The MBA’s Financial & Personal Rewards

Gender Gap

More Bad News on Women’s Careers

This month, the proverbial “war on women” was shifted from the ballot box to the boardroom, as new studies examined the paradoxes behind lower pay and diminished opportunities.

In November, a Gallup poll indicated that 64 percent of American women were cynical about their job prospects, eight points higher than men. A study by David Newton and Mikhail Simutin, which examined 23,000 CEOs and c-suite executives over 16 years, found that female officers who worked under male CEOs earned, on average, $46,500 less than their male counterparts. Even with female CEOs, their compensation was $2,960 less than men. Worse yet, the gap between male and female officers worsened as CEOs grew older, with the discrepancy going as high as $103,040.

Alas, male officers earned $21,960 less than female officers under female CEOs, so gender wasn’t the only issue in the Newton and Sumlin study. And that’s the challenge for researchers wrestling with the gender gap. The data findings are unassailable: Women earn less doing comparable work to men, all while facing perceived favoritism at best and discrimination at worst. And that doesn’t even factor in child care and diminished career opportunities. However, those results only tell part of the story.

And those issues were highlighted in recent research conducted by The Harvard Business Review and Bloomberg Businessweek relating to women holding MBAs. Let’s start with the Harvard study, which was conducted by Harvard’s Robin Ely and Colleen Ammerman and Hunter College’s Pamela Stone. Drawing from a sample of 25,000 male and female HBS grads, the study examined how they felt about their work, career trajectories and family responsibilities.

Not surprisingly, the men were happier. At work, 59% of men shared that their work was meaningful, 10 percent higher than women. And they were nine points higher than women in terms of career advancement at 50 percent. In other words, there was a satisfaction gap embedded within the gender gap echoes Betty Friedan’s unspoken discontent among 1950s women:

“The problem lay buried, unspoken, for many years in the minds of American women. It was a strange stirring, a sense of dissatisfaction, a yearning that women suffered in the middle of the 20th century in the United States. Each suburban wife struggled with it alone…she was afraid to ask even of herself the silent question – “Is that all?”

Unlike their predecessors, 21st century women are entering with higher ideals that unravel into disappointment. In the Harvard study, only 25 percent of female graduates expected to enter into an arrangement where their spouse’s career took precedence. Over time, 39 percent found that to be true. 61 percent of Harvard men, on the other hand, anticipated such an arrangement – and it eventually became a reality for 70 percent. Similarly, 78 percent of Harvard men believed that their spouse would be the primary care-given for their children. In the end, that became the norm for 86 percent. So it should come as no shock that 85 percent of women (and 73 percent of men) felt that “prioritizing family over work” was the biggest barrier to career advancement at work.

However, it is not necessarily child-rearing that drives women out of the workforce according to the study.

“Our survey data and other research suggest that when high-achieving, highly educated professional women leave their jobs after becoming mothers, only a small number do so because they prefer to devote themselves exclusively to motherhood; the vast majority leave reluctantly and as a last resort, because they find themselves in unfulfilling roles with dim prospects for advancement. The message that they are no longer considered “players” is communicated in various, sometimes subtle ways: They may have been stigmatized for taking advantage of flex options or reduced schedules, passed over for high-profile assignments, or removed from projects they once led. One alumna, now in her late fifties, recalled, “I left my first job after being ‘mommy-tracked’ when I came back from maternity leave.”

Even when companies accommodate women with flexible hours or part-time positions, they often lack the heft of their previous roles:

“…Yet another recounted leaving the workforce in response to unfulfilling work: “I last quit three years ago because I could not seem to get new challenges and became bored by the work. I had great reviews and the company liked me. There appeared to be preconceived notions about part-time women wanting less challenging work, off track, when I was seeking the more challenging work, on some sort of track. And being part-time took me out of the structured review and promotion ladder.”

That sentiment is embedded in the study’s data, where Harvard women also trailed their male counterparts in several key metrics: direct reports (81% vs. 71%), P&L responsibility (58% vs. 45%), and senior management positions (57% vs. 41%).

The study’s authors admit that they’d expected that time out of the workforce was probably the main driver for the discrepancy between men and women in senior leadership roles. However, they were surprised to learn that it had little impact:

“… it’s often argued that because being in senior leadership is directly tied to years of professional experience, women are less likely to be in those roles precisely because they are more likely to have taken such breaks. So we delved deeper, with controls for variables such as age, industry, sector, and organization size, analyzing a range of factors related to family status and parenting, looking for a link to women’s lesser representation in top management. But we found no connections. We considered not only whether graduates had gone part-time or taken a career break to care for children, but also the number of times they had done so. We asked about common career decisions made to accommodate family responsibilities, such as limiting travel, choosing a more flexible job, slowing down the pace of one’s career, making a lateral move, leaving a job, or declining to work toward a promotion. Women were more likely than men to have made such decisions—but again, none of these factors explained the gender gap in senior management. In fact, both men and women in top management teams were typically more likely than those lower down in the hierarchy to have made career decisions to accommodate family responsibilities. We even looked at whether simply being a parent—aside from any career changes or decisions related to parenting—made a difference. It did not. Again and again, our core finding—HBS alumnae have not attained senior management positions at the same rates as men—persisted.”

Nonetheless, a new Bloomberg Businessweek study found less ambiguity and more bias in its findings. In a survey of 9,965 MBA graduates at 112 programs, Bloomberg Businessweek reported that women earned $14,548 less than men on average. At their face, the results were disheartening:

“…17 of 22 industries that hired MBAs last year offered women less money. Women entering finance earned, on average, close to $22,000 less than men, the largest pay differential among companies that drive MBA hiring. Women were offered $12,300 less by tech companies, and $11,500 less by consulting firms than their male peers.”

Why is this significant? At this point – graduation – most women haven’t started families, meaning they are starting on equal footing with men. In fact, you could argue that male and female MBAs are both re-entering the workforce after graduation. And expertise, previous experience, and income may be the only facets that differentiate them.

Bloomberg Businessweek weighs all three of these factors in its study, admitting that career choice has an effect, as “part of the reason women overall earned less is that they were more likely to go into fields with below-average salaries, like consumer products and advertising.” But that doesn’t explain the entire trend, pointing to career switchers as an example:

“A man entering a new industry straight out of an MBA program has the same amount of experience in that industry (none) and the same level of education as a woman in the same situation. Yet women who were switching into tech, finance, or consulting—the three industries that hire the most MBAs—made an average of $12,800 less than men who were also newbies. Men who were in one of these jobs before business school, and stayed the course after graduating, made $13,300 more than women on the same path.”

However, the most damning statistic relates to previous income: “Women made about $8,500 less than men upon graduating regardless of what they were pulling in beforehand.”

Bottom line: The gender pay and opportunity gap exists long before women start families. Most likely, child birth exacerbates an existing trend. Is there a “war on women” in the workplace? No, they’re not being attacked as the metaphor goes. Instead, they’re being denied entry to the battlefield altogether.


Sources: Bloomberg Businessweek, Washington Post, Harvard Business Review

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