Wednesday, November 12, 2008
Bad Math: Why Women’s Progress in the Workplace Doesn’t Add Up
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The data is compelling: women are earning more than half of all graduate degrees in the U.S., entering the workforce in greater numbers, and creating quantifiable advantage for companies. And yet the number of women in leadership roles remains a small fraction of their male counterparts. Something doesn’t compute. So what’s missing from the equation?
Let’s start with some stats. As of 2007:
6.7% of Fortune 500 C-level executives were women
2.6% of Fortune 500 CEOs were women
14.7% of Fortune 500 Board Members were women.
By now most experts, analysts (and working women) agree that the traditional and dominant work model is a deterrent for women who want a successful career and family. The linear and narrow paths to the top just don’t work. Nearly 50 percent of all graduates recruited to the workforce are women but fewer than seven percent of women advance to C-level roles. The trade-offs are too many, the inequities too great.
Consider these facts:
* Over 50% of women in senior level positions have partners who are employed full-time compared to 20% of their male colleagues
* 49% of highly paid women ($100k and above) between the age of 41-55 were childless compared to 19% of men
* 38% of highly accomplished women make the decision to accept a position with fewer responsibilities and less compensation than they are qualified for to meet the demands of family responsibility
* Over 80% of women in the U.S. become mothers by the age of 44
Although the 2008 election is giving some visibility to issues surrounding the management of work and family lives, the tumultuous economy may do much more to get companies to think differently and to break old workplace molds.
This is the time when companies most need to leverage the best talent available, yet the financial resources required for this critical investment are diminishing quickly. A growing number of companies can no longer afford to sustain existing staff levels, let alone consider developing talent for the future. How can companies get the help they need to grow stronger? How can women be a bigger part of the solution?
Let’s look at the options that do not require the traditional, long-term investments routinely made to recruit, train and retain talent especially for knowledge driven roles. Companies need experienced and accomplished professionals with proven track records to hit the ground running. One smart and fast way to make this happen is by hiring highly accomplished business women who have “opted out” of the workforce. The majority of these high achieving women leave during peak years of their careers for family concerns, and over 90 percent of them want to return to their careers – but not always in the traditional way.
Examples that highlight some of these ideas include:
Advisory role: A company considering a major investment in systems and technology hires a seasoned Chief Information Officer for a six month period to help guide them through this complex transaction and implementation.
Project based role: A consumer product goods company trying to better position one of their brands within the luxury market space hires a former marketing professional with a substantive luxury background to design and deliver a unique positioning strategy within a three month time period.
Permanent part-time role: A small foundation hires a senior public relations expert with corporate experience to lead their annual fundraising and event planning efforts.
Flexible full-time: An investment bank needs an experienced product specialist to work on specific assignments identified as capital market transactions, structured products and leveraged loan financings.
As companies are able to build upon these success stories, judgments and metrics that emphasize the “when,” “where” and “how long” will be replaced with more accurate evaluations of what really matters: deliverables, results and overall job impact. To date, the cultural and structural shifts required to make changes on a large scale have not been consistently and confidently supported. Perhaps today’s economy, which calls for creative and efficient business solutions, may generate even more support for new definitions of workplace success.
The bottom line is that companies need more women in leadership positions. Over the past decade evidence that ties women to positive company performance has been building. McKinsey, Harvard Business Review and Catalyst are among the thought leaders who have done studies that show a capital advantage of having more women in top positions. Recent research indicates that companies with a higher representation of senior-level women have returns on equity 35 percent higher and 34 percent greater return to shareholders than those with a lower number of women in leadership roles. Also, when you factor in that over 80 percent of all consumer decisions are made by women, how can companies afford not to have more women on the “inside” to better understand what’s happening on the “outside.”
Cultures that support non-traditional career choices and paths – coupled with structures that integrate new ways of working and advancement opportunities over longer periods of time – will be the companies that ultimately attract and retain Corporate America’s cream of the crop.
A more flexible work culture is not the total solution, but it is undoubtedly a big step toward reconciling immediate talent constraints and the conflicting realities and high aspirations women have in their professional and personal lives. Ultimately, these new ways of working will benefit men as much as women, and create new standards for what careers – and families – can look like.
But in the meantime, there remains a discouraging disconnect between the number of women who enter the workforce and the number who advance to the top of their field. So let’s remember the numbers, the value and remind employers to check the math. Because whether or not we agree on the “how,” the “why” is obvious: it’s more important than ever to have our best and brightest minds in the mix. The future of America’s workforce depends on it.
Lisa Paolozzi is the founder of OptIn, a professional service organization that brings together top-tier professionals with companies willing to think differently about how to structure work arrangements. The result: a new way of working that helps smart women keep successful careers going strong – and to help smart companies keep those women and grow stronger.
Sources:
Catalyst “The Bottom Line: Connecting Corporate Performance and Gender Diversity”, Harvard Business Review “Women and the Labyrinth of Leadership”, National Center For Education Statistics, Families and Work Institute & Catalyst study “Leaders in A Global Economy: Finding the Fit for Top Talent”, McKinsey & Co “Women Matter”, U.S. Census Bureau and Off Ramps and On-Ramps “Keeping Talented Women on the Road to Success,“ by Sylvia Ann Hewlett.
Comments
I appreciated your indepth article regarding employment by women and a new definition for workplace success. What a great tool to companies looking for the opportunities you described. I am so proud of you!!!
This is awesome and you are so right!!!!!! For years now my friends and I have felt that something is deeply wrong. For all the positive pipeline, so few women are both making it up the ladder and staying there. I worked for 14 years at Goldman Sachs and for many of those on diversity issues. I feel called to speak out on this as well and I thank you for some great information.
Thanks Jacki!
I remember meeting you at a White House Project event and often hear about your work through mutual friends. You have a strong voice and I admire your work with the econcomic empowerment of women.
Thanks Lisa for an insightful article. Your examples of flexible work options are low-cost options that provide benefit. I would also like to see these expanded to bring more women into senior level positions with the same flexibility within a company’s career ladder.
My view is that the bad math exists because organizations have been operating like this successfully for decades. To change the way they work currently requires a full overhaul. They will change when the ‘pain’ of change is less than the ‘pain’ (cost) of the status quo. Change typically happens when there is an external catalyst that causes so much pain that the change hurts less than the status quo (think Japanese v. US automakers, offshoring, etc.). The business case for change doesn’t seem to be a large enough carrot for the amount of organization ‘pain’ required to make the change to more flexibility. Consider the costs, for example, of changing the rules about who gets the organizational rewards of ‘making it’.
Perhaps the economy will give that push; another big push will be when we’ve reached the tipping point. Another push may be that change will come from smaller organizations which have no choice but to think creatively about how to run their companies. Perhaps too, by including more senior women flexibly into the work pool, existing assumptions will change.
Hi Jodi,
I value your comments and agree that the road to change is long. Although I think the growing evidence and awareness of the business case is creating a more enticing carrot. Perhaps the economy will also give a push. The pain we are feeling from current leadership and old ways of working may create openings for more women to take the helm.
Although I know you were not referring to flexible work arrangements or this talent pool as low-cost options, it is worth mentioning that the positioning of women and FWAs is critical. We must be extremely careful not to push this change into a category that is associated with discounted or cheap resources (I often relate it to the disciplines of luxury marketing)......otherwise we can easily create a scenario where we are taking one step forward and then two steps backwards.
And let’s not forget Generation Y (women & men)...they will also push new work models by prioritizing and selecting companies with cultures that fully integrate FWAs (without the stigma). Eventually companies will be forced to change in order to stay competitive with others going after the best talent.
hi Lisa,
I totally agree both about the cheap resources and Gen Y. In my experience, women very often discount their services, undervaluing themselves and their work in the process. Further this can create a downward competitive spiral (a race to the bottom). Thanks for highlighting this very important point.
I also agree about Gen Y. This group is pushing new work models (against much resistance), forcing a rethink. Also consider Best Buy’s model of rethinking work by breaking it down into tasks and letting people decide how to best accomplish those tasks instead of the traditional 9 - 5 model.
There’s a lot of potential out there. I wonder, where are the lever points for change?
Absolutely loved the piece.
Your writing, like you, is great, fun, informative and a breathe of fresh air.
Best, Jenn
Lisa,
Wow - your statistics further prove that our feelings of disconnect with current business practices are well founded but, more importantly, that businesses who value women in top roles acheive a competitive edge. Attitudes are slowly changing - this is the second article along these lines that I’ve seen this week and the last one was from a male journalist.
More power to you!
LaDonna Braun
Women have been creating their own work force models for years by starting their own businesses, like you did! Those who are talented and creative can get the flexibility they need, greater compensation and the satisfaction that comes from working hard on something that they own.
Traditional corporate structure can be a waste of time and effort for many women, and simply not worth the trade-offs that are required. That is why so many of us choose to opt out.
As a 24 year old, I quickly realized that climbing the “traditional” corporate ladder would not work for me as the new mother of a 1 year old girl. The flexibility was not there. I started my own business at age 25 and have never looked back.
Aileen,
The entrepreneurial model is an excellent option for some women but it’s not for everyone. Changing traditional work models will expand our range of choice.
As a side note….two possible resources for women entrepreneurs are http://www.countmein.org and http://www.goldenseeds.com
Thanks for your comments.
Lisa
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