Escape From Corporate America
More and more women are abandoning big companies to strike out on their own.
Divorce, dumping, or abandonment: Call it what you like, but many women are trading in Corporate America for entrepreneurship. According to Cheskin Research, they are starting businesses at twice the rate of men and have become a major force in both the traditional and the e-business marketplace. The Center for Women's Business Research estimates that, as of 2002, there are 6.2 million women-owned businesses, employing 9.2 million workers and generating $1.15 trillion in annual revenue.
In the interest of security, women used to be willing to channel their time, energy, and effort to the corporation's needs at the expense of fulfilling their own professional goals -- but no more. In starting their own businesses, they're seeking freedom, flexibility, recognition, more money, and opportunities to leave a legacy -- all of the things they once thought they would find within corporations.
Dorothy Perrin Moore, author of Careerpreneurs: Lessons From Leading Women Entrepreneurs on Building a Career Without Boundaries, claims women are breaking away from the constraints of corporate life in record numbers to seek professional fulfillment in their own ways. She refers to it as the organizational push and entrepreneurial pull.
Praise, Yes. Ownership, No
Is Corporate America actively pushing out its most talented women? Despite the diversity initiatives that have proliferated in recent years, many organizations still unconsciously treat their women as second-class citizens. Nobody knows this better than Kay Koplovitz, who founded USA Networks and ran it for 21 years. In 1997, USA Networks became a bargaining chip in an unpleasant lawsuit between Viacom and MCA, and was sold for $4.5 billion. Since Koplovitz had no equity in the company, not a dime of the sale proceeds came her way. "Hell, when I started out in cable in the early '70s, it wasn't just male-dominated. It was male," she says. "The boys had always treated me cordially, had always lavished praise on my performance. But they had never, not even remotely, been ready to make room for me as a co-owner."
Her goal had been to take USA Networks public to recoup her investment; when that didn't happen, she suddenly found herself looking to buy a new company. Despite her extensive experience, she found that women remained at a distinct disadvantage in raising venture capital -- at the time, in 1997, only 1.7 percent of venture capital was going to businesses owned or run by women. This spurred Koplovitz, along with some other seasoned and well-connected women, to form Boldcap Ventures LLC, an angel fund for high-net-worth women investors intended to help women start and grow businesses. Although the fund is in its infancy, Koplovitz says, "We have funded three companies: an agribusiness, a cancer diagnostic, and an online security company."
Koplovitz shares her experience with other women entrepreneurs as chair of both Broadway Television Network and the National Women's Business Council. She also continues to run her angel fund and has authored Bold Women, Big Ideas: Learning to Play the High-Risk Entrepreneurial Game.
What Really Walks Out the Door?
Koplovitz's situation is not an isolated example. According to a study by Catalyst, a nonprofit research and advisory organization working to advance women in business and the professions, 29 percent of women business owners with prior private-sector experience cited glass-ceiling issues as the major reason for leaving corporate positions. Of those women, 44 percent felt their contributions were not recognized or valued.
Sheila Wellington, Catalyst's president, shares one survey respondent's experience: "'I worked for a corporation in the area, and I just got tired of people coming in, especially male counterparts, who were being promoted above me.'" One-third of the women surveyed agreed with the statement "you were not taken seriously by your employer or supervisor." Fifty-eight percent of the respondents said that nothing would attract them back to the corporate world; 24 percent could be lured back by more money, and 11 percent by greater flexibility. In fact, lack of flexibility is an even bigger problem for women in Corporate America than glass-ceiling issues: 51 percent of the women surveyed cited the desire for more flexibility as the major reason for leaving corporate positions.
What are the repercussions of these results for corporations? "As women walk out the door after years of training," Wellington says, "what really walks out is the potential that those women would have brought to Corporate America."
If anything, women's reluctance to conform to corporate strictures will become even more pronounced as the younger generation enters the workforce and starts ascending the corporate ladder. Marilyn Moats Kennedy, managing partner of Wilmette, Ill.-based Career Strategies, indicates that the women she sees are perfectly willing to work for a Fortune 500 for a few years as a learning experience. Then they're gone. Kennedy says: "When I've done focus groups with junior and senior women at University of Michigan and Northwestern University, they see corporations as places to hone your skills, but not to stay long-term. They object to office politics, asking, 'Why do I have to toady to some old guy who ceased to be productive years ago?' They don't value longevity. They don't care about seniority. They want to control their work lives, especially their hours."
A Woman Takes on the Bear Market
Linda Darragh, vice president of the Women's Business Development Center in Chicago, notes that some of the most successful women business owners are refugees from Corporate America. They have been trained there and built their contacts and knowledge base there over the years. Then they find a market niche that is not being served by their employer, or they arrive upon an idea that complements the business in which they have developed expertise. "These women are the risk-takers who jump from Corporate America to pursue entrepreneurship," Darragh says.
Consider Maxine Clark, founder and CEB (Chief Executive Bear) of St. Louis-based Build-a-Bear Workshops, which designs customized teddy bears and has retail stores across the United States. In 1972, Clark began her career as a trainee for May Department Stores and climbed the ropes to become president of Payless ShoeSource until she left in 1996.
After running a $2.5 billion retail shoe chain, she was ready to create something of her own. "I wanted to do something more creative and important and leave a legacy behind," she says. "I loved retailing and wanted to continue to work in a field that had been so good to me." Although her corporate position was difficult to give up, the fun had gone out of it. And for Clark, the fun and the emotional aspects of her work are just as important as anything else. When asked if she would do it all over again, Clark's response is one you rarely hear coming out of the executive suite: "The business and the rewards have far exceeded my wildest expectations. The smiles on the kids' faces are worth all the hard work!"
While some women choose entrepreneurship after experiencing all that corporations have to offer, others don't consider the prospect until it falls into their laps. Take Jane Applegate, founder and CEO of SBTV.com (Small Business Television), a multimedia Website for business owners that has produced custom video and print content for MasterCard and other clients. "I never set out to be an entrepreneur," she says. "My small-business column for the Los Angeles Times had become very popular after five million corporate workers lost their jobs in the late 1980s and early 1990s. When my first book was published in 1991, I hit the lecture circuit and was unable to keep my newspaper job."
Applegate has founded three successful companies, including a strategic consulting firm and two media companies. "The amazing people I interviewed every day for my columns and books inspired me to start my own business," she says. "I've never regretted living the entrepreneurial life, although it has been filled with financial ups and downs." Applegate is currently serving as Sprint's small-business spokesperson, consulting for J.P. Morgan Chase and other clients, and promoting her most recent books,201 Great Ideas for Your Small Business and The Entrepreneur's Desk Reference.
Cutting 'em Off at the Feet
Still other women are looking for entrepreneurial opportunities from the day they start their corporate careers. Upon finishing college, Sara Blakely, CEO and founder of Atlanta-based Spanx, started on the corporate track in the sales group at Danka, a $3 billion office-equipment company. "When I was working at Danka, I was constantly waiting and wanting to really start my own business," she says. "In order to be true to yourself, you need to go the self-employed route."
The seed for her new business was planted as she got ready for a party and was anxious about how she could wear her slim-fit designer pants with swanky open-toed sandals and still look svelte. She grabbed a pair of scissors and cut the feet off of a pair of pantyhose; the pantyhose went on, and the pants looked perfect. As the evening wore on, however, "the stockings rolled up my legs," she says. "If I had this problem, other women must too." A product was born: Spanx, a footless pantyhose.
During her final months at Danka, she formulated plans to launch her company. Even before turning in her resignation, she had already secured contracts with Neiman Marcus and Saks Fifth Avenue. With orders in hand and only $5,000 in personal savings, she took the plunge. Blakely prefers not to divulge annual sales volume yet, but she is happy to say that Spanx has been profitable every month since launch.
One inspired piece of marketing has helped generate those profits: Blakely sent a sample gift box of Spanx to Oprah Winfrey, who liked the product so much that she asked the entrepreneur to be a guest on her show, and later christened Spanx her favorite product of the year. "I didn't have any money for advertising, and to reach seven million television viewers was any entrepreneur's dream come true in building awareness of a brand," says Blakely.
Delivering the Numbers
Like many women entrepreneurs, Blakely enthusiastically offers encouragement to her would-be compatriots. "If you have a great idea, don't wait for the right time," she says. "Just make it happen."
Given the increase in women-owned businesses, a large number of women appear to be following Blakely's upbeat advice. Sandra Peterson, senior vice president of health businesses for Medco Health Solutions -- a $29 billion, wholly owned subsidiary of Merck & Co. -- suspects she knows the reasons for the massive exodus of talented women from Corporate America. "Many corporations do not think women are critical to their bottom line," she says. "They falsely think the lack of senior women has no business impact. Corporations that put focus and energy into mentoring women, especially by the most senior male executives, make a difference. They need to nurture them, especially the thirtysomethings who have years to go in their career development. Women progressing up the corporate ladder who find themselves in a hostile environment and without that support often choose to make a career change. They are more willing to take the risk of leaving and starting a new career and in many cases become entrepreneurs."
Why, then, has Peterson chosen to remain with a large corporation? "I have been able to change the environment that I work in," she says. "I bring in talented women to work with and then I deliver the numbers. Ultimately, it's not about gender -- it is all about the numbers and delivering the goods."
As women gain credibility by delivering the numbers, they have the opportunities to make bigger changes, as Peterson would like: "I want to create a change across America. I want to see that women have equal opportunity within a workplace and that I can make a positive impact on our society as a whole," she says.
Keeping Them in the Fold
But what is Corporate America doing to keep women like Peterson, who want to work for change within the system rather than abandon what they see as a sinking ship? So far, not enough. According to the Catalyst study, companies need to focus on providing flexibility, as well as continuing challenges and opportunities for personal growth, to retain women whom they view as high-potential or who are already significant contributors. The study reports a five-step recommendation plan to help companies find and keep top-caliber women:
Increase flexibility. Companies should offer part-time arrangements and other forms of flexibility, providing women with more control over their work lives in order to manage the overlap between their work and their outside lives. As with most initiatives, articulating the business rationale for flexibility is a key step to making it work, as is support from senior managers. Another important element is to focus on work productivity, as opposed to hours spent in the office.
Increase the number of opportunities for women to use their entrepreneurial skills within companies. More and more corporations are learning that they need women with entrepreneurial skills to thrive in the global business climate. The same risk-taking, innovation, and leadership skills required to launch a business are also needed within established organizations.
One way to go about this is to put more women in sales, since it is one of the most visible entrepreneurial areas within an organization; another is to place more women in start-ups, turnarounds, business and new-product development, and international assignments, which offer challenges to those employees with entrepreneurial abilities.
Further, to encourage women to take on these kinds of assignments, companies must profile the rewards involved, provide support on obvious high-risk assignments, and empower women to make decisions and exercise independence. vWork to identify women professionals and managers with entrepreneurial abilities and interests early in their careers. Companies that do not back women at the outset or that do not hold managers accountable for developing and promoting female talent will ultimately fail to retain high-potential women. But for those that do, diversity can be a cornerstone of the company's success instead of just a buzzword.
Take J.P. Morgan Chase, a Fortune 50 financial-services company with a focus on commercial and investment banking. Conducting business with 32 million consumers nationwide and serving a client base in more than 180 countries, Chase breeds continual change in its culture along with a big push to enable women to succeed. For Chase, there are four key initiatives that come into play for a winning approach to diversity and one that advances women: communication, work and life issues, training, and mentoring and networking programs.
Since inaugurating the four-pronged approach to diversity, the number of high-potential women at Chase increased across all organizational levels, with a particularly notable increase in higher-level management women -- from 19 percent in 1996 to 24 percent in 1999. Chase managers at all levels are held accountable for developing and managing a formal diversity plan and for their results, which are measured using a "diversity scorecard." Managers report scorecard results to the CEO, share them with others, and have their bonuses based on them.
Recognize and reward women's bottom-line contributions, and articulate the business case for retaining women. Companies need to examine the extent to which women are represented in line functions and to which their contributions are acknowledged and rewarded. They also need to develop a solid business case for why women are critical to the advancement of the business. Furthermore, they need to ensure that male managers buy in and feel accountable for recognizing and rewarding women's contributions.
Recruit female entrepreneurs to corporate boards and senior line positions. In addition to business experience, women business owners could offer firsthand knowledge of the entrepreneurial mind-set and offer insight for companies into how they could expand entrepreneurial opportunities within their business organizations. IBM is a good example: It believes that women play a significant role in the ongoing success of the company and is dedicated to playing both a direct and indirect role in the future successes of women entrepreneurs.
To enhance its position as a premier employer for women of talent and ambition, IBM devotes a portion of its Website to women entrepreneurs, where women executives can learn about women's business organizations, online communities, technology offerings, and business resources. It also hosts a Global Women's Leadership Conference, attended by more than 170 women from 22 countries. The conference's goal is to sustain focus on the bridge between the workplace and the marketplace, share accomplishments, measure IBM's progress on advancement of women, develop strategies for advancing women in the new millennium, and understand the impact of e-business on women. These efforts have paid off: At IBM, women represent 30 percent of the global population and over 22 percent of the management team.
"A Natural Condition"
"I believe the growth of women entrepreneurship is beyond a trend. It's here to stay," says Karen Kerrigan, CEO and founder of Women Entrepreneurs Inc., a business association based in Oakton, Va. "After all, women as entrepreneurs, at least to me, is such a natural condition."
The rise in female entrepreneurship is not only good for women -- it's good for the economy. The 2002 Global Entrepreneurship Monitor, published by Babson College, London Business School, and the Ewing Marion Kauffman Foundation, is a study that documents the relationship between global entrepreneurship and economic expansion. According to the study, entrepreneurship is one of the best indicators of a country's economic success -- and a good way to accelerate the pace of entrepreneurial activity is to encourage women to participate.
Then who loses out? America's leading corporations could, unless they turn the entrepreneurial abilities of their female executives to their own advantage. Ray Smilor, co-author of Daring Visionaries: How Entrepreneurs Build Companies, Inspire Allegiance, and Create Wealth, says that businesswomen are leaving Corporate America because "they want the chance to create corporate cultures that reflect values that are important to them, the freedom to shape more meaningful and flexible lifestyles, and the rewards -- psychological as well as financial -- that can come from building their own ventures." If women can find these opportunities within the context of a corporate career, companies will be the ones that benefit.
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Laurel Delaney is founder of GlobeTrade.com, a Chicago-based global marketing and consulting company, and creator of the e-newsletter Borderbuster. She is currently at work on her next book, Women Entrepreneurs Take On the World.
