February 2008 – Why women mean business

A few weeks ago I was having some lunch not far from my nearest Volvo dealer. A mobile phone message from the dealer mentioned a special offer. Our family car is a Volvo and we had been thinking about a change so I called at the showrooms, partly out of curiosity, wondering if some startling new technology was tracking my phone.

It turned out to be nothing more than a co-incidence, but since I was there and since the salesman knew he had a potential buyer, we began the ritual of looking and talking about this and that latest model, culminating in a test drive and some serious haggling.

The haggling was very close to a deal. It wouldn’t have taken much to swing it. But the salesman seemed curiously diffident, as if he thought he had done as much as was necessary.

I felt frustrated about the whole episode because I knew that he could have done so much better. It’s something I have noticed before, dealing with other car salesmen, and I’m wondering if the problem is cultural, based, as I’m sure it is, on the outdated assumption that buying cars involves men selling to men.

This belief was confirmed when reading a new book, Why Women Mean Business, by Avivah Wittenberg-Cox and Alison Maitland who make a convincing case for more women in senior business roles.

The case is supported by sound research. Goldman Sachs, for example, has suggested that gender equality in the labour force could boost gross domestic product by as much as 9 per cent in the US, 13 per cent in the Eurozone and 16 per cent in Japan.

Research published in 2004 by Catalyst, a US think tank, found that the Fortune 500 companies with the highest representation of women in their top management teams significantly outperformed those with the lowest averages. Return on equity was 35 per cent higher while the total return to shareholders was 34 per cent.

Catalyst found the out-performance was even more impressive when three years later it compared the financial results of companies with the highest and lowest representation of women on their boards. The authors quote many such studies telling a similar story. There is no shortage of evidence supporting the contention that the promotion of women in to senior roles is good for business.

So why isn’t it happening? Why after a generation of women has moved through careers, protected by equal opportunities and sex discrimination legislation, are there still so few women in the most senior jobs?

Why, when Indra Nooyi was appointed chief executive of PepsiCo in 2006 could the Fortune 500 companies muster just 11 women chief executives? It is not only, as the authors call it, a “yawning gender gap,” it is persistent, troubling and wasteful. Women have become probably the greatest neglected resource in business, both in their market potential as consumers and in their productive potential as employees.

Indeed this could well be the reason that I am not driving around in a new car. Had that sale been handled by a woman, had my wife who also came along to see the car, been handled differently, the outcome for the dealer might have been successful.

Carlos Ghosn, chief executive of Renault and Nissan, recognised as much, speaking at the Women’s Forum in Deauville, France, in 2006, when he said that women directly made or influenced two-thirds of car purchases in Japan. Nissan carried out surveys, showing that 80 per cent of women buyers and half of men would like to see women sales executives in car showrooms. Yet only one in 10 of the salespeople in the Japanese car industry are women.

I would count myself among that male group. I am sick and tired of badly-dressed salesmen, wearing oversized car coats and poorly-knotted ties, spending too much time talking and too little listening. Are they stupid enough to believe that I am going to buy a car without my wife’s approval?

As the authors point out: “It is now fairly common knowledge that the majority of car-buying decisions are made or heavily influenced by women.” Yet so little of this understanding has permeated the motor industry that websites have been established in the US to handle women’s car buying queries.

The reasons for women’s limited advancement in business are many fold and complex as the book makes clear, but I think this particular observation of the authors, which applies across so many other industries, is getting to the root of the problem. It is a fundamental weakness of business models that were designed for a male-dominated world.

Yes there are other factors - including an under-representation of women among MBA students. Many of these issues are associated with the “male environment” of business that tolerates long hours of working and management systems that make a virtue of assertiveness while underplaying other approaches that can be equally, if not more, effective depending on the circumstances.

“Companies are learning that they need to change how they market to women. They also need to change how they manage them,” write the authors.

You would imagine, then, that more flexible working arrangements, would have created more openings for women, yet, according to Charles Russam who runs Russam GMS, an interim management agency, relatively few have taken up this kind of work where executives undertake short-term contracts, moving from one to another.

“I have a database of 8,000 interims but only 10 per cent of them are women. I think, however, that more women will be turning towards this kind of work in future,” he says.

One problem may be a lack of familiarity with the concept of interim management among women. Carole Harden, who has undertaken an impressive string of interim assignments at human resources director-level, believes that many women do interim work but call it something else. “They may work through word of mouth. I find it helps to make sure your CV and employment details are listed with a number of agencies,” she says.

Rachel Youngman who worked in a full time role as deputy executive director of the International Bar Association, left six years ago because she wanted greater flexibility around her work. Today she combines interim roles with consultancy work.

“I wanted diversity, flexibility and opportunities for self-expression, all the things you don’t always get in full time employment. In the interim role I feel I’m in the driving seat. I can put my foot on the accelerator and ease off as I choose. But it’s very much a career and it’s hard work,” she says.

In spite of such alternatives, thousands of successful women continue to leave the workforce in mid-career and the number may be increasing according to a recent study by PriceWaterhousecoopers that reported a sharp fall in the number of senior women managers in the FTSE 350 over the last five years.

The real issue, I believe, is not that women need to change but that business needs to change. Senior careers for women should not be about women fitting the demands of the job, but about work changing to meet the needs of women. As the book suggests, we need a revolution in thinking. It could start on the sales floor.

Why Women Mean Business, Understanding the Emergence of Our Next Economic Revolution, by Avivah Wittenberg-Cox and Alison Maitland, is published by Jossey-Bass, price £16.99.

See also: How Women Can Fill The Talent Gap