The Public Forum Institute

Women Entrepreneurship in the 21st Century
President George W. Bush
U.S. Secretary Elaine Chao
U.S. Secretary Paul O'Neill
U.S. Secretary Ann Veneman
Administrator Hector Barreto
March 18-19, 2002
Washington, DC

Jumping Off the Corporate Ladder
Why more and more women are leaving big businesses--and are starting their own.
by Elaine Pofeldt
FORTUNE MAGAZINE

Francine Holt has no regrets about her decision to leave corporate life. After working as an administrative assistant at Blue Cross and Blue Shield in Jacksonville, Fla., in the late Eighties, Holt left her entry-level position behind and founded Holt Creative Solutions in New York City in 1991. Holt was discouraged. Extra technology classes did not lead to a higher position, and she felt frustrated as she watched company politics slow the advancement of two talented women supervisors. Holt, a young African American woman, wondered if it was possible to get ahead. "I didn't understand corporate America," says Holt, now 38.

When the Navy transferred her husband to New York, and Holt began job-hunting, she decided working for a big company was not for her. Instead, she started a business --training temporary-agency employees to use software programs like Microsoft and Lotus -- skills she learned on the job. The company grew so quickly she was soon able to leave the temporary office she had in her home's laundry room, and opened an office near the World Trade Center within months. As she branched out to doing job placements and signed on big financial service corporations and government welfare-to-work programs as clients, she expanded her staff to 80 employees. Her husband joined the firm, overseeing the company's training programs and helping her juggle her business responsibilities with raising their four children. Although Holt declines to reveal the company's revenue, she is a member of Young Entrepreneurs' Organization, which requires CEOs who join to come from firms with annual sales of at least $1 million. "I'm so happy God gave me the vision to star my own business," she says.

Holt isn't the only one who's noticing how hard it is for women to achieve recognition in big companies - and questioning the corporate track. More women may be breaking into the senior ranks of corporate America than ever before, but only ten of this year's FORTUNE 500 companies have a woman CEO. Last year, the number was seven. Although there are no figures available on how many women are giving up corporate jobs in favor of opening small businesses, the U.S. Department of Labor says women are starting new ventures at a rate of 2:1 compared to men. According to the most recent Census Bureau statistics, the U.S. has 9 million women owned businesses, compared to 11.4 million owned by men. And that number may soon be equal, despite big obstacles. Only five percent of venture capital and three percent of government contracts in the country go to women-owned firms, said Jonathan Ortmans, president of the Public Forum Institute, at the Conference on Women Entrepreneurship in the 21st Century in late March. His nonpartisan group organizes meetings with congressional leaders for constituents.

Like Holt, the old glass-ceiling phenomenon is the primary reason for the female diaspora into the entrepreneurial world. Even in 2002, few big companies groom women for high-profile positions by placing them in line positions, where managing profit and loss statements allows them to gain the credibility they need to lead the entire firm, says Janice Reals Ellig, a partner in Gould, McCoy & Chadick, Inc., an executive search firm in Manhattan and co-author of What Every Successful Woman Knows (McGraw Hill, 2001). "It takes an enlightened CEO and human resources team to say, `We have qualified women. We should make sure they get the training and assignments which will give them the opportunity to run parts of this company and ultimately, this company,'" says Ellig.

Women have some role in this, of course. Many haven't mastered the unwritten rules of corporate politics, which closes them out of the informal networks that help support executives in making it to the top, she notes. "When a woman gets higher up, she's got to make sure she networks with her peers, pays attention to building relationships with those men," says Ellig. "They will either support her or not." Some women, like Holt, don't want to play. "It's almost to me like a game," says Holt. "You always have to tell people what they want to hear." Add to this a gender-based wage gap -- female managers earned 73 cents for every dollar earned by men in 2000, compared to 86 cents in 1995, according the General Accounting Office -- and it's not hard to understand why women are now leaving the corporate path. "What I hear a lot of women saying is they're not sure if it's worth it," says Ellig. "If it's so difficult to be rewarded for what you're doing by being given the choice assignments so you can move up, maybe I should take my expertise and work for myself or work for a smaller company."

Barbara Kasoff, vice president and co-founder of Women Impacting Public Policy, Inc., a nonprofit which advocates for women in business, and co-founder of GrassRoots Impact, a public policy strategies firm, puts a more positive spin on it: "They're seeing success in rising slowly to senior levels in corporations, and they want to be able to take that kind of success and put it into something of their own." She has reason to be upbeat. After rising to senior vice president of research and software development during nine years at World Computer Corporation in Auburn Hills, Mich., Kasoff left to start the telecommunications firm Voice-Tel of Michigan, Inc., which she sold to Premiere Technologies in Atlanta at a profit. She then followed that with Voice Response Corporation, Inc., which she also sold at a profit to Long Distance Company of Michigan. "I wanted to be able to set the terms of how I conducted my business," she says.

With three sons, Kasoff, 59, also craved the kind of flexibility that corporate jobs don't allow. Of 800 women entrepreneurs surveyed in 1998 by Catalyst, a New York City-based nonprofit which studies women in business, the desire to control their schedules was the number one factor that lured them from trying to advance in their previous jobs. "It still means engaging in an enormous amount of personal sacrifice," says Suzanne Tufts, president and CEO of the American Women's Economic Development Corporation, based in New York City. "It's not a coincidence that some of the most famous women we see in the media don't have children, and their husbands decided to retire earlier or step down. The men who break through the topmost ranks have not necessarily been there at the soccer games or school conferences, but somehow they manage to have a lot of kids." Women also tend to be the ones who care for aging parents, notes Terry Neese, 53, co-founder of Grassroots Impact and owner of Terry Neese Personnel Services in Oklahoma City, Okla. and three other businesses. "Being your own boss frees you up to be able to juggle all those balls. The only person you have to feel responsible to is yourself and, of course, your clients."

But even women who don't have children often balk at the personal sacrifices involved in climbing the corporate ladder. Betty Herard, 42, who runs the Herard Center of Technology, a technology training and facility rental firm in Manhattan, left a career as a technology administrator that took her to American Express and later City University of New York, because she was frustrated by bureaucracy and politics that made it hard to move ahead. "You're going to be expected to do the work, especially when it's known you have the talent and ability, but you're not going to get the advancement, the recognition, the salaries, the title -- you're not going to get that," she says. "In order to keep growing professionally, help people, do what I love and be happy, feel balanced, feel fulfilled, and have a sense of purpose, I felt I would have to work for myself."