CFO

As Women Leave the Workforce, Take Steps to Boost Retention and Maintain Strong Teams

By Megan O’Brien, Brainyard Finance & Business Editor
November 23, 2020
women workforce

In short:

  • The COVID-19 recession is unique from past ones in that it has disproportionately impacted women.
  • Women are leaving the workforce at four times the rate of men due to increased responsibility as a result of the pandemic, particularly in childcare.
  • This exodus threatens impacts to company performance, the economy and the future workforce if there isn’t mitigation from businesses. An expert weighs in on how to retain female talent at your organization.

Each recession hits differently. The tech bubble’s burst at the start of the millenium hit investors and Silicon Valley. The Great Recession was felt more by men than women. This time around, in the COVID-19 recession, women have been affected much more than men. This event is so profoundly hitting women that it’s been dubbed the “shecession.” Nicole Mason, of the Institute for Women’s Policy Research, coined the term while tracking how women are leaving the workforce in unprecedented numbers.

So unprecedented, even the Smithsonian had a comment.

“There is no historical example we can look back to in order to provide insight into the record number of women leaving, being pushed out of, or pulled away from the paid workforce because of the impact of COVID-19,” historian Crystal M. Moten, a curator at the Smithsonian’s National Museum of American History, told the organization’s magazine.

And the exodus will have important business implications.

In this article, we address this trend’s impact on both companies and macroeconomic conditions, why the face of this recession is female, and how companies can help prevent these effects in their own organizations.

Implications of Women Leaving the Workforce

Women are leaving the workforce at four times the rate of men. The September jobs report from the Bureau of Labor Statistics reported that 865,000 women over the age of 20 had dropped out (neither working nor looking for work) of the U.S. workforce in September alone, as opposed to just 216,000 men in the same age group. There were more female drop-outs than there were jobs added in September (865,000 vs. 661,000).

Projections show the implications as far from short-term and relevant on a range of levels:

Company

It’s not just a diversity and inclusion issue; it’s an issue of company performance that produces financial impact.

In 2019, the Drucker Institute evaluated 640 publicly-traded companies to gauge their effectiveness. The study looked at 34 indicators across five categories, including customer satisfaction, innovation and financial strength. The findings: On average, women made up 20.2% of executives at companies that scored in the highest quartile. For companies in the second quartile, that number was 17.5%. The third quartile saw 15.4%. And at companies that were least effective, just 12% of executives were female.

Other research corroborates the hypothesis that gender-diverse business units perform better financially. In a study published by Management Science Journal, it was concluded that gender-diverse teams have higher sales and profits than male-dominated teams. Further, a Gallup poll discovered gender-diverse business units have higher average revenue. And a study by S&P Global found that publicly traded firms with female CEOs and CFOs have superior stock price performance compared to the market average.

Research finds that diverse teams tend to outperform because they have a diversity of thought. Multiple perspectives lead to richer brainstorming, better understanding of consumers, sharper decision-making and more innovation.

Productivity and culture stand to take a hit from a loss of women, too. Mothers, specifically, are more productive than their childless counterparts, per research from the Federal Reserve of St. Louis. And WerkLabs found more productivity, retention and more on teams with “mom managers.”

Thus, failing to retain women limits your access to talent and productivity. Retention becomes an even bigger priority when you consider the cost of replacing an employee can reach two times their annual salary — and that’s a conservative estimate.

Economic

Per McKinsey, a loss of women in the workforce stands to impact the macroeconomy as well. Without action, global GDP growth could be $1 trillion lower in 2030 than if women’s unemployment matched that of men in each sector, the firm reports. Yet taking action now to advance gender equity could add $13 trillion to global GDP in 2030. And a delay — only taking action once the crisis has subsided as opposed to now — would reduce that $13 trillion by more than $5 trillion.

Future Workforce

If gender equity regresses, the future workforce will see consequences. Northwestern University estimates this recession will likely widen gender pay equity by five percentage points, further perpetuating the conditions that drove women out of the workplace this year. And research suggests that women are more likely to hire women, so women leaving leadership positions means fewer will be around to hire or promote others in the future.

Katica Roy, founder and CEO of Pipeline Equity, pointed out an even less-apparent potential effect during Fast Company’s 2020 Innovation Festival.

“In over 40% of U.S. households with children under the age of 18, moms are the [sole or primary] breadwinners,” she said. “... So, ensuring that we have equitable opportunity and pay is not only an issue of fairness — it’s also an issue of the economic opportunity for the next generation of the labor force.”

McKin1

Why Are Women Leaving the Workforce?

Now that we know the macroeconomic consequences of women leaving the workforce, let’s dig to the root.

Part of women’s en masse departure can be attributed to the fact that the COVID-19 recession disproportionately impacted sectors with high concentrations of women, like hospitality, leisure and retail. However, for many beyond those sectors, the pandemic has simply become untenable. Many were forced to juggle a job, round-the-clock childcare and household work.

When looking at population data, one sizable group is clearly vulnerable in this environment. Single-mother households made up 21% of U.S. children’s living arrangements in 2019, while only 4% were single-father. Shouldering the responsibilities of both breadwinner and caregiver becomes especially rough as schools and childcare centers close or go virtual.

However, a partner doesn’t always lighten the load. More than 70% of fathers say they’ve split household labor equally with their partner during COVID-19 — but only 44% of mothers agree, according to a joint study by McKinsey and Lean In. In fact, the survey (of heterosexual parents in dual-career couples) found the majority of mothers felt they were doing all or most of the household work. And, 44% of women reported being the only one in the house providing childcare, versus 14% of men, in a survey by the Center for Economic & Social Research.

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The ‘Motherhood Penalty,’ Pay Gap and More

Research finds a “motherhood penalty” by which moms encounter a per-child wage discrepancy of about 5%. Moms are also viewed as less committed, dependable and authoritative at work — leaving many feeling pressure to work more in order to prove competence. It’s not surprising, then, that nearly three of four women who left or downsized their career during COVID-19 cited burnout as the reason, per McKinsey and Lean In.

Another issue is the gender pay gap: If it comes to deciding which of two parents will stop working, it makes sense for the lower earner to stop. And that, statistically, tends to be the woman.

This recession’s disproportionate impact on women is deeply rooted in gender norms, attitudinal biases and microaggressions in the workplace.

The Brookings Institution’s Gender Equality Series describes it well: “COVID-19 is hard on women because the U.S. economy is hard on women, and this virus excels at taking existing tensions and ratcheting them up.”

Why Women Are Leaving the Workforce

Summary of top findings from research (cited above) and interviews
Lack of childcare
Performance concerns (unable to meet previous expectations considering new responsibilities)
Homeschooling responsibilities
Burnout
Caregiving responsibilities
Lack of flexibility in work schedule

Perspective of a Working Mother

For a Chicago-based executive director of a nonprofit, COVID-19 meant leaving the workforce after nearly 20 years.

“A year ago, would I have ever thought that I would be leaving my job? No,” she said. “Could I have imagined that, as a 40-year-old woman, I would just not be working? No. And I’ve worked nonstop since I left college. I worked when my kids were babies, I worked during maternity leave. I did all that. But this is different, and there is no end in sight.”

For the first six months of the pandemic, she juggled taking care of her children, household tasks and her job. Whereas some of her friends’ companies took advantage of the Family and Medical Leave Act for temporary relief, her company was too small to be eligible.

“It was hard, especially because no one else at my company worked full-time and had kids, so they didn’t get that I couldn’t just be on a call at any time — like when my child’s computer wasn’t working, or she needed help in math or she wasn’t understanding something,” she said. “There’s a large social-emotional part. We are not only the parent, but we’re the teacher, we’re the social worker, etc.”

In August, Chicago Public Schools announced schools would be fully remote until further notice. With her company unable to accommodate another part-time worker, she concluded her setup was unsustainable.

“It was too much,” she said. “... As [my husband] and I talked about it, I said, ‘This is not working for me, it’s not working for you, and it’s not working for the kids.’”

She doesn’t envision this issue resolving easily. She estimates the repercussions will continue if companies and policymakers don’t act.

“I think it’s definitely a setback for women working,” she said. “I’m far enough in my career that I hope I can go back [into the workforce] somewhere. But for women that are in the position where they are working their way up, when it comes time for promotion, she has a gap in her employment.”

This trend shows no signs of abating in the near future. One in four women are still considering moving to part-time roles, less-demanding roles, leaves of absence or stepping away from the workforce altogether.

For remedies, Brainyard reached out to Allison Robinson, founder and CEO of The Mom Project, which connects professionally-accomplished women to world-class companies through a digital marketplace and community.

How to Retain Women in the Workforce

Flexibility

Flexibility, a main feature of the hybrid workplace, goes beyond where professionals work into when. Per Robinson, flexible hours can benefit working moms who aren’t able to sit at their computers from nine to five, Monday through Friday. Supporting the knowledge economy, in which the quality of contributions ranks more highly than when or how long one works, could spur a swell of more productive and happier workers of all backgrounds.

We’ve written extensively on government assistance during the pandemic. The CARES Act could provide a little-known flexibility option for companies. Work-sharing programs involve employers temporarily reducing the hours of their employees rather than laying them off. Hours would increase again once economic conditions improve. With this approach, employees would be paid for the hours they work and collect prorated unemployment benefits to help cover the hours they lose. While work sharing has been around awhile, the CARES Act encourages employers to practice it by reimbursing the entire cost of short-time compensation benefits paid in states that have work-sharing programs in place.

Open Conversation

Robinson says companies can prevent working mothers from leaving by prioritizing respect and empathy. Empathetic conversation, particularly, can quell some of working moms’ most pervasive worries: that their performance will be judged because of their additional responsibilities, that they’ll be delayed or foroughed, that they can’t talk about challenges they face.

Questions for managers to consider include:

  • What are reasonable expectations for employees, given their current responsibilities outside of work?
  • How can these employees’ jobs be made more sustainable to avoid burnout?
  • How can I help these employees handle both work and home life?
    • Do goals need to be revisited? Can deadlines be extended? Where can I give employees opportunities to recharge?

“Managers and supervisors should reach out to all members of their team, especially moms, and have an open and honest conversation about the current situation, including what’s working, areas of improvement or assistance and goals,” Robinson said.

Identifying the needs of individual employees will be the first step toward halting those broad, pandemic-induced issues in the workforce.

Access to Resources

According to Robinson, companies need to offer resources like healthcare (including mental health services), childcare, tutoring, counseling and additional paid leave to working moms. This could be in the form of stipends, subsidies and discounts.

For some businesses, though, that might not be fiscally possible. We’ve assembled low- to no-cost options that companies can use to help their working parents:

Low-Cost Resources to Provide Working Parents

Resource Description
Virtual Parent Groups Allow parents to virtually connect on challenges, support and possible solutions (and, if local, consider creating a pod system for childcare).
Education Guides A document that provides parents with professional resources, videos, supplemental activities and guidance for effective at-home learning.
Childcare and Healthcare Portals A compilation of care resources to save parents time in finding health and childcare.
Outlets for Parents to Voice Concerns Whether it be roundtable discussions, forums or an employee resource group, provide opportunities for working parents to share their voice with the organization.

The Bottom Line

Right now, companies are facing an exodus of women that threatens to exacerbate long-standing talent shortage concerns. However, those who work to retain their professionals stand to gain a competitive advantage in the coming months and years.

Mark Bianco

For more helpful information from the Brainyard and our friends at Grow Wire and the NetSuite Blog, visit the Business Now Resource Guide.

  

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