Closing The Gap

As Indra Nooyi steps down, companies must support a dwindling pipeline of women leaders

On Monday, PepsiCo announced that CEO Indra Nooyi will step down in October. Nooyi, who has led the company for 12 years, will be replaced by current president Ramon Laguarta.

Her departure comes at a time when women make up just 4.8 percent of Fortune 500 CEOs, and just 25 women hold the CEO spot at S&P 500 companies, according to research group Catalyst. When Nooyi officially steps down, that number will decrease to 24 until Kathryn Warden steps into her role as the CEO of Northrop Grumman in January 2019.

Her exit also comes on the heels of several other departures by female CEOs, including Campbell Soup CEO Denise Morrison, Hewlett Packard CEO Meg Whitman and Mondelez CEO Irene Rosenfeld.

Lisa Mann, CEO and founder of Think Marketing, tells CNBC's "Power Lunch" that Nooyi's departure speaks volumes about the growing concern around corporate America's ability to keep female leaders.

"Companies should be embracing their VPs and SVPs who are women and nurturing them to be leaders in business," says Mann, who once worked at PepsiCo under Nooyi's leadership. She emphasizes that 80 percent of consumer purchasing power is held by women.

Nooyi, who joined PepsiCo in 1994 as head of strategy, has been open about her belief that companies need to do a better job of diversifying their leadership by hiring more women and people of color. But she points out that the drop-off in women leaders is not only attributed to the professional pain points women experience throughout a career, but the personal ones as well.

"We get a lot of women in at the entry-level positions. As you get to middle management, women rise to those positions, and then that's the childbearing years," she told the Freakonomics radio show in February. "And when they have children, it's difficult to balance having children, your career, your marriage, and be a high-potential out-performer who's going to grow in the company."

Indra Nooyi
David A. Grogan | CNBC
Indra Nooyi

CNBC contributor Suzy Welch praises Nooyi for her transparency about the challenges women leaders face and says the demands women must juggle in their personal lives could be a key reason why more women are leaving corporate America and starting their own companies.

Currently, more than 11.6 million companies are owned by women in the United States, according to the National Association of Women Business Owners.

"What is happening now is there is an off-ramp of women who want to be in business and have more control and run their own thing," Welch says on CNBC's "Power Lunch."

She says many women feel that "if you're going to have pain, then you might as well control it more, and you can do that as an entrepreneur."

As a result, Welch says, the pipeline for women in executive positions continues to dwindle and the lack of representation is hurting businesses even more.

"I was recently talking to the CEO of a large energy company, and he said, 'I can't recruit any women to high-level positions in my company,'" Welch says. The reason for that, he told her, is that a lot of women look at him and say, "There are no women on your board."

Both Welch and Mann agree that to fix this problem companies need to create more welcoming workplaces that support women as they climb the corporate ladder and become mothers, wives and leaders.

"A lot of women, as Suzy said, are finding opportunities for wealth creation elsewhere and making the decision that, you know what, the pain points are too big in corporate America and I want them to address them first," says Mann.

Nooyi, who will remain chairman of PepsiCo until 2019, says she's leaving her position at a time where she still feels young enough to pursue other opportunities, a source familiar with her departure told The Wall Street Journal.

In a series of tweets about her exit, the 62-year-old thanked her staff and said she'd never anticipated becoming CEO of such a large company.

"Growing up in India, I never imagined I'd have the opportunity to lead an extraordinary company like PepsiCo," she said. "Leading this company has been the honor of my lifetime. We've made more meaningful impact in people's lives than I ever dreamed possible."

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