Digest 46. Closing the gender gap in rewards
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The last years were characterized by a vivid debate about the persisting gender gap in rewards – and mass media attention is fueled around this topic also by symbolic, and very telling, actions – such as the identification of the “Equal Pay Day”. This commemorative day has slightly different characterization across the globe. In Italy, Equal Pay Day indicates the day that women would have to start working in that year, if their effort was to match the salary they receive. In 2023 this was February 11th and essentially, this means that women had worked “for free” for more than a month, from January 1st to February 11th. That large is the difference between their average salary and men’s average salaries! In the USA, Equal Pay Day takes a complementary interpretation. It indicates how far into a new year women must work to be paid what men were paid the previous year. For 2023, US women have to work until March 14 to achieve what US men have made in 2022.
Statistics are striking and speak loudly. Yet, to move beyond the outrage that these numbers sparkle, we need to ask how we got there and what can be done to twist this situation.
Which are the systemic and contextual factors associated with the gender pay gap, so that we can intervene on those?
Joshi, Son and Roth (2015) conducted a meta-analysis -a statistical analysis that combines the results of multiple studies on a specific topic- to identify attributes of the workplace context that are associated with sex differences in organizational rewards, broadly considered as encompassing salary level and salary increases, bonuses and other incentives, and number of promotions. The strongest point of this study is the bridging of two, historically separated, traditions of study: one that emphasizes the socio-psychological foundations of gender bias, and the other that underlines the role of institutional and structural factors for gender equality.
They found that the difference between men and women in performance evaluations (i.e., supervisors’ evaluations of what individuals do and whether they contribute what is expected of them at work) was only slightly in favor of men. This average difference was not only small, but also extremely variable across contexts, such that in different occasions women outperformed men (or better, we should say, were evaluated more positively, if we are not to equate evaluations with objective data; see Digest 22).
The second basic result of the meta-analysis concerns the difference between men and women in organizational rewards. In this case, the male advantage was way larger (14 times the difference in evaluations!) and was statistically significant. In other words, while context features can exacerbate or reduce the differences, the male advantage is always present.
Testing the impact of factors that can explain this phenomenon, and particularly factors that pertain to psychosocial bias, the researchers report that the performance evaluations received by men and women did not explain their different rewards. Hence, men are on average overrewarded, and this does not depend on their performance evaluation - or the supervisors’ bias thereof we could add.
Instead, the contextual factors predicted when men are overrewarded as compared to women. This happens, to some extent, in occupations that are more prestigious (e.g., executives and primary care physicians among those included in the study) and when the job performed is highly complex (i.e., it requires solving complex, novel and ill-defined problems, for which the person enjoys great degrees of discretion and autonomy). To a much larger extent, however, the phenomenon of men receiving more organizational rewards is explained by structural factors, namely the proportion of men in an occupation and the proportion of women at executive or senior manager levels within the industry. As expected, the greater the proportion of men in the occupation, the larger the gender gap in rewards. On the opposite, the larger the proportion of women in top positions at the industry level, the lower the gender gap.
Who needs more evidence that quotas work?
Organizational implications
As many organizations have started to realize, reducing the gender reward gap starts with seemingly unrelated actions. Some of these, for example, include specific vocational training and targeted employer branding initiatives that aim at enlarging the pool of female workers to be recruited in occupations that are traditionally “male”.
Quotas for female executives and senior manager positions seem to be a powerful driver of institutional and cultural change. As this study showed, such interventions do not work just for those directly involved, by reducing the reward gap at the top, because an equal number of women get promoted (and promotions are part of an organization’s rewards). The consequences of these actions are more far-reaching, and reverberate on the lower hierarchical levels by sending a signal, providing greater access to other women to enter the industry (in addition to career-related support) and likely raising attention on issues of gender inequality (including in rewards).
More systemic interventions need to be put in place, as compared to the typical training programs aimed at reducing bias in evaluators (see for example Digest 16). While these programs are important, they alone will not alter the reward gap. As the study showed, the gender gap in evaluations is, in fact, quite small – which is encouraging in that many steps have been made; yet the reward gap is unaffected.
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Reference: Joshi, A., Son, J., & Roh, H. (2015). When can women close the gap? A meta-analytic test of sex differences in performance and rewards. Academy of Management Journal, 58(5), 1516-1545. https://doi.org/10.5465/amj.2013.0721