Chapter 1
Women and the New Economy
THE NEW ECONOMY GIVES WOMEN UNPRECEDENTED and exciting opportunities, but they can only take these opportunities—and have an equal chance of success—if they get the proper support. Using interviews and case studies, this book shows that for women employees and entrepreneurs, the most effective way to provide this support is through mentoring and sponsoring—and the networks and role models they provide.
Mentoring and sponsoring go hand in hand—and they are compelling because they help women get ahead. Mentoring is advising—how to accelerate your career or achieve your entrepreneurial goals. It's normally a relationship between a senior or more experienced mentor with a junior and less experienced mentee, but there are examples of reverse mentoring, with a junior mentor and a more senior mentee. Sponsoring is mentoring taken to the next level—sponsors champion their mentees, put them forward for promotion and positions of responsibility, or, in the case of entrepreneurs, introduce them to influential people, act as their referee, open doors…. In sponsoring, sponsors take a risk on their own reputation and put their necks on the line. But in both mentoring and sponsoring, the relationship is based on respect, confidentiality, and agreement on how to achieve goals.
The New Economy: Opportunities for Women
Statistics and pervading stereotypes suggest that we still have a long way to go in establishing gender equality. This is true, but by delving deeper into employment trends we find some indications that the new economy is helping women gain a more equal footing.
The Gender Gap
Huge progress has been made in the United States and Western Europe in establishing equality in educational attainment. In 2013 in the United States, more women than men enrolled in college. For OECD countries, 74 percent of women successfully completed upper secondary programs versus 66 percent for men in 2008.1
But in the workplace it's a different story, with most women only making it to the junior management levels and few achieving senior responsibility. In major corporations in the United States, women represent 53 percent of new hires, but this decreases at each transition up the management ranks: only 37 percent of those promoted to managerial level are women, 26 percent vice presidents and senior executives, and only 14 percent on executive committees.2
Outside of the corporate world, inequality persists in other forms. In the United States and Western Europe, women are more likely to work part-time and in less well-paid occupations. In the UK, nearly 40 percent of employed women work part-time (less than 30 hours a week) compared to just over 10 percent of men. The median wage gap between men and women remains significant: France (14 percent); Germany (17 percent); UK (17 percent) and the United States (18 percent).3
And it's the same story among the self-employed: across all Organisation for Economic Co-operation and Development (OECD) countries, self-employed women earn 35 percent less than their male counterparts. In the United States this figure is 43 percent (2011).4 Yet it seems that the type of the work women do, and the time they have to devote to their business, provide only a partial explanation: it is still the case that many women spend more time on household work, leaving them less time for paid work and restricting the type of work they feel willing to take on.
The Opportunities of the New Economy
The new economy, led by rapid innovation in information technology and the spread of the Internet, is a revolution—a revolution that has created new business models and shattered the traditional roles of women and men.
The organizational structures and working practices of the old industrial and manufacturing economies no longer fit. Organizations have redefined themselves—their products, their services, their customers, their markets, and their income streams. Labels for this new economy, if used at all, include digital, social, sharing, and circular.
The economic impact of new economy is striking. In the United States, e-commerce sales amounted to $300 billion in 2014, and are expected to grow to more than $400 billion in the next few years.5 In France, a new website is set up every 30 minutes, and the number of e-commerce retailers grew by 17 percent between 2011 and 2012,6 and more than doubled in 2013.7 A Boston Consultancy Group study estimates that across all G20 countries, the new economy is set to grow at 8 percent each year, far outpacing growth in traditional sectors.8
Against this backdrop of upheaval and innovation, women have everything to play for—and everything to gain—and mentoring and sponsoring can help them to take these opportunities.
Women in Corporates and Finance
In previous decades we used the term “glass ceiling” to describe the lack of women at senior executive and board level. But while glass ceilings still exist in the face of stereotypes and male networks, the phrases “leaking pipeline” or “frozen middle” are perhaps also appropriate when we see women falling behind as they go up the ladder of seniority.
There is a growing understanding of the difficulties women face, and governments and corporations have taken active steps to redress the imbalance—and have made some progress. In Norway, where a “pink quota” was introduced in 2008, women now make up 36 percent of boards. In France, a law was passed in 2011 imposing progressive quotas for equal representation of women and men on boards of directors and steering committees: as a result, in 2013 women received 48 percent of new directorships (compared to 39 percent in 2012).9
But in the United States and UK, such moves have not been government-led—and both countries lag behind other developed economies. In 2013, only 16.9 percent of board seats in the United States were held by women;10 this low figure has remained unchanged for the previous nine years. The UK was a similar story until a burst of activity following the 2011 Davies report,11 which had an impact. Latest research from Cranfield School of Management reports 23.5 percent of women on boards in the FTSE (Financial Times Stock Exchange) 100—with only 17 more women on boards needed to reach the 2015 target of 25 percent. The FTSE 250 has also made great progress, more than doubling the percentage of women on their boards since 2011, from 7.8 percent to 18 percent.12 Though far from gender parity, this represents a significant success in a relatively short space of time.
In the finance sector, the shortage of women at senior level is keenly felt. As set out in the Financial Times in 2014, just 6 of the top 150 banks have female CEOs.13 And there are few examples of improvement—the number of women on the executive committees of large financial institutions rose just 3 percent between 2003 and 2013.
Encouragingly, however, many financial institutions are taking steps to redress this balance. In an industry that needs as much innovative thinking and constructive leadership as possible, institutions have recognized the long-term commercial benefits of tapping into the full potential of women as employees and senior business leaders. For example, Barclays set (and met) a target of having 20 percent of women on its board.14 At BNY Mellon, promoting women at all levels has been built into their Corporate Social Responsibility program, with measurable results: since 2009 there has been a 100 percent increase in the number of women at Executive Committee, Operating Committee, and Regional Operating Committee levels.15 Some of these figures do mask the fact that women tend to head up soft-skills departments and men income-generating ones, but the willingness of financial institutions to engage in promoting women in all fields is a step forward.
Women in STEM (Science, Technology, Engineering, and Mathematics)
In STEM it is the action being taken to encourage more girls and women, rather than the numbers themselves, that suggests progress to a more equal future.
Women are historically underrepresented in STEM. Statistics released by the White House show that women in the United States earn 41 percent of STEM PhDs, but make up only 28 percent of tenure-track faculty. Over the past three decades, there has been a steep decline in the number of female graduates with computer science degrees. According to the U.S. Department of Education, the number of computer science degrees awarded to women peaked at 37 percent between 1984 and 1985 compared to only 18 percent in the period between 2008 and 2011.16 As a consequence, women hold only 20 percent of all U.S. computer software engineer and computer programmer positions. In France, a report on managing gender and age diversity in IT teams (November 2013)17 concluded that, at less than 25 percent, women were significantly under-represented. This report revealed that only 11.6 percent of women engineers were graduates in the new information and communications technologies (NTIC) in 2010.
Across developed nations, business, academia, and government are working to help girls and women overcome the social and psychological prejudices preventing them from pursuing careers in STEM. The New York Academy of Sciences launched the Global STEM Alliance,18 a private-public partnership with industry, academic and educational institutions, government, and the nonprofit sector, aiming to provide resources, support, and mentoring for the next generation of STEM leaders.19 Through a virtual platform, the initiative pairs students as mentees with international STEM expert mentors.
Showing what corporates can do, CISCO, a founding partner in US2020,20 has pledged 20 percent of its workforce to spend 20 hours a year on STEM mentoring by the year 2020, with a particular emphasis on encouraging girls and women.21 In the UK, Code First: Girls, sponsored by the City of London and the Royal Bank of Scotland, inspired Abigail Holsborough, a young digital entrepreneur (see interview in Chapter 20), to take up coding and ultimately to found her first start-up.
Women Entrepreneurs
The stereotype of female entrepreneurs is that they run small businesses in niche, low-profit areas of the economy. As with all stereotypes, there is an element of truth behind it. According to the Census Bureau Survey of Business Owners (2007),22 77 percent of women-owned enterprises were founded with $5,000 or less in capital. Nearly half of all women-owned firms were in service sectors, such as health care and social assistance (16 percent); professional, scientific and technical services (14 percent); and “other services” (16 percent).
But, as with all stereotypes, this puts a negative spin on what can be interpreted as a positive development. Entrepreneurship, across all sectors, is a real growth area for women in the new economy. By offering women the opportunities and flexibility they don't always find in major corporations, entrepreneurship provides a new arena in which to pursue their ambitions. According to the 2007 Census, the number of women-owned businesses grew by 20 percent between 2002 and 2007, compared to 5.5 percent for men-owned firms.
The economic contribution of women-owned businesses is significant. The Center for Women's Business Research23 measured the economic impact of the estimated 8 million U.S. businesses currently owned by women entrepreneurs at just under $3 trillion annually, which translates into the creation and/or maintenance of more than 23 million jobs—16 percent of all U.S. jobs. These jobs not only sustain the individual worker, but also contribute to the economic security of their families, the economic vitality of their communities, and the prosperity of the nation.
It is not clear what proportion of the sharing economy these women-owned businesses represent—this is fertile ground for further research. What is clear is that women choose to start businesses because working in this context is liberating and allows them to make direct changes to people's daily lives.24
The comparatively low start-up costs of digital businesses is another positive for female entrepreneurs, who are less willing to take on debt than their male counterparts. Innovation and set-up in the digital economy have so far been predominantly male, but this is changing. Apple, Facebook, Microsoft, Yahoo! and Twitter are no longer typical, and the chance of success for women digital entrepreneurs is increasing. At the end of 2013, the French commission for Digital Women for a Digital Economy, in partnership with the French engineering school EPITA (École Pour l'Informatique et les Techniques Avancées), launched “Excellencia,” an award for tech women. One of the three prizes awarded in September 2014 was given to a woman digital entrepreneur.
Women Entrepreneur Networks
Many women entrepreneurs say that they feel isolated and lack networks. In the new economy, this is limiting. At a time when pace and visibility are key to success, networking is essential for sharing business information, gaining wider recognition, and marketing. Indeed, being undernetworked can significantly slow down the growth of new businesses.
So given the proven importance of networking, why do women continue to lag behind?
Brigitte Gresy, French General Secretary of the Equality Council, believes that negative stereotyping and socialization are at the root. She suggests “Our society teaches boys to dare and girls to conform.”25 Diana Vanbrabant, Managing Director of ETACC (the European Training and Coaching Company),26 offers another perspective. She says that men and women have different attitudes towards networking: women are often better one-on-one listeners and invest more time in nurturing close relationships, while men engineer their networks for their own gain.
Shifting this attitude is essential for women's success. It can only be done if we start to tackle the stereotypes and find more innovative ways to help women overcome professional obstacles. Numerous measures are already underway, such as positive discrimination, quotas, industry-led school programs and mentoring-sponsoring networks.