How Rankings & Recruiters Make It Difficult To Enroll More Women In Business Schools

‘ONLY HALF OF THE WAGE GAP CAN BE EXPLAINED BY CAREER CHOICES’

“Women statistically tend to go after jobs that pay less compensation,” agrees Garrette. “They are less likely to go after investment banking and consulting. And when they take jobs in industry, they tend to go into luxury or marketing positions which pay less. But only half of the wage gap can be explained by career choices. The other half is just that for the same position in the same industry, they get lower wages. This part should be addressed. The problem I think is that most of the programs do their best to recruit more women and train them, but then it is up to the companies to play their role. It’s our mission to provide the best education we can to both men and women, but there is a share of the salary gap we cannot address.”

Garrette says that schools that try to break out of the pack by enrolling more women will likely suffer a hit in several major rankings where compensation is a key, often heavily-weighted metric. The Financial Times global MBA ranking, for example, applies a 40% weight to salary information provided by MBA alumni, more than any other metric. Forbes’ MBA ranking is entirely based on income because it solely calculates the return on investment of the degree. U.S. News & World Report meantime, weighs salary and bonus 14% in its methodology. Even Businessweek, which never used compensation data to rank MBA programs, is this year adding that component to its methodology at a weight of 10%.

“If you look at rankings, the salaries play a major part in determining the overall score of a school,” adds Garrette, also a professor of strategy and business policy. “Programs with more women are to some extent penalized in this calculation because with a wage gap of about 15%, programs with more women will have a lower average. The Financial Times does reward schools that get closer to a 50-50 enrollment of men and women, but the weight of that criteria is very, very low so it doesn’t really count.”

Though Garrette didn’t say it, rankings that rely on GMATs also are somewhat problematic because GMAC data shows that women score on average score 21 points lower than men who average 555. A Columbia Business School study last year, moreover, found that out of the more than 80,000 female GMAT takers in 2013, just over 2,000 have the GMAT scores, work experience, and interests needed for acceptance into top full-time MBA programs.

THE FINANCIAL TIMES SHOULD ADJUST ITS SALARY NUMBERS TO ACCOUNT FOR THE WAGE GAP

Garrette believes the Financial Times should adjust its compensation numbers for women so that schools which are more successful in enrollment women aren’t hurt in its ranking. “They adjust for this and that so why not adjust for the percentage of women in the class?,” he asks.

At HEC Paris, where 35% of the enrolled MBA students are female, the wage gap is about 15%, says Garrette. And that’s despite the fact that many of the school’s biggest employers are in the mainstream of MBA recruiting: Amazon, which hired 10 of HEC’s graduates last year, McKinsey & Co., GE, L’Oreal, Schneider Electric, and Johnson & Johnson.

But the variance in HEC’s starting MBA salaries—the high and low extremes—is oddly higher for women. “In the latest class, the highest salary we had adjusted for purchasing parity was given to a female graduate. So it is doable to reduce the wage gap. One of the problems is that when men and women negotiate their salaries, the employers expect that the men will negotiate and they have anticipated that they will give slightly more.

“If a woman negotiates, employers are surprised. In some cases, a woman could take advantage of that and get a higher starting salary but it is exceptional behavior. So we are trying to tell them in seminars that employers tend to behave in a different way with them because they know that women tend to negotiate less. We’re urging them to negotiate more.”

THE MORE YEARS A WOMAN IS IN THE WORKFORCE, THE WORSE THE WAGE GAP GETS

And once a woman accepts a lower starting salary, the gap is likely to widen later on. “Studies say they are punished twice,” explains Garrette. “They are hired at a lower salary and then their progression is less fast than for men. Most companies give salary rises on percentage terms so if you start with a lower base, the progression you get is lower.” That is especially troubling in the way The Financial Times measures compensation because it counts what alumni make three years after graduation.

“At the end of the day, the problem rests with companies. They always say we should graduate more women. Ideally, we should be as close as possible to 50% and the schools are trying to do that. But employers don’t give them the same salaries. We are not here to create a cheaper labor force for companies.”

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