To the surprise of many, large numbers of highly qualified American women are dropping out of mainstream careers. In fact, more than half of the women in the class of 1981 from Stanford University left the workforce at some point.

Even more surprising, only 38 percent of women who graduate from Harvard Business School work full-time for the balance of their careers. One in three women with an MBA isn’t working full-time right now. Compare that with only one in 20 for the MBA men.

And these aren’t just the women who quietly fade away, either. They include some very high-profile business leaders, like Brenda Barnes, former CEO of PepsiCo, and Karen Hughes, who left the Bush White House to take care of her teenage son.

But, according to the Harvard Business Review, until recently there had only been anecdotal evidence for this “female brain-drain.” Then, in early 2004, the firms of Ernst & Young, Goldman Sachs, and Lehman Brothers formed the Center for Work-Life Policy to investigate the question. Ultimately, they conducted a survey with Harris Interactive of 2,443 women in two representative age groups.

Their findings are extremely important for the long-range health of the economy and the competitiveness of individual companies. Why? Because women are in fact leaving the workforce, just as the anecdotal evidence suggests. But, more importantly, the study concluded that companies that can learn ways to keep them — or coax them back — are going to hold a huge competitive advantage over those who simply let them go.

The authors of the study found that 37 percent of all the women they surveyed had quit work at some point other than for traditional retirement; the number rises to 43 percent for women with children. Nearly a quarter cited taking care of family members, such as parents, as the reason. In a separate survey by the group, 40 percent of highly-qualified married women left work feeling their husbands created more work around the house than they performed, and almost that many felt their spouse’s income alone was sufficient for the family.

But another big and, perhaps bigger, factor was that many women didn’t find their careers satisfying. Only 6 percent felt their work was too demanding. On the contrary, most felt it wasn’t demanding enough. Despite this, 93 percent of the women said they intended to return to work.

Sadly, it’s not nearly as easy to get back into the workforce as it is to leave it. A fourth of the women who had left their jobs were unable to get rehired. Of the 74 percent who did succeed in getting jobs, only 40 percent were hired in full-time, professional positions. The study found that even if the time off is relatively short, it can be devastating to a career. In the business sector, on average, women in the survey only quit for 1.2 years. But they lost nearly a third of their earning power in that time. In all sectors, if a woman spends more than three years out of a job, she’ll lose 37 percent of her earning power.

Interestingly, when women begin their careers, they earn almost as much as men do. From age 25 to 29, they make nearly 90 percent of what their male peers make. That all changes when women become mothers. By age 44, their salaries are down to 71 percent of the male wage. Clearly, the same prime years during which a woman would be having children are the prime years for establishing a career. And as many women have learned, you may be able to do both, but few can do both well.

The problem with all this for American business is that highly qualified women are desperately needed in the corporate world and will be needed even more in the coming decade. So companies that don’t pay enough attention to the problem and its solutions now will pay the price later.

To properly address the problem and exploit this opportunity, companies need to recognize that even women with careers will have families, and they’ll need to take time off to do that. Unless companies embrace that fact, and then help their female employees to come back when the time is right, both will be marginalized as savvy competitors figure this out and reap competitive advantage from it.

Johnson & Johnson is one company that has already adopted an enlightened policy toward its women executives and their changing needs. It readily arranges for a transition to part-time work when women have children or need to spend more time with their families for other reasons. This not only elicits gratitude among employees, but it boosts productivity and makes for very loyal long-term workers.

At Pfizer, such part-time workers are given the same benefits and training as full-time employees, but they work 40 percent less. There are a variety of options, including three-day workweeks or a shortened workday that is structured around a child’s school hours. These working mothers are eligible for promotion and can return to full-time work when they choose.

In some cases, companies with enlightened work policies for women are taking talent away from the competition. A senior employee left another company to join Lehman Brothers when a recruiter called and told her that she could work at home one day each week.

Yet other companies are allowing flexibility not only in the day of the week but also in the entire career trajectory. Booz-Allen is one such firm. Management consulting is a business driven by an up-or-out attitude, and as a result, it loses a lot of talented women at the mid-career point, where traditionally they’d be moving into position to become partners.

But Booz-Allen has instituted a so-called “ramp up, ramp down” program to avoid losing that talent permanently. The program takes apart standard consulting projects and gives women portions of the job that can be done by telecommuting or during “flex hours” in the office.

Thus, a talented woman can take on the amount of work she can handle, keep her hand in the game, and be ready to move up when time permits. Booz-Allen wants to keep their skills sharp and be their employer-of-choice when that time comes. For the first time, a woman in management consulting can have a family and look forward to becoming a partner.

In this regard, Ernst & Young has become one of the leaders of the movement to keep women from opting out. The firm first noticed that women were leaving in droves in the 1990s. Although its entering classes of young auditors were equally male and female, only a small percentage of females made it to partner. The problem was more than cosmetic. Turnover in client-servicing roles meant lost continuity on work assignments. And on top of losing talent that the firm had invested in training, the average cost of replacing a lost auditor was 150 percent of a departing employee’s annual salary.

Ernst & Young’s leaders set a priority to retain and promote women. They convened a “diversity task force” of partners to focus on the problem, and established an Office of Retention. The company equipped all of its professionals for telecommuting and established a policy that all jobs could be done flexibly. More importantly, using this option would not affect anyone’s opportunity for advancement.

The company then set up programs targeting five locations within the firm for improvement in five retention-related areas. Palo Alto and San Jose were singled out for “life balance.” Minneapolis got a mentoring program. New Jersey was a testing ground for flexible work arrangements. Boston became a networking hub for women in the business community. And Washington, D.C., became the center for “internal networking” at E&Y.

Certain partners were designated as “career watchers” to track individual women’s progress, in particular, monitoring the caliber of the projects and clients to which they were assigned.

Growing out of this program, Professional Women’s Networks are now active in 41 offices, and they focus on building the skills, confidence, leadership opportunities, and networks necessary for women to be successful. A three-day Women’s Leadership Conference is held every 18 months. The most recent was attended by more than 425 women partners, principals, and directors.

With some companies going to such great lengths to retain women, other companies should beware. The Center for Work-Life Policy study found one particularly dramatic piece of evidence in its survey: Only 5 percent of highly qualified women who were returning to the workforce expressed an interest in rejoining the organizations they left. In the business sectors, that percentage was zero. In other words, if you lose them, you lose them for good.

Based on the growing opt-out trend and companies’ efforts to address it, we offer the following five forecasts:

First, as the number of workers between the ages of 35 and 45 continues to shrink, the talent shortage will get worse. In the short term, CEOs are going to realize that to find enough high-caliber talent to drive growth, they’re going to have to institute policies to retain more of the women who work for them, even when those women have to leave work for a year or two mid-career.

Second, the broader use of telecommuting and flexible work arrangements by women will have a rebound effect on men, who are now reluctant to take advantage of today’s work-life policies. Job sharing and parental leave will become more common — and more acceptable — for both men and women. Companies will increasingly compete for talent on the basis of these policies. The leaders in work-life policies will win the best talent.

Third, cultural and societal trends will gradually erase the stigma associated with leaving work temporarily to attend to family matters. Companies will begin crafting imaginative policies to help further de-stigmatize the practice, including visibly promoting women who have taken time off in order to show that it can be done. Increasingly, work-life policies will be presented in such a way so that men, as well as women, won’t be afraid to use them. Men are already spending nearly an hour more per day with their children than their own fathers spent with them, according to research by the Families and Work Institute conducted for companies such as IBM, Johnson & Johnson and Texas Instruments. And Generation X fathers, those aged 23 to 37, are at the forefront of this shift in priorities from career to child-rearing, by devoting 1.2 more hours to their children each day than dads from the Baby Boom generation, aged 38 to 57, spend with children of the same age. As the St. Louis Post-Dispatch 2 reports, the clearest signal that fathers’ priorities are changing is that they are increasingly willing to give up promotions so they can spend more time at home. From 1992 to 2002, the number of college-educated men who wanted to move into jobs with more responsibility dropped from 68 percent to 52 percent.

Fourth, as these developments spread, corporate cultures will be transformed. It will become part of an accepted recipe for competitive advantage to have a family-friendly, “work-life policy” that is all-inclusive and non-stigmatized. As more and more women rise to the top, the Trends editors forecast these policies, and the new corporate culture that supports them, will become increasingly second nature.

Fifth, America’s large pool of female talent will emerge as a driving force behind the country’s competitiveness in the coming decades. Fifty-eight percent of college graduates are now women, and nearly half of all professional and graduate degrees are earned by women. Companies that stay connected to these women when they leave — and welcome them back when they want to return — will reduce costs and realize benefits that are now being wasted. Without the constant drain on talent that is now taking place — and the costly job of replacing it — far more value will be realized from each career, and the overall economy will stay on track with greater ease. The more effective use of women’s talents in the workplace will enable the U.S. economy to remain the envy of the global marketplace for the next 20 years and beyond.

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