Gender Pay Gap is Alive and Well in The C Suite: What’s Behind the Data?
By Michelle Hendelman
Recently, Bloomberg reported that women who hold executive leadership positions in Standard & Poors 500 Index companies earned 18 percent less, on average, than their male colleagues. Is this gap nothing more than a statistics problem where fewer women in those top spots yields a lower pay average? Or, are there other factors contributing to the large discrepancy between men’s and women’s salaries in the C-Suite?
Either way, the pay gap in the highest levels of leadership should be addressed, especially if women leaders are graduating from the same elite institutions and following similar career paths as their male counterparts. While C-Suite pay disparity is an interesting issue to explore on its own, it is not as if the pay gap reported by Bloomberg magically appeared at the executive level after years of salary equity between men and women.
This is not the case at all. In order to shed light on the C-Suite pay gap, it is helpful to look at the trend of disparate wages among men and women from a much earlier point in time. One company, for example, set out to explore the attitudes women and men have about salary before they graduate from college.
In an effort to determine the origins of the gender pay gap, employee branding firm, Universum, revealed that women undergraduates expect to earn roughly $7,700 less than male undergraduates.
In their yearly salary anticipation survey, Universum asked nearly 66,000 undergraduates at 318 universities what they anticipated their entry-level salary would be upon graduation. Given the significant difference between men’s and women’s responses, is it safe to say the gap starts here? If anything, these results indicate the roots of the gender pay gap are planted long before women reach the C-Suite.
If young women are already expecting to earn less money before they even enter the workforce, it is no surprise that women’s earnings consistently fall below men’s across many different industries, for the same jobs. So by the time women reach the C-Suite, the pay gap is already so wide, it seems nearly impossible to narrow it at that point.
Negotiating Salary: A Key Factor in the Gender Pay Gap?
One theory that persists in discussions of the gender wage gap is that women are less likely than men to negotiate their salary. Researchers have especially observed this to be true when there is no indication that salaries are, in fact, negotiable. This means that men will usually attempt to increase their take home pay, even if the option of salary negotiation is not expressly made available to them. Women, on the other hand, are more likely to accept an initial salary offer when negotiating does not appear to be an option.
However, when the option to negotiate a salary offer was made explicit, researchers found that women were more likely to counter the initial salary offer with a higher offer of their own.
Negotiating your salary might seem risky if you are unsure what the expectation is on the other side of the table. That being said, you might be short-changing yourself if you assume that negotiating your salary is an unacceptable tactic.
Attitudes Toward Competition: This Does Not Explain the Gender Pay Gap
Previous research points to something called “the competition gap” to explain the underrepresentation of women in top corporate leadership positions. In this study, women were less likely than men to pursue a job where they would be subject to performance pay, or bonus pay in the form of commission. Researchers concluded that the competitive pay structure deterred female applicants regardless of the potential opportunity available to them.
However, a 2008 paper out of Cornell University entitled, “Understanding the Gender Pay Gap: What’s Competition Got to Do With It?” examines how perceptions about men and women’s propensity for competition affects one specific aspect of gender inequity in the workplace: the gender pay gap. The authors found that, in fact, there is not strong evidence to suggest that male and female attitudes toward competition and performance pay structures in the workplace are different enough to significantly contribute to the gender pay gap.
Uncovering the exact reason why women in the C-Suite make so much less, on average, than men is difficult to do when so many factors are simultaneously in play. What we have learned, however, through Universum’s telling survey, women’s propensity to negotiate pay, and theories about women and competition is that women are potentially feeding into flawed perceptions before they even set foot in a workplace.
