Microsoft Reaps the Rewards of Female Managers

Posted by ProjectC 
'The magic phrase at Microsoft's third-largest subsidiary outside the United States is "trust-based working hours," and it has helped the company to not only achieve strong returns but has repeatedly earned it the distinction of being voted Germany's most popular employer. "We agree to certain goals with each employee. How and where they are reached is secondary," says Hirl-Höfer. As refreshingly simple and uncomplicated as this sounds, it remains a distant goal for many companies, say the authors of a McKinsey study entitled "Women matter."'


Microsoft Reaps the Rewards of Female Managers

By Michaela Schiessl
February 08, 2008

Women rarely make it into senior management in German corporations, but Microsoft Germany is now setting an example of how to systematically achieve equality for women. Shrinking populations in Europe are forcing companies to get serious about bringing women into the executive leagues. It's a step that is also helping them become more profitable.

Isabel Vogel was a little nervous when she arrived at Microsoft's German headquarters in Unterschleissheim just north of Munich for a job interview. You have nothing to lose, she told herself. She knew that making it this far was already a victory. Despite her stellar background, she wouldn't have stood at a chance at most other companies. For them, there would be one huge blemish on her resume: the fact that she is the mother of three young children.

Her twins had just turned two and she had another child who was three and a half. Despite her responsibilities as a mother, Vogel, a marketing assistant, wanted to work a 30-hour week. Preposterous, her friends said. "No problem," the man at Microsoft told her. "I have confidence in you; you'll make it," he said -- and offered her the job.

That was two years ago, and Vogel did make it. In fact, she has even turned her part-time marketing job into a full-time position. She has never missed a day of work, thanks in part to the company's family-friendly environment. She has served as a shining example for other young women in the company since then -- and as evidence to her employer that its woman-friendly personnel strategy is working. "If we don't manage to recruit women now, we'll be facing massive problems in less than five years," says Achim Berg, the general manager of Microsoft Germany, referring to the challenges of a shrinking population in Germany.

Far more important than the dearth of qualified workers are the surprising results of several studies completed within the last year. They all come to the same conclusion: Companies in which women hold senior management positions are more profitable.

The US women's organization Catalyst examined the 500 biggest corporations in America and came to the same conclusion as the relatively unbiased corporate consulting firm, McKinsey: Companies with a blend of male and female senior executives are more successful, both economically and in terms of their corporate culture. According to the studies, the companies with the most women in senior management achieved a return on equity that was up to 53 percent higher than those without women in top-ranking positions.

Earnings were shown to be significantly higher in companies with at least three women on their management boards. Three appears to the magic number, because it enables women to influence the dominant culture in a group. The classic individual female crusader, on the other hand, stands little chance of succeeding. Either she conforms to the male code of behavior -- or she fails.

"Diversity is extremely important," says Berg. "Diversity begets quality." A former member of the executive board of T-Com, Berg resigned in early 2007 to assume his current position at Microsoft Germany -- and found that there were already three female directors on the board. He appointed two more women, so that there are now five women on the company's 13-member management board -- an exception in the German business world.

"Whenever I mention this to other executives, they spend half an hour talking about nothing else," says Berg, 43, who finds their reaction amusing. And when he reveals that all five female senior executives are also mothers of young children, he manages to upset quite a few established views of the way things work in business.

There is currently only one woman on an executive board of the companies listed on the DAX index of 30 major German companies: Bettina von Oesterreich of the mortgage bank Hypo Real Estate. Otherwise, it's pinstripes far and wide in Germany's executive boardrooms.

According to the Statistical Office of the European Communities (Eurostat), women hold only 11 percent of all seats on the management boards of Europe's top 50 publicly owned companies. Women make up only 10 percent of the supervisory board members in German companies, a number that would even be significantly lower if it weren't for the labor representatives on these boards.

There is also an enormous pay gap (more...) between men and women. On average, women in Germany earn 22 percent less than men for each hour they work -- this despite the fact that it has been six years since the federal government reached an agreement with umbrella organizations in industry to promote equal opportunity.

It has since become clear that corporate Germany needs women. But recruiting them is easier said than done. "A family-friendly environment is the killer criterion for women. If it isn't what they want, we don't get them," says Microsoft's Director of Human Resources Brigitte Hirl-Höfer, who has gone to great lengths to create an attractive environment so that she can recruit the best talent. Microsoft organizes and helps pay for daycare centers, operates a parents' and babysitters' exchange and pays agency fees for all kinds of family services, from babysitting to care for the elderly.

Job solutions are customized for women returning to work after maternity leave. As a result, most women at Microsoft spend only six to 12 months at home after giving birth. All kinds of part-time arrangements are available, including job-sharing and even virtual teams that work together on the Internet. The company provides technical equipment for those employees who wish to work at home, and employees on maternity or paternity leave are copied on important documents to keep them in the loop.

But there is one condition that must be met for all of these programs to work, explains Hirl-Höfer: "The culture of flexible working hours must have strong acceptance."

The magic phrase at Microsoft's third-largest subsidiary outside the United States is "trust-based working hours," and it has helped the company to not only achieve strong returns but has repeatedly earned it the distinction of being voted Germany's most popular employer. "We agree to certain goals with each employee. How and where they are reached is secondary," says Hirl-Höfer. As refreshingly simple and uncomplicated as this sounds, it remains a distant goal for many companies, say the authors of a McKinsey study entitled "Women matter."

In most cases, the rules of professional life are tailored to men whose wives stay at home to run the household and raise their children. For instance, the notion that it should be possible to send an employee anywhere at any time is incompatible with the double burden women face. Mothers, in particular, are unable to satisfy corporate demands for their undivided attention. "As long as the criteria for promotions are not changed, little will change in the situation of women in leadership positions," the McKinsey study concludes.

At Microsoft, the new way of thinking begins at the bottom. The company gives preferential treatment in the hiring process to women with the same qualifications as men applying for the same positions, and women already make up 28 percent of the company's 2,200 employees. At Microsoft, each employee receives a performance review twice a year, and employees also evaluate their supervisors. Supervisors, in turn, are asked to pay special attention to recruiting new female employees and to consider female candidates when filling existing positions.

Acceptance among senior executives is one of the most important criteria for achieving equal treatment of women in the corporate world. McKinsey warns that nothing will change unless management actively supports and aggressively promotes the goal of promoting women.

"Children are no obstacle. It's a matter of will," says Microsoft General Manager Berg. Dorothee Belz, 46, the director of legal and corporate affairs at Microsoft Germany, appreciates this environment. Until 2002 Belz worked as a lawyer in the male-dominated world at media giant Leo Kirch. In 2003 Belz, a former public prosecutor specializing in white-collar crime, took a position with the software giant -- only to discover, four weeks later, that she was pregnant. But her new employer was unperturbed, telling her that she should arrange her work to suit her needs. Belz left her office two weeks before giving birth. She set up a home office two months later, and returned to work full-time after five months. She handles her parental duties with the help of nannies, a grandmother and child care facilities. She says that the arrangement is exhausting and expensive, but that "women have to pay so that they can work." Her decision still meets with open disapproval from friends and acquaintances.

Her colleague Angelika Gifford, is also irritated at times by this lack of understanding among outsiders. Gifford, the public sector director at Microsoft, has been in management at the company for the past 15 years. She helped develop the company's operations in Europe, the Middle East and Africa, as well as its services to major customers. But she says that nothing has ever been as stressful for her as the self-locking door at the daycare center where she takes her three-year-old son.

If she arrives only a few minutes late, she faces a locked door and an irritated kindergarten teacher. She has to ring the doorbell to get in, and when she enters the daycare center she looks into the accusing faces of the teachers and the mothers who arrived on time. "That's when every look I get says: And now you have to go work, too?" At work, at least, Gifford is not made to feel like a bad mother.

Despite their relatively sheltered working lives at Microsoft headquarters in Unterschleissheim, these female executives are aware of the double standards women face in real life. Gifford is convinced that male managers are generally more readily forgiven for their mistakes. "It would be inconceivable for female senior executives to show up at one of the 'men's evenings' that still seem to be quite common today. It would spell an immediate end to their careers."

Dorothee Belz has noticed that women take a more differentiated view of things and are more willing to discuss problems than men. But that's when men are quick to derisively suggest that they "not make things so complicated." "But it isn't really all that complicated," says Belz, "just complex." This is the sort of comment that repeatedly convinces Achim Berg of the wisdom of mixed management teams. "Women have a different management style. The teams benefit from their social intelligence."

But couldn't this supposedly female management style be a form of self-defense? Do female executives behave in a more socially open, compassionate and solution-oriented way because this is precisely what is expected of them and because other forms of behavior are regulated? Studies confirm that female executives are not paid attention to when they behave like male executives.

In other words, searching for a management style of their own puts women in a Catch-22 situation. It is often difficult to reconcile the soft touch and compassion expected of women with the management qualities of dominance and perseverance.

But it's clearly worth it, says Berg. He believes that male senior executives respond to the addition of women to their teams by changing their behavior significantly, and they become less inclined to show off. "It seems that there is a noticeable decline in territorial behavior. But perhaps we'd be better off consulting a zoologist," says Berg, laughing.

Translated from the German by Christopher Sultan