- Globally, women control about $20 trillion in annual consumer spending.
- Lack of diversity among executives hampers efforts to reach female consumers.
- To realize the potential of women employees, companies will have to recalibrate traditional notions of power and personal ambition.
Your customer is changing—and you may not even know it. The Nielsen Company estimates that almost all income growth in the U.S. over the past 15-20 years is generated by women exercising their growing economic influence. In fact, according to Maddy Dychtwald, author of Influence: How Women’s Soaring Economic Power Will Transform Our World for the Better, women today are responsible for 83 percent of all consumer purchases, including 53 percent of stock market investments, 62 percent of new car purchases and 55 percent of all consumer electronics.
Women now represent a growth market twice as big as India and China combined, report Michael J. Silverstein and Kate Sayre, partners in The Boston Consulting Group’s Chicago and New York offices, respectively. In a widely quoted Harvard Business Review article, Silverstein and Sayre wrote, “Globally, women control about $20 trillion in annual consumer spending, and that figure could climb as high as $28 trillion in the next five years. Given those numbers, it would be foolish to ignore or underestimate the female consumer. And yet many companies do just that, even ones that are confident they have a winning strategy when it comes to women.” The automobile industry and Dell represent the extreme ends of old and new industry, yet both fall short in engaging women.
Car makers desperately want to implement campaigns that properly target women, yet most of them seem clueless about the levers to pull in order to yield lucrative results. Three-quarters of women report feeling put off or misunderstood by car dealers still relying on macho selling techniques, according to the AAA. Could it be partly because auto industry leadership is relatively devoid of women? Ford, for example, has only two women on its 14-member board of directors.
When it comes to effectively marketing to women, even digital-age companies can falter. Dell, which has one woman on its board, fell flat in an effort to market laptops specifically to women with the “Make it Pink” website launch in 2009. The cutesy “very special site for women,” focusing on tips for counting calories and finding recipes, created an uproar amongst women, who described it as “condescending.” To its credit, Dell moved quickly to revamp the site’s name and focus. But why did Dell’s usually savvy marketers fall into such a trap?
Consider the Super Bowl, the nirvana of American TV marketing. Of the 58 Super Bowl spots where the identity of the creative team could be determined, 92 percent of the creative directors were white males, according to Advertising Age. Simply put, the market opportunity represented by the purchasing power of women will be largely hit or miss until companies figure out how to make their internal leadership as diverse as the external markets they want to attract.
“Women are transforming the way the world works,” says Dychtwald, who is also the co-founder of San Francisco-based Age Wave, adding this is good news for men as well as women. “Definite benefits accrue to organizations that succeed in having diverse sets of perspectives sitting at the leadership table.” (See “More Women, More Success.”)
But despite the potential benefits that diversity in the corporate halls can bring, the fact remains that organizations still have a long way to go in their efforts to achieve it. Only 29 percent have a clearly defined strategy for developing women for leadership roles, according to a survey conducted by Mercer.
The top three factors identified by survey respondents as preventing women from advancing to the next level were: work-life balance (42 percent), lack of executive sponsor (41.5 percent) and insufficient breadth of experience (29 percent). Not coincidentally, the top programs offered by organizations worldwide that are viewed as targeting the needs of women leaders correspond to those issues: flexible work arrangements (66 percent), diversity sourcing and recruiting (44 percent), coaching (44 percent) and mentoring (43 percent). (See “Top Three Obstacles—and Solutions”.)
Fixing the Gender Issue
“Any company serious about empowering women must start by appointing women—and preferably more than one—to the board of directors,” says Judy Robinett, a member of the Golden Seeds angel investor network, which has almost 200 members (both men and women) in New York, Boston and San Francisco. The group invests in companies that have at least one woman in a C-level position with significant equity in the company. If a startup doesn’t have at least one woman on the board, Robinett wants to know why and has yet to hear a satisfactory response. “The research is clear: there will be an increase in ROI with diversity on the board. Commitment must start at the top.”
But not only at the top. Women’s empowerment must also begin early. Robinett recently volunteered at a speed-mentoring event for female middle-and high-school students sponsored by McKinsey and NASDQ. After listening to keynotes by Meg Whitman, former CEO of eBay, and Dr. Jane Shaw, chairman of Intel, the young women sat at separate tables with mentors to work through a series of challenges. Each group then brainstormed solutions to overcoming gender discrimination and institutional obstacles to women. Robinett didn’t know if she should laugh or cry at the strategy favored by most of the girls: bypass traditional corporate career paths and start their own businesses.
Jerre L. Stead, CEO of IHS, a $1.2 billion provider of technology information and insight based in Englewood, Colo., believes that his main responsibility is to do everything he can to avoid such departures. “The most important thing I can do as a CEO is to create the conditions for early identification of potential leaders,” he says. This often means going deep down in to the organization to identify leaders, giving them highly visible jobs, helping them stretch and then getting them ready for the next step.
This priority is gender-neutral, but Stead is convinced that CEOs should be especially on the lookout for talented women leaders. “Their success offers their companies double benefits,” he says. “First, not only is great leadership always great for the company, but successful women leaders who are also highly visible serve as magnets for other great women who then regard the company as a desirable workplace.”
Change Starts at the Top
The CEO is the person best positioned to influence the corporate cultural changes required to create the conditions for women to really contribute, notes Sally Helgesen, author (with Julie Johnson) of The Female Vision: Women’s Real Power at Work. “The CEO can really broaden the lens on the assumptions the corporate culture has on what leadership behaviors are rewarded. They may find to their dismay that certain assumptions about leadership are carried over from industrial models. To the extent that’s true, certain names simply don’t arise when leadership or succession decisions are made, to the detriment of the company.”
Stead concedes that this leadership recognition process is slow and uncertain even in the most progressive organizations. When organizations are more hide-bound, he has been known to push. For example, in the early 1990s after AT&T purchased NCR, Stead was asked to become CEO of the acquired company. He agreed, on the condition that AT&T find a P&L opportunity for Patricia F. Russo, whose career Stead wanted to advance. Russo became CEO of Avaya, a Lucent spin-off. Within a few years, Russo was named CEO of Lucent Technologies and its successor, Alcatel-Lucent. Forbes magazine rated Russo among the 10 most powerful women in 2006.
Often companies who lag behind on diversity among senior management claim a dearth of candidates with appropriate skill sets in the talent pipeline. Helgesen rejects this argument. “The issues are always cultural,” she says, noting that if a CEO is determined to shift this culture, the compensation committee is a good place to start. The unchallenged assumption of many compensation committees is that every leader will consider any tradeoff justified if the compensation is high enough. CEOs should not assume that, she adds. “Women frequently take themselves off the track because they question the effectiveness of the carrot of financial compensation and the stick of competitive ranking.”
To realize the potential of their women employees, companies will have to recalibrate traditional notions of power and personal ambition. “Many companies still operate on the basic assumption that advancement is dependent on the appetite for power,” says Avivah Wittenberg-Cox, CEO of 20-first, a gender consulting firm based in London. “Women by and large are not hungry for power and will not push for it. Corporate cultures that persist in regarding women as being insufficiently ambitious for the top jobs because they don’t display that hunger suffer from a huge blind spot. Unless firms can understand the differences and optimize their cultures around these realities, they will lose talented female executives up and down the pipeline.”
“Globally, women control about $20 trillion in annual consumer spending, and that figure could climb as high as $28 trillion in the next five years.”
The traditions of many enterprises, unless directly challenged, all but guarantees that a culture of all-male leadership will persist. If CEOs don’t start shifting their cultures to reflect the career needs and power styles of women, they will quickly feel the sting, says Bobbie Little, director of Worldwide Executive Coaching Services at PDI Ninth House, a Minneapolis-based recruiting and coaching company.
“This talent will vote with their feet and they’ll vote with the their tweets,” she says, by which she means that disempowered employees will take their talent elsewhere and use social media to make sure the entire world knows about it. “Organizations and even individual supervisors will be exposed to the world as either talent magnets or outfits that are hostile to talent.”