Reflecting on the RBA’s unsurprising and monumental choice to navigate turbulent times

You might have seen in the news lately that the Reserve Bank Governor, Philip Lowe, is set to be replaced by his deputy, Michele Bullock, notably, the first woman to hold this position. 

This is an impressive first by an impressive woman with extensive experience and well deserving of the role. It’s also a milestone achievement when it comes to appointing women into leadership roles with national significance. In many ways it’s your typical ‘glass ceiling smashed’ type moment.

However, given the extensive battering that the Reserve Bank has coped over interest rates rises over the past twelve months, and the complex situation faced by the Bank going forward,  we wonder if Bullock’s smashing of a glass ceiling could see her soon being pummelled by the glass cliff. 

What’s the Glass Cliff all about?

You have probably heard of the Glass Ceiling, where women fail to be promoted to positions of leadership, but there is a lesser known phenomenon called the Glass Cliff. The Glass Cliff is used to describe a situation where women are appointed in times of crisis or turbulence – often effectively set up to fail. 

Here’s some recent examples: PWC appointing Kristin Stubbins as acting CEO following the recent conflict of interest scandal; Elon Musk appointing Linda Yaccarinointo the impossible job of Twitter CEO; and even Theresa May being appointed as the Brexit PM. 

It’s not that these women aren’t qualified, it’s just problematic that their moment of opportunity came in the midst of a crisis. So why does this happen?

Typically in times of crisis, the qualities that people prioritise are traditionally seen as ‘feminine’ such as being a steady hand, being risk averse, and being a calming presence. This can lead to women with these qualities being identified as the most attractive option. 

Secondly, boards want to ensure that they keep star performers, who are typically identified as white men. Knowing that the next person to take the leadership reins will go through significant stress trying to turn the organisation around, boards often look to people they are more willing to sacrifice. 

Finally, women are traditionally offered leadership positions less frequently than men, so while a man may see the opportunity and decline it as they know another chance at leadership will come around, often women will accept the role in the belief that it may be one of their only chances at promotion to an executive position. 

You might be reading this like ‘well more women in positions of power, that can’t be a bad thing right?’ but the catch-22 is on the outcome. 

If the woman manages to turn the situation around and stabilise the organisation, she is often then replaced with a man, as the qualities that people then look for are traditionally ‘masculine’ such as taking bold bets, or being daring, strategic, or challenging the status quo. 

If the woman doesn’t manage to fix the situation, usually because the organisation was already going downhill, or there wasn’t sufficient internal and external support for the changes that needed to be made, then it serves as further ‘evidence’ that women aren’t strong leaders, and shouldn’t be as trusted as men in positions of power.  

Even worse, is that the company then looks progressive for appointing a woman to a leadership role, so they can then continue to appoint men at their discretion. 

It’s also worth noting that the glass cliff also applies to other minority groups, such as people of colour. 

So what’s the link to the RBA? 

The RBA has been under fire for their role in the ongoing cost of living crisis after 12 interest rate hikes since May 2022. One of the RBA’s roles is to curb inflation and one of their only tools available is setting the cash rate which flows on to the interest rates that everyday people are 

forced to pay through their house mortgages and small business borrowings.

In the June Mood of the Nation survey, 46% of Australians said they are having some difficulty making ends meet or are having a lot of difficulty paying bills and covering basic expenses (up 7% since the last survey). A lot of this pain has been blamed on the RBA and the continued rate hikes, with the highest concerns in the survey being cost of living (69%), housing affordability (32%) and interest rates (23%).

Over the past year, Lowe has effectively become a household name, and a very public face of the cost of living crisis. The challenge facing Bullock as Lowe’s predecessor is considerable: continue lifting rates and risk increasing rates of unemployment and being the the face of deeply unpopular policy, or take an alternative course of action and risk being labelled weak and blamed if inflation continues to increase. 

Bullock’s appointment isn’t necessarily your typical glass cliff case, Treasurer Jim Chalmers has released figures showing 70 per cent of appointments in the Treasury portfolio went to women during Labor’s first six months in office meaning women now hold more than 50 per cent of all government-appointed roles in Australia’s key economic and financial system institutions for the first time.

We have no doubt that Bullock has the skills and experience needed to lead the RBA at this challenging time. We just hope that she isn’t the next high-profile victim of the Glass Cliff.

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