Thursday, November 29, 2012

The Scarlet Q

Sometimes colleagues wonder why I take courses, workshops, or training in subjects in which they believe I’m already well-versed. One associate put it this way, “Why are you taking this course – you could teach the subject yourself?”  The answer is that I love learning and am always searching for better ways to convey knowledge.  Sometimes, the best lessons come from what NOT to do.

I signed up for a presentation class with the idea of gaining additional experience in front of a video camera – always a good source of practice.  I sent the organizer a text version of the topic on which I wanted to speak: the growth in women-owned businesses, yet the challenge that those businesses stay small, with few employees, tiny revenues, and low growth ambitions. The point of my presentation was that we could expect more women to achieve board of director roles when more women addressed the causes of women’s own low self-expectations in business. It’s enough of a challenging topic that it is being debated in headlines by the likes of Sheryl Sandberg and Ann Marie Slaughter.

So, how did the trainer counsel me to present this complex challenge effectively to my target audience?  He referred me to a YouTube video presentation by a woman researcher speaking on the topics of “vulnerability” and “shame.”  He suggested I follow her example of revealing a personally dramatic experience as she did – talking about her breakdown and therapy sessions.  He pointed to the large number of “hits” on her YouTube video page as evidence of an exemplary speech.

The lesson for me was that guys get told to “Be Like Mike” and aspire to follow persuasive and ambitious role models.  Women are advised to “Be Like Oprah” and show how they are weak, vulnerable, and full of shame.  Or shame-worthy.  Or anything BUT persuasive, admirable, outstanding examples of intelligent life.

I have nothing against the woman researcher/speaker, her many fans who love listening to her tale of misery.  I DO strenuously object to the trainer’s blatant gender stereotyping: the failure to look and listen to individual women and recognize their talent and aspirations; the propensity to package 100% of women into pink princess gowns, waiting helplessly on the sidelines for that magic kiss from a stud-ly Ken-Doll Prince Charming to save her from her vulnerability and shame.

Gender stereotyping deprives women of the training and conditioning they need to grow businesses effectively in a competitive marketplace.  Ultimately, gender stereotyping of women reappears in the arguments that poor, pitiable, vulnerable women can attain top tier company board of director roles IF, and ONLY IF, and ONLY WHEN these same Ken-Doll Prince Charmings in the boardroom enact quotas to save the poor princesses from having to earn a board role on the merits. Quotas are a gender stereotyping statement implying that women couldn’t possibly achieve a board role without the gift of preferences from the knights in shining armor in the boardroom.

Once a woman receives the imprimatur of a “quota-directorship,” she would henceforth be identified as a “preference director.” She would not be seen as a peer either by other female directors who made it into the boardroom on the basis of their talent and accomplishments OR by male directors who saw her as vulnerable, weak, and needy of special treatment. The Scarlet Q will always be her mark of public shame.

Women cannot be both leaders and decision-makers of boards or companies – whether of their own or of others – by cowering in the back of the room, hiding from the learning, experiences, and the growth that the open marketplace has to offer.

Women-Owned Businesses in 2012

Women-owned businesses are an important part of the economy. Even more important is that selected women entrepreneurs are highly likely to have or develop the skills and competencies required to serve on corporate boards of directors.  The entrepreneurial path (23%) into the boardroom is second in importance only to the corporate path (40%) as indicated in my book, Outstanding in their Field: How Women Corporate Directors Succeed (Praeger: 2009).

We often hear that “having MORE women on a board is correlated with better performance” of a company.  It therefore might follow that we could expect women-owned businesses, where the company IS women, to be impressively profitable.  Is that the case?

An examination of Census data studied by the National Women’s Business Council (NWBC) and American Express OPEN might provide us insight into which women entrepreneurs are the ones most likely to “make it to the top” and to outperform.

NWBC reported that 7.8 million women-owned businesses earned $1.2 billion in revenues, which comes out to an average of $153,846 in revenues a year.  American Express OPEN reported that 8.1 million women-owned businesses earned $1.3 billion in revenues, or an average of $154,600 revenues a year. That’s really not the profitability to be expected by all the correlation studies.

Even more important was the fact that 88.3% of the women-owned firms were NON-employer firms (6.9 million sole proprietors) compared to 11.7% (912,600) that were employer firms, according to the NWBC. Employer firms hired 7.6 million employees or an average of 8.3 workers per firm. Their annual payroll was $217.6 million, which comes out to an average of $28,632 per worker per year. Again, not levels that we would expect by all the commentary.

Women-owned businesses with employees earned $1.1 million in revenues per year per firm, or more than 7 times the average revenue ($153,846) per firm of all woman-owned business, and 38.6 times the average payroll (i.e., personal income  of $28,478) per firm of non-employer women-owned businesses.  Total annual revenue of women-owned firms with employees was over $1.0 billion a year – which is more than 5 times the total revenues of women-owned firms that had no employees ($196.1 million a year). That is performance.

The bottom line is that the 11.7% of women-owned businesses which were employer firms earned 83.7% of all the revenues of all the women-owned firms.  The other 88.3% of women-owned businesses (sole proprietor firms) earned only 16.3% of all the revenues of all the women-owned firms.  It would appear that there are “a talented few” among women entrepreneurs just as there are “a talented few” among women who have been invited to serve on boards.

The American Express OPEN study essentially duplicated the results of the NWBC using 2011 data.  American Express added consideration of co-owned (male/female) business owners, in which case all indicators showed improved performance. 

Women collaborating with men in business generated even more positive results.

“Women-owned firms account for 29% of all US enterprises, but employ only 6% of the country’s workforce and contribute just under 4% of business revenues.”

“Women- and equally-owned firms combined represent 46% of all US firms, employ 13% of the workforce and contribute 8% of business revenues.”

While many women-on-board advocates vociferously bemoan the 15 to 18% share of women on boards, they are silent when it comes to the even lower 11% share of all women-owned businesses which earn anything approaching substantive revenues. Nobody is “making” women entrepreneurs under-earn, under-employ, and stay small.  An open economy allows women to choose the business they wish to enter and to make it as profitable as their skills, competencies, and team-building talents could achieve.  Yet, only 11.7% achieve anything suggesting performance results. AND there is no “outrage” on the part of women advocates.

We ought to be outraged by now because women have been educating themselves in significant numbers at professional, scientific, and technical academic programs for some time and – recently – are making serious inroads into business schools.  Yet, women continue to follow the same few industry sectors and the same few businesses that they have pursued for decades.  It is time to send the message that, if women want to advance themselves in the entrepreneurial marketplace, then a greater share of women-owned businesses need to pursue alternatives to the typical low-income, low-profitability professions. More women – not all women -- but, some.

Over 70% of all women-owned businesses fall into just six industry sectors. The largest share of women-owned businesses is “Other services” (16.1%) which includes personal care services, beauty salons, pet-sitting, and dry cleaning. “Health care and social assistance” (15.7%) includes doctors and dentists, residential care facilities and child care providers.

“Professional/technical/scientific” (14.0%) includes attorneys, accountants, public relations and human resources/organizational development consulting. “Retail trade” (11.2%). “Administrative and waste services” (10.3%) includes employment and travel agencies; janitorial, cleaning, and landscaping services; and convention organizers. “Educational services (3.6%) includes cosmetology, language schools, flight training, driving schools, and computer skills training.

Women-owned businesses dominate the “Health care and social assistance” sector (52%). They represent 46% of the “Educational services” sector, 41% of all “Other services,”  37% of the “Administrative and waste services” sector,” 34% of the “Retail trade” sector, and 29% of the “Professional/technical/scientific” sector. With the possible exception of accounting, these are not the industry sectors that engender performance-oriented skills and competencies that would train and educate women entrepreneurs to achieve corporate board directorships. 

Before anyone gets his or her dander up and suggests that these arguments denigrate women who choose the professions they do for the reasons they do, stop right now.  Just because I can see the opportunities and potentials that might be available to the few (today) who might choose alternative industry sectors and career paths does not mean that I have contempt for anyone who chooses NOT to follow those routes. I am pointing out the fact that low percentages of women entrepreneurs in industry sectors with experience relating to corporate board performance might possibly be at least a contributing factor to the low percentage of women with practical P&L business experience and might influence the small numbers of women chosen as director candidates.

There is a tendency to blame all men for all the opportunities that women believe have been lost, stolen, or strayed.  The women-owned business data tells us that there are consequences that result from the choices women make.  If women know the consequences, many may still make the same choices.  That is their option. 

But, maybe a few more women entrepreneurs might begin to make alternative choices – say
  • enter higher revenue industry sectors,
  • grow a business through hiring employees,
  • or aspire to higher revenues. 
Any one of these choices will produce different consequences – such as help improve the economy through increased employment and revenues, provide long term benefits to the women entrepreneurs themselves, and enhance their eligibility to serve with distinction on a corporate board of directors.

All I’m saying, here, is that a few really talented women have made the choice to pursue the credentials and competencies required to serve as corporate directors. If we want to see their numbers increase, then women themselves can do more than simply blame all the men in the boardroom.  If less than 2% of all women-owned businesses earn $1 million or more a year, and barely 13.3% of those even HAVE a board of directors, isn’t it time we accepted some of the responsibility for increasing THOSE percentages, ourselves?