Evan and Janette in conversation.

This week, in a change to our Bottom Line format, we’ve something a bit special for you: Janette Rutterford from The Open University Business School turns the tables and puts Evan into the interviewee’s chair.

You can watch two interviews on the Bottom Line website.

In the first, the managerial make-up, Evan shares his experiences from talking to numerous CEOs during his time on the programme. Are there differences between female and male management styles? Do Americans manage differently to the British? And are those large executive paycheques ever really justifiable?

Watch the managerial make-up

In part two, a different recession, Janette and Evan explore what makes the current world recession so unlike anything we’ve experienced before. And is there a way out?

Watch a different recession.

There’s a lot of talk these days about flexible working, work-life balance and portfolio careers. Crèche-at-work schemes, job-shares and flexi-time have become commonplace. If so much is being done to help women be part of the work force why are women, especially mothers, turning away from traditional jobs, and becoming entrepreneurs?   

Mothers who do run their own business make an important contribution to the UK economy, £4.4 billion according to a recent estimate in a study commissioned by the Yellow Pages. This shows that the difference between the sexes when it comes to entrepreneurial ambition isn’t as wide as we may think. Many women in paid employment choose to set up their own businesses upon parenthood, not because they are unemployable but rather because it’s a lifestyle choice. Indeed, most were in other, more traditional, types of employment positions before starting up their businesses. As with most entrepreneurs, setting up their own business is often centered upon the drive to be their own boss, and, importantly, the flexibility that this gives.

Mum at work.
[image © copyright Photos.com]

Two reasons appear to dominate women’s decisions to start-up their own businesses after they become mothers. The first of these is the desire for greater flexibility and autonomy. This is a great incentive for women, despite the fact that the demands of juggling your own business with the pressures brought on by motherhood and a hectic home life can be very challenging. The second is the difficulty, or perceived difficulty, of returning to the jobs they held previously.

This issue recently came under the spotlight when legislation was introduced in April 2007 extending maternity leave entitlements. Whilst aimed at protecting the rights of mothers, as Nicola Brewer, chief executive of the Equality and Human Rights Commission said in July 2008, it had the unintended consequence of alienating some employers such as small business owners who see women of childbearing age as potentially a costly problem.

The legislation views women as primary child carers, which may stereotype the roles of women rather than improve the flexibility of working arrangements for both parents. This is compounded by the unhelpful views of some high profile businessmen. For example, Sir Alan Sugar of The Apprentice fame reportedly stated that many employers discarded the CVs of women of childbearing age. These scare stories can surely be seen as ‘push’ factors for women to go it alone in business.

The need for flexibility is reflected by the types of businesses that are established by women when compared to men. Men tend to opt for start-ups in construction, consultancy or IT. Popular choices for self-employed women are also start-ups in IT. In addition, they make more traditional choices in the areas of health and beauty, catering and childcare-related fields where flexibility and the link between their personal and professional interests are more apparent. However, about a third of all businesses started by mothers are now internet-based, showing the invaluable role of modern technology in enabling more flexible career strategies involving home working.

Websites such as elance have encouraged a boom in employing virtual administrators and PAs (personal assistants) who are based on the other side of the world, remotely organising clients’ emails and diaries, and booking meetings and travel all at a distance. More often than not these are mothers, who are being inventive with regards to the type of work they can accomplish from home.

FriendsReunited creator, Julie Pankhurst, founded the website in 1999 while expecting her first child. This business was sold for £175m in 2005. We should champion the successes of such high-profile female entrepreneurs who turn large profits, but also the large number of women who are small and micro business owners. My own research on home based businesses, such as small hotels and bed and breakfasts, shows that flexibility, autonomy, and the ability to combine home and family with rewarding work are important for women at all stages in their lives. As one such business owner explained to me:

“It works for me. I can fit other things in more easily now like the kids, and family and friends … just spending more time doing what I want to do and working from home. Although it’s a lot of hard work, you get used to that the longer you run a business. It’s very rewarding to have a successful business which is all your own work. I’m very proud of that… It just makes sense really for many women” 

However, when looking at entrepreneurs who want to combine parenthood with a rewarding career, it is important that we are not gender-biased. Some men also choose to start their own businesses while seeking to balance childrearing with career aspirations. The current economic downturn may make credit harder to come by for future entrepreneurs of both genders causing a decline in ‘mumpreneurs’. Let us hope that this doesn’t happen and that we continue to benefit from the boom in tycoon mothers – oh, and let’s not forget the fathers! 

Weblinks

• Maternity leave 'damages' careers
• 'Kitchen table tycoons' identified as new brand of female entrepreneurs
• Watch the Mum's the Business trailer
• Mum's the Business
• What makes an entrepreneur?
• The world of work
• Free OpenLearn course - Entrepreneurial behaviour

Courses

• Investigating entrepreneurial opportunities 

About the author

Dr. MariaLaura Di Domenico is a Lecturer in Organisational Behaviour at the OU Business School where she is responsible for research and teaching in organisation studies, small business, and entrepreneurship.

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Pregnant? You’re fired! touches on a sore point for many women – the trade off between having money and having children.

Not only may getting pregnant lose you your job immediately; leaving work to have one or more babies costs – and costs a lot. It’s not just the obvious things like nappies, child care, or even school or university fees. It’s the opportunity cost of not working and the consequences that has for your pension – the income you would have got if you hadn’t taken on a maternal or caring role.

"One in two women over retirement age are not entitled to the full state pension"

An Open University course starting in 2006, called You and Your Money, has a whole chapter devoted to ‘Sharing and caring’ and highlights the costs of having a family in fairly stark terms. Recent research has identified a longer term problem, though. One in two women over retirement age are not entitled to the full state pension – compared with only one in ten men - because they devoted themselves to caring and not to earning money. The poorest pensioners in the UK are women over the age of 80.

And younger women are building up a problem for the future. In 2003, 29% of all single women had no savings at all and nearly two thirds of single parent households (the vast majority women) were in the same position (according to the Department for Work and Pensions).

But it’s not all doom and gloom. Times are changing and more and more women work. Girls do better now at school and at university, and end up with higher skills and so higher pay. Higher income leads to higher savings and greater wealth. In the US, in 2004, women represented over 40% of all individuals with over $500,000 in assets. In the UK it is predicted that women will own 60% of the nation’s wealth by 2025. Part of this change can be explained by the growing rates of women’s employment, of education and of participation in the higher paid professions. But another key factor is women’s greater longevity - living longer than men means they are likely to do better in terms of inheritance.

What will women do with this increasing wealth? Will they save more or less than men? Are they more risk averse than men? Popular opinion says that women have more of a ‘nesting instinct’ and are prepared to take less risks in investing than men. This has potential consequences for retirement. Lower risk assets earn lower returns – on average. After 20 years, say, a retirement fund invested in a building society account will have much less than if it had been invested in company shares. A smaller retirement fund means a smaller pension.

So far, little research has been done in this area except in the US where women do seem to invest in less risky assets than men and single women more so than married women. But recent research on women and money in the UK in the nineteenth and early twentieth centuries has come up with a slightly different picture. There is evidence that if women do have money, they like to speculate with it. Wealthy women from the North and South of England speculated in the shares of the South Sea Company in the 1720s, some of them making tidy sums in the process. Wealthy female clients of Barings Bank in the 1820s and 1830s speculated in Spanish and Chilean bonds. In the early 20th century, women aristocrats – the celebrities of their day - were criticised for setting a bad example to the masses as they gambled with their housekeeping money.

There is also evidence that middle class women knew more about investment than they do today. In the nineteenth century, women only worked if they had to and many ‘genteel women’ lived in salubrious places such as Bath or Leamington Spa and relied on their investment earnings. For these women – and there were a lot of so-called ‘surplus women’ with a very small chance of getting married – the returns they got on investment were crucial. Advice was plentiful – from newspapers, magazines, text books and friends and advisers. But the risks were much greater than today. Companies starting up had only a one in three chance of lasting more than five years. And company prospectuses were not regulated, and more economical with the truth than they are today.

"There are still women penalised for choosing to care for others"

Of course, there were also many women who worked but had no savings and no prospect of a decent pension. In principle, today’s women are better off in many ways. They have the option to work and hope to save for their old age. They have had a better education, have better work prospects, and should have access to good advice. But, as this programme shows, there are still women penalised for choosing to care for others. As in the nineteenth century, there are disturbing discrepancies between women who have very little, both in terms of income and savings, and women who are comfortably off.

Further reading

• The price of parenthood – having children brings many changes
• '"The widow, the clergyman and the reckless": women investors in England, 1830 to 1914’ by J Rutterford and J Maltby, in Feminist Economics, vol 12
• ‘The Gender Asset Gap: What Do We Know and Why Does It Matter?’ by C D Deere and C Doss, in Feminist Economics, Special Issue on Women and Wealth 
• 'Why do Women Invest Differently than Men?' by V L Bajtelsmit. and A Bernasek, in Financial Counseling and Planning no. 7
• ‘Who’s Better at playing the Markets Game?’ by N MacEarlen, in The Observer (20 June 04) 

About the author

Janette Rutterford is Professor of Financial Management at the OU Business School, having previously worked in corporate finance and investment. Jannette's research includes pension funds, equity valuation and investment history, in particular the history of women and wealth.

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