Women MBAs Earn Less (Why am I Not Surprised?)

I didn't remember that the Equal Pay Act was signed by President Kennedy in 1963. I was reminded while creating a speech for Women's History Month. My...how far we haven't come.

In yet another report on unequal pay (thank you Lilly Ledbetter for putting teeth into the Act), The Economist is reporting on a study on the earnings of men and women MBAs. From the National Bureau of Economic Research:

"The authors tracked the earnings of 1,600 MBAs who graduated from the University of Chicago’s Graduate School of Business between 1990 and 2006; they attribute the differences to choice of subjects (women took fewer finance courses), that women’s careers were subject to more interruptions, and that the women worked fewer hours than the men.

The main underlying reason for the second and third of these explanations is that once women MBAs had children, many cut back on hours, or dropped out—13% of the women in the study were not working at all ten years after graduating, while the corresponding figure for men was a mere 1%. The researchers stress that active discrimination is unlikely to have played much of a role in the pay gap—but the continued influence of gender roles in determining career paths is clear." (e.a.)

I beg to differ...women, weigh in: is thinking that the belief that "women take care and men take charge" counts as "active discrimination"? Do you think active discrimination still impacts career advancement?...wages?
Lead ON!
Susan
Susan Colantuono is CEO of Leading Women. She blogs on networking for PINK Magazine. Follow her on Twitter.

Recent News of Note and Happy Women's History Month

Reiterating that companies whose boards have the highest percentage of women directors outperform those with the lowest by huge margins (42% higher Return on Sales, 53% higher Return on Equity, and 66% higher Return on Invested Capital) margins, I have been hypothesizing why that is. I believe it's because outside women directors have a lesser stake in "we've always done it that way" thinking. I found this quote from Davia Temin, President and CEO of Temin and Company (she will be speaking to Women Corporate Directors on The Role of Boards During Times of Crisis) most interesting:

"Do you remember when 'Maximize Shareholder Value' was the mantra of corporate board directors? Today's mantra is much shorter -- Survive...In times of crisis, corporate directors' first responsibility is to cut through denial, understand that this is not business as usual, and begin to think through, with management, a full range of crisis scenarios. These days, every organization needs to fully develop a series of bad to worse case strategies, and it is the board's obligation to make sure that happens." (e.a.)

I continue to believe that we are facing a crisis of leadership competence in the financial and automotive companies that are dragging down our economy. Denying the market forces that put them in jeopardy is only one example of missing out on the fact that their failed strategies were based on "business as usual"...and an unsustainable house (pun intended) of cards.

It's Women's History Month and 98 out of the 100 news releases I've read about celebrations focus on the accomplishments, achievements and contributions of women. What's missing? A focus on the history of being a woman - the movements that have provided us with the vote, reproductive rights, civil rights, equal employment opportunities, equal pay legislation (note I didn't say equal pay). Would that the celebrations looked more clearly through that lens.

Excellent career advice from Down Under: The entire article is excellent - here's the first of 15 tips: to get ahead stop being so good at your job. GREAT counterintuitive advice!

A Harvard Business Review study "found that while women outshone men on most of the leadership dimensions measured, there was one startling exception – the ability to recognise new opportunities and trends, and develop a strategic direction for an enterprise.

Surely one exception should not matter – except that ability was the most highly prized by men when looking for leaders. Women, who are very strong on the technical elements of their job and have their nose to the grindstone, can be easily overlooked for promotion."

At Leading Women we've been beating this drum for 10 years! A whole chapter in my upcoming book addresses strategic acumen - as do modules in our leadership programs.

FORTUNE's Pattie Sellers is reaching out to mentor global women who have been part of Goldman Sachs' mentoring program. She writes,

"If you’re thinking now that Fortune is now in the business of helping the best and the brightest business women in developing countries, well, you’re right. But these are unusual times. And we’re all doing things outside our job descriptions."

To which I say, KUDOS!...and as a woman, caring about the status of women around the globe is part of all our job descriptions. History has proven that the improved equality and status of women rises families, communities and nations.

Dee Dee Myers' new book, Why Women Should Rule the World, has this fitting message for International Women's Day and Women's History Month:

"Without a doubt, the increased presence and power of women in public life has generated enormous, positive change. But getting to a place beyond double standards, where equality is not a slogan but a way of life, will demand more. It begins with acknowledging that men and women are different. And it embraces the idea that because they are different, women will bring with them a different mix of experience, values and points of view. That, in turn, will expand the range of what’s acceptable – and what’s possible. It won’t be easy; if it were, it would have already been done. But it’s in our economic, social and political interest to create a world that’s freer and fairer. Where women have more power – and are allowed to use it. Where everyone is judged by their performance – and their potential. Where double standards are only a distant memory."

Read the entire excerpt here.

Lead ON!
Susan
Susan Colantuono is CEO of Leading Women. She blogs on networking for PINK Magazine. Follow her on Twitter.

Vision, Strategy and Networking

In my new book I explain why the idea of the "visionary leader" is a particular manifestation of the times in which it arose (late 70s early 80s). At that time, successful executives were responding to the external forces in the marketplace and transforming their organizations. Failing executives were not.

Imagine my delight this morning when I read of new research from Insead. Nothing surprising in the major findings...they mirror many other studies about which I've written:

"Research by Insead Professor Herminia Ibarra and PhD candidate Otilia Obodaru shows that women leaders are not perceived to be as strong as men when it comes to articulating a vision of the future and translating that vision into a strategic direction for the organisation...Ibarra and Obodaru studied the 360 degree reviews of more than 2,800 women. In all, they looked at 22,244 evaluations on a leadership assessment developed by Insead's Global Leadership Centre. They were surprised to find that women did as well or better than men in most categories. The exception was vision and that exception could be one reason why fewer women rise to the top jobs."

But what was refreshing was this:

Ibarra says the image of a man sitting on a mountaintop and suddenly gaining business insight is pervasive but doesn't really fit with reality. "The way you envision the future is by being out there and trying to understand trends in the industry, in society and talking to people – that is how you are able to formulate what are the threats and opportunities in your business and how that might match up to capabilities in your organisation."

While it's essential to understand trends and market forces, it's overly simplistic to say that you can envision the future by "talking to people" in order to understand trends. There is one category of "people" that transformative executives like Anne Mulcahy, CEO of Xerox and Ann Livermore EVP of HP talk with. They credit much of their success to being close to and listening to customers.

Lead On!
Susan
Susan Colantuono is CEO of Leading Women. She blogs on networking for PINK Magazine. Follow her on Twitter.

White Men Over the Age of 45 reprised

UPDATE: Bank of America heiress is lambasting the executives at the top.

"The granddaughter of the man who founded Bank of America in San Francisco in the early 1900s called the bank's current condition "totally repulsive" and blasted the bank's management for being 'idiots'." WATCH

I've mentioned before in this blog my friend, Mark, who after the savings & loan debacle said, "If those in power stereotyped themselves, no one would put money in banks run by white men over the age of 45."

This was again brought to mind last week when the mostly all white CEOs of America's largest banks appeared before the House Financial Services Committee. Not surprisingly, this followed a strikingly similar scene a day earlier in Great Britain when (as reported by the Washington Post) Britain's bankers Fred, Tom, Andy, Dennis, Eric, John, Stephen, Antonio and Paul were called before Parliament's Treasury Select Committee.

Why do I reprise this? Because I don't agree with the President and others who say that what we are facing is "a failure in confidence". I believe that what we are facing is misplaced confidence and failures of executives and boards.

Bear with me while I pull several threads together.

First, several years ago in conjunction with FORTUNE's most powerful women issue, the magazine studied companies that have managed to get a significant number of women to the top. These companies are characterized by a relentless focus on measurement. It makes sense that if true performance (not perceptions) is the measure by which people are promoted that a higher percentage of the 50% of women who make up the pipeline will make it to the top. So, it's safe to say that well-run companies will have more women at the top. It seems logical that if a company has a full pipeline, but doesn't have a significant number of women at the top, it isn't being run with a focus on true performance (in other words, less than well-run).

And research bears this out. Studies by Catalyst have found that companies with more women at the top generate higher total return to shareholders than those that don't. Unlike some, I don't say that it's the women at the top that account for the higher TRS, it's that truly well-run companies will naturally have more women at the top. The behavior of women has also been described by studies and stories to be highly ethical (think about the whistle blowers at Enron).

Several studies have indicated that having a critical mass of women on boards also is an indicator of enhanced business performance.

So, we have a virtuous cycle of companies that are well-run, promoting more women to the top, and likely having more women on boards. (Lest you think there's no problem with boards today, read this earlier post here.)

For my book I've been researching the remarkable turnaround of Xerox that was led by Anne Mulcahy. One of the decisions she and her CFO made was to make no financial move that they didn't understand. This is a brilliant executive decision. I would suggest that it is a decision that executives in financial institutions - and the boards that hold them accountable for strategy execution, organizational viability and keeping shareholders whole - should adopt. Actually it's a decision that every CEO and board should be guided by.

But, instead we have companies and boards that choose people to get to the top on the basis of considerations that have less to do with competence and performance (although they would argue otherwise) than they have to do with style and membership. We have a shortage of women at the top - and as several studies have suggested, a related absence of willingness to challenge the ethics of decisions. And we face, yet again, catastrophic failure of these highly compensated men who have brought ruin to the economy and our citizens.

Of course, I am going to suggest that things have to change and change radically. But, I'm not alone. Again, as reported in the Washington Post (see link above), men are thinking the same.

"There are quite a lot of alpha males with testosterone steaming out their ears," said Stuart Fraser, one of London's top financial sector officials.

"Clearly, something needs to change," said Howard Archer, chief European and U.K. economist at IHS Global Insight in London. "You can argue that the men have made a right mess of it, and now the ladies should have a go."

Now, I disagree that it's gender alone that will make the difference. I believe that the lenses through which competence is viewed have to be cleaned up, the measures by which readiness for promotion have to be rethought and promotion on the basis of "membership" in the "boys club" have to cease in order to get highly qualified women to the top. FORTUNE has found companies that do this. Would that there were more.

Lead On!
Susan
Susan Colantuono is CEO of Leading Women. She blogs on networking for PINK Magazine. Follow her on Twitter.

Heading up B Schools

BusinessWeek reports on the increasing numbers of women heading up American business schools. Now up to 17% from 11% in 2002. Way to go!

Speaking of BusinessWeek, I'm preparing for a global presentation on women's history month and came across a story about Brownie Wise, the first women to ever make the cover of BusinessWeek. Without her, Tupperware would probably be another failed invention. She died in obscurity, but a recent book, Tupperware Unsealed, tells her story. Read about her here. Buy the book here.

Lead On!
Susan
Susan Colantuono is CEO of Leading Women. She blogs on networking for PINK Magazine. Follow her on Twitter.

You've GOT to be Kidding Me!

If this is the kind of thinking widely represented on corporate boards, no wonder our economy is in such trouble. The lack of logic is mind-boggling!

The search firm, Heidrick & Struggles and the University of Southern California surveyed directors of publicly traded companies. More than 55% said they would not want to diversify their boards by increasing minority representation. Here's where the lack of logical thinking comes in:

"...while there is little commitment to increasing representation on the board, many directors (82 percent) recognize that having a diverse board can be beneficial to the company because diversity contributes to a broader range of decision options for consideration."

Let's see if I understand. They're saying they know diverse boards are good for business, but >55% of them don't want to diversify. Who's holding directors accountable?

On another note, among the <45%> who...

"...would like to increase board diversity, 30 percent of them are giving special consideration to women, 21 percent to African Americans, 17 percent to Hispanics/Latinos and nine percent to Asian Americans."

If you dare, you can read more about the September, 2008 study, you'll find it here.

Forget the Lipstick!!??

Our non-verbal communication is very important and as the pundits say, "you never get a second chance to make a first impression." But women in Britain are taking exception to dress for success advice offered by a consultant brought into The Bank of England.

"Ruth Lea, economic advisor to the Arbuthnot Banking Group and former director of the Centre for Policy Studies, said: “What the Bank of England is doing is appalling.They are spending our money on these things. It is farcical.

Katherine Rake, director of The Fawcett Society, the leading women’’s rights group, further added: “Not only will eyebrows be raised that an event like this has been held just as we are entering recession, but it sends out damaging messages to women working at the Bank of England."

Read the post here.

Lead On!
Susan
Susan Colantuono is CEO of Leading Women. She blogs on networking for PINK Magazine. Follow her on Twitter.