You have a better chance of being a CEO in Australia if you were born in USA, UK or Canada

Researcher
Professor Nick Parr
Writer
Fran Molloy
Date
10 January 2019
Faculty
Faculty of Business and Economics
Topic

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A study of census data shows the Australian-born are less likely to reach the top of companies than people born overseas.

Could your place of birth affect your chance of making it to the top of the corporate ladder? What about your ancestry – or the language you speak at home?

All of these factors influence whether you head a business in Australia, according to a comprehensive study by Macquarie researchers into the demographic backgrounds of business leaders across Australia, published in the Asia Pacific Journal of Human Resources.

Professor Nick Parr and PhD student Sheruni De Alwis from Macquarie’s Faculty of Business and Economics used 2011 Census data to examine the birthplaces, languages, ancestries, gender, age profiles and religions for people holding the job title of chief executive officer (CEO) or managing director (MD).

The researchers then looked at how often each of these characteristics applied to senior executives, compared to the wider Australian workforce.

Some English-speaking migrant groups were more highly represented amongst CEOs and MDs than were the Australia-born, relative to numbers of employed as a whole.

They found some fascinating patterns which prove that Australia’s highly diverse workforce isn’t reflected in its upper ranks, where senior executives play a huge role in an organisation’s culture. In turn, their cultural, linguistic and religious backgrounds will influence their leadership style, managerial culture and how they interact with their subordinates.

There were nearly 50,000 CEOs or MDs in the Australian data, most aged between the ages of 40 and 60, and only 19.3 per cent of these were female.

The analysis showed that people are more likely to rise to the top in Australia if they were born in an English-speaking country, such as Canada, England, South Africa or the USA, Parr says – beating even the locals.

“Some English-speaking migrant groups were more highly represented amongst CEOs and MDs than were the Australia-born, relative to numbers of employed as a whole,” Parr says.

“We also found that migrants from countries with known high levels of proficiency in English – like Germany and Holland – were relatively highly represented among CEOs and MDs."

That suggests that English proficiency could be an important factor in making it to senior executive level, he says.

“Conversely, ratios of CEOs and MDs compared to non-executives were very low for those born in the Philippines, Vietnam, India and China.”

Studies in other Western countries found an under-representation of ethnic minorities in senior executive roles, with people from these groups less likely to be promoted into management positions and with higher exit rates than those from majority groups.

Suggested causes include conscious and unconscious discrimination in appointment and promotion decisions by the dominant white male group against people of other racial backgrounds, the researchers say.

Migration: Professor Nick Parr from the Department of Management and Centre for Workforce Futures says skilled migration programs could partly explain patterns in where CEOs come from.

South Korean migrants and Japanese speakers exceptions to rule

In Australia, while most migrants from Asian countries had low rates of representation among CEOs and MDs, those born in South Korea and those who speak Japanese were exceptions.

Professor Parr says one explanation could be the business investment component within Australia’s skilled migration program which allows business people with money to invest to migrate to Australia and set up businesses which employ Australian residents.

“Migration patterns under that scheme were initially skewed towards people from Korea and Japan, but more recently it has predominantly consisted of migrants from China,” Parr says.

“Another factor that may play a role is the controlling interests in Australian companies of certain American and Japanese multinationals.

“This could be an explanation for the high rates of Japanese speakers, and migrants from the USA, relative to share of workforce, among CEOs and MDs.”

Upward mobility for second-generation Lebanese and Greek Australians

The research revealed that people with Lebanese ancestry and people with Greek ancestry were more highly represented among CEOs and MDs than in the national workforce - a strong contrast to first-generation groups who were under-represented in senior ranks, Parr says, showing that these groups had overcome a history of labour market disadvantage.

Many migrants from southern Europe in the 1950s and 1960s were employed in manufacturing, which is a sector in which CEOs and MDs with these ancestries are concentrated.

There were high unemployment rates among these groups in the 1980s, Parr says, adding that the prevalence of second-generation Lebanese and Greek Australians in senior executive roles represents an aspect of upward mobility.

Historic employment patterns of migrant groups can give further insights into today’s patterns.

“Many migrants from southern Europe in the 1950s and 1960s were employed in manufacturing, which is a sector in which CEOs and MDs with these ancestries are concentrated.”

What can we learn from this research?

Parr says the study adds detail to the picture of Australian senior executives, and could help guide further research.

“These findings may help other scholars to better understand patterns of leadership style and organisational culture that we have in Australia,” he says.

“It is possible that cultural priorities, hidden ‘ceilings’ or unconscious or covert discrimination against people from certain backgrounds lie behind some of the statistics.

“That’s just speculation, we can’t say for certain it is the case."

Nick Parr is Professor, Department of Management, Centre for Workforce Futures.

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