, it is up to the firms

Aside from gender lens investing, McKinsey & Company reports that creating employee resource groups with tailored content for women — plus resources specifically for women of colour — improves employer performance in strengthening DEI policy implementation. Also, introducing formal mentorship and sponsorship programs for women — and specific programs for women of colour — at all management levels can benefit the company alongside the individual by creating a stronger workforce and a better environment for all.

Fixing the broken rung and breaking the glass ceiling ultimately depends on companies’ commitment to the transparent recording and tracking of compensation inequities and gender representation. If companies use metrics and data to set gender parity targets, some might see their increased hiring of women as arbitrary or unfair. However, collecting data on things that drive women’s professional development in the workplace, such as hiring and promotion, could allow firms to create more equal opportunities for women that lead to their career advancement.