Author: Karen Firestone

Although the U.S. is a highly developed country, the US government’s work/family policies have not changed since 1993,when the Family and Medical Leave Act (FMLA) passed. We are the only developed country without any required paid parental leave. (FMLA entitles employees 12 weeks of unpaid leave with an equivalent position available on return.)

Even so, most large companies provide six weeks of paid leave, usually covered by a short-term disability insurance plan. Such insurance only works economically for companies with an employee base so large that many people might be out at the same time. FMLA applies to companies with over 50 employees, so smaller enterprises, which comprise over 50% of US businesses, need to create their own policy.

I run one such company — a growing, 11-person investment management firm — and this is a challenge I’ve been grappling with: how can we offer fair parental leave or flexible work policies to retain talented employees while also covering our costs and making sure our workflow remains on track?

The research on this is inconclusive, and mostly focused on country-wide statistics or on large firms. Scandinavian policies provide evidence that generous parental leave and work schedule flexibility translates into greater participation of women in the labor force. While there is mixed evidence of this resulting in more female executives at top levels than the 14% in the US, the data does indicate that mothers do continue to work, at least part-time, in Norway, Sweden and Denmark. The debate rages about whether these policies discourage subsequent full-time employment or actually set women up to re-engage full time and move into higher level positions.

Our company’s goals include retaining talent, preserving our investment in those people we have trained, and keeping those who work well with clients and colleagues. We also desire a diverse workforce, which we believe is preferable in making investment decisions, serving our customers, and building an enjoyable and well-rounded corporate culture. In a small firm, the retention of any one emerging key player can be more meaningful than for a large corporation. However, these goals come with costs.

When I had four children, all under age four, my company gave me an eight month leave, after which I came back full time, eventually managing a $10 billion mutual fund. When Nancy, a managing partner of a major law firm, had her second child, she worked three and then four days per week for years, until she was comfortable returning full time. George, the CEO of a small investment company, offers mothers re-entering after a leave a reduced schedule. Three quarters of them eventually came back full time. This and many other examples suggest that employer flexibility does lead to women returning and advancing at the same company.

The question is whether a small business should articulate a policy, or whether our best approach is to offer each person a customized plan. Spelling out all benefits in writing could be a useful recruiting tool, but could require delivery of equally generous plans to people of varying value to us. For that reason, we have chosen to explain that we offer a mix of set and customized work/family benefits. We see this as fair to our employees and to ourselves, as a small enterprise.

In eight years, no woman at our firm has yet had a baby, although three men have become fathers. We have not had any explicit paternity leave, but I now feel that we should offer a fixed amount of time off for fathers, probably two weeks. Women physically bear the burden of having children, so although expensive, a six week paid leave is probably the appropriate level to be competitive.

Greater complexity arrives after the initial leave, when the primary caregiver, either the mother or father, needs a longer leave or a more flexible or reduced schedule. Big corporations contain redundancies, which allow colleagues to cover for each other over a period of months. Without that luxury, small companies must hire long-term temp replacements for administrative, research, investment, trading, or other positions. Other costs include management time and effort and the risks of errors or a poor cultural fit.

Since we and other firms offer an annual allowance for continuing education, we might offer the same amount for child care over a specific duration. The greater the expected value or contribution of that person to the organization, the more attractive the package. The government should consider a credit for firms offering these benefits despite the lack of legal requirement.

Recently, a young woman in our office documented a cash withdrawal from an account in a thorough manner. There was a snafu at the custodian’s end that could have cost us many tens of thousands of dollars and might have been disputed, if our colleague hadn’t been so thorough. That expertise is very valuable, which we should keep in mind as we craft a policy for anyone needing leave or flexibility in the future. Particularly at a small company, the costs of being inclusive and pursuing an egalitarian ideal are more immediately tangible than the benefits. It’s up to the management to carefully weigh these expenses against intangibles that pay off handsomely in the long run.

Let’s agree that gender stereotyping still exists. We may try to suppress the subconscious image of political leaders, doctors, and CEO’s as male, but that’s what pops into our heads when we hear those professions. What’s ironic is that I’m the CEO of an investment company, so, if I struggle with this, I suspect others must too.

One of the most ubiquitous forms of stereotyping is when someone (whether male or female) assumes that a woman working with a male colleague is working for him. In my case, people of both sexes ask me if I work for David, the partner with whom I co-founded our firm. When Ava, a well known dermatologist in Los Angeles, bought a large practice, most patients assumed that she was working for the selling doctor, who was male. According to Marsha, a top executive at a medical center, the doctors often defer to the male nurse in the operating room, who is often junior to all the female nurses present.

Does it really matter that this occurs? I think so. Such remarks can be annoying at best, but also, at times, demeaning and confidence-eroding. The literature strongly suggests there is a benefit to explaining to the speaker, whether innocent or intentionally discriminatory, that he or she is mistaken.

However, even if they want to confront such stereotypes, research shows that most women, regardless of their status in an organization, are reluctant to actually do so.

We don’t need to over-think this. Whether the person is making an innocent mistake or being actively patronizing, just answer directly about your position — while keeping your tone friendly and open. For instance, when people assume David’s my boss, I usually just say something like, “Actually we co-founded the company together,” and move on. Even for powerful women, there is a cost in antagonizing a client, a prospect, or a peer. Depending on your tone, the response “I’m the boss” or “He works for me” may sound angry or overly defensive. Sue, an accomplished scientist and leader of a well-known research lab, told me, “I don’t make a big deal if they don’t realize it’s my lab, but I correct them, often with a joke, and then move on.”

You can also make your response less direct — perhaps by using the politician’s strategy of answering a question by referring to something that wasn’t in the original query, such as “we started the company eight years ago when I felt we had the right product.” Or if you prefer to make more of a point, you might say, “You seem like such an open minded person. I would have thought you’d guess right away that I’m the CEO.” (Or “his supervisor,” or “the chief consultant on the job,” or whathaveyou.) This approach appeals to the person’s sense of him or herself as egalitarian, which Leslie Ashburn-Nardo, Kathryn A. Morris, and Stephanie A. Goodwin have described as a very effective strategy in their Academy of Management paper.

Then there are the times that actions speak louder than words. Laura, a high-ranking attorney, remembers walking into a client meeting to take a deposition, only to be asked for some coffee by the client. Although fuming inwardly, she got the coffee, then sat down to begin the deposition. The client apologized profusely.

Your company has just developed an amazing new product. Years of development, energy, and, of course, money have gone into it. Hype and excitement behind the launch pushes it into high gear. But it falls apart at the seams at the last moment, leaving your company on the brink of disaster. What do you do next?

Having observed management teams for decades as a mutual fund and portfolio manager, I have watched numerous companies vanish after a disastrous launch of a product or service. Very few find a way to avert the fall; even fewer can identify the potential threat early and rally the troops in a new direction. A charismatic CEO with the willingness to accept a setback, move in a different direction, and persevere to achieve this new and difficult vision can succeed where most fail.

One CEO who had the ability to turn around a disaster was Frank Baldino of Cephalon. While this story is not new, it represents the perfect example of a phenomenal corporate turnaround and the skills required to engineer such a recovery.

Cephalon’s IPO was in 1991, part of the second wave of biotechnology companies to sell shares to the public. The focus of the firm was development of a treatment for ALS, or Lou Gehrig’s disease, and its leader was Dr. Frank Baldino, an intense, brilliant, and charming scientist. Cephalon’s lead molecule, Myotrophin, was a growth factor, intended to promote neurons that ALS destroys. Nearly all the assets of the company were targeted on this drug program. The stock climbed in anticipation of the clinical results, but unfortunately, the data were not strong enough for the FDA. Realizing that a rejection from the FDA was possible, Baldino sharply scaled back the Mytrophin program, containing the risk but maintaining an option on the possibility of success. The FDA voted to reject Myotrophin in 1997.

Even with Baldino’s proactive efforts, this was a large blow to the company. When disaster strikes, a forward-thinking CEO needs a back-up plan. Baldino already had one, albeit on a small scale, while Myotrophin was still on a fast track. In 1993, he purchased the rights to a well-tested drug for narcolepsy, Provigil, from a French company named Labon. Without shifting the spotlight from the company’s lead program, Baldino quietly moved resources to a second track. Following the FDA decision, Provigil took center stage. As Lisa Burns, CEO of Burns McClellan, long-time publicist for Cephalon, told me in a recent phone interview, “All the energy that Frank had applied to Myotrophin, he turned to Provigil.”

Baldino moved aggressively to bring Provigil to market. He convinced his board of directors and his management team that this was the right path, and he began to seriously promote Provigil within the company and to outside investors. While it might have appeared that Cephalon was a one-trick pony, the intentional overlap with another equally viable drug allowed the firm to maintain its momentum and created another road to success — one that the company needed. Persuasiveness about a new direction is critical for the CEO who is trying to save a sinking company. In this case it worked: The drug was approved at the end of December 1998.

Despite this, skeptics dismissed Provigil as a limited drug with no more than $100 million sales potential. Baldino had other ideas. Baldino sought to convince thought leaders of the therapeutic benefit, prove the drug worked, and then market it to the needy community. Provigil improved sleep apnea and wakefulness in shift workers with sleep-related problems. According to Burns, “Frank’s big, bold, bravado personality, combined with his abilities as a great scientist, helped build a previously undefined market for the drug that he brought to the U.S.” As a result, the sales force could market the drug to a larger market, including doctors treating airline pilots, truck drivers, military personnel, and factory workers who needed to stay awake at strange hours.

But Baldino didn’t stop there. As a shrewd manager, Baldino leveraged the company’s sales force by adding related products to its core franchise. He acquired two other drugs for the marketing team to sell to the neurologists whom they were already detailing. He developed the next generation form of Provigil prior to the patent expiration. By 2010, sales exceeded $2B.

From a failed product to a stock that rose to a value of over $5 billion in much of the 2006-2010 period, Frank Baldino had rebuilt a decimated company, creating meaningful wealth for his shareholders and many of his employees. Baldino passed away in 2010, but his actions offer an example for CEOs today. Managers who scrap all plans after one failure may be forfeiting tremendous rewards. A shift in direction and dedication to a new — if not challenging — vision can be a tough route to take. But with the right commitment and creative thinking, it could be the way to save your company from the brink.