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Scaling The Glass Cliff

Josette Thompson  Follow

glass_wall A few days ago it was announced that Marvin Ellison, formerly of Home Depot, will be taking the reigns as CEO of struggling retailer JCPenney. The announcement was met with strong reception driving up the company's stock prices. Ellison is credited for being a driving force behind Home Depot's comeback after the housing crisis and the market is hoping he can engineer a repeat performance for the department store. Alongside reports of Ellison's success was also mention of the fact that he is the first African American CEO JCPenney has had in its 112-year history, and is now the seventh(!) black CEO in the country.

As a woman of color that is in a senior position at my organization, it is inspiring to see that Ellison's performance and leadership qualities were heavily touted within coverage of his appointment. Ellison is clearly qualified for the job and has a proven track record of success. As I read further I came across an interesting article on that discussed a study examining women or people of color in corporate leadership positions. The author shared that, "women and people of color are more likely to be promoted to the top of struggling companies, a phenomenon that has been dubbed the 'glass cliff'." No matter what previous performance period researchers looked at, return on equity was significantly negative before a woman and/or a person of color became CEO at a Fortune 500 company between 1996 and 2010, even with a variety of factors that could have an impact taken into account."

The study goes on to say that part of the reason for this is that when a company is seeing tough times it is more willing to shake things up and try a different strategy, "for example, they may want to bring in women because women are assumed to be sensitive and cooperative, which may be more valuable in tough times. Men of color are also thought to be more warm and relational."

Other studies show that diversity (and not just ethnic diversity) leads to innovation, and looking to people with different experiences and skill sets is a smart strategy when seeking to achieve objectives in good or bad times. Though with many companies seeking to diversify their workforce and particularly at the senior ranks, I'm sure there are sometimes very deliberate decisions to place a person of color in a leadership position. In JCPenney's case, I hope the decision to bring on Ellison was based primarily on his qualifications. Either way, he wouldn't have been considered for the job if he didn't have the skills to do it. It will be interesting to see how Ellison navigates his new role, the changes he implements and if he can put the retailer back on track. And whether or not he is successful, it won't be because of his skin color. End of Story

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