Bath Business and Society

Research, analysis and comment on the role of business in society from Bath's School of Management

Topic: Gender equality

Why women and men too easily accept the gender pay gap

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📥  Gender equality, Policy

 

Writing for the Conversation, Dr Chris Dawson considers whether differences in psychology account for the gender pay gap.

 Large employers in the UK will have to publish from April annual data on their gender pay and bonuses gaps. While under the Equal Pay Act it is illegal to pay men and women differently for doing the same job, figures from the Office for National Statistics puts the gender pay gap for full-time employees in 2016 at 9.4% in the UK. The reasons for this substantial difference in earnings are often attributed to occupational segregation by gender, driven by differences in education, accumulated experience and discrimination. The Conversation

But recent research has instead focused on underlying gender differences in preferences and psychological attributes which may affect choice of work, and therefore help to explain the gender pay gap.

For instance, women may seek different career paths and value aspects of employment such as flexibility and a pleasant working environment instead of focusing directly on pay. On the whole, women tend also to be more risk averse than men and have lower preferences for competitive situations which can both lead to career choices with lower earnings than men.

So psychology seems to provide a fruitful area for explaining the gender pay gap. The focus of my own research into this subject is a particularly pertinent psychological trait, that of optimism. By optimism, I specifically mean systematically biased beliefs in the probability of doing well.

Psychologists have documented our tendency to view ourselves in implausibly positive ways and our absurd belief that our future will be better than the evidence of the present can possibly justify. However, when it comes to assessing our competence, our ability and our future prosperity, men really do overestimate themselves while women are typically more pessimistic. I found that this difference between men and women can really matter in matters of employment.

Optimism affects the satisfaction we get from our pay. While we know that women face a substantial wage penalty compared to men, they also tend to be more generally satisfied with their work and income. This is a counter-intuitive situation. We would expect those who get paid the most (men) to be the most satisfied. Here is where optimism, our biased perception of the future comes into play. The satisfaction we gain from our wages is to some extent based upon our expectations. Receiving £10 when you are expecting £5 feels pleasing. But receiving £10 when you are expecting £20 feels disappointing.

If women are predisposed to underestimating themselves and their labour market prospects, as my study finds, they will continue, on the whole, to be satisfied with such pay inequality. This is a worrying state of affairs. We tend to search for new jobs when we feel that some aspect of our current occupation, such as pay, can be improved upon. But if we are satisfied, we stay in that job, we don’t negotiate and we don’t ask for that promotion.

Battle of the sexes

For men it’s the opposite story. They constantly overestimate themselves, widening their vulnerability to inevitable disappointment. Disappointed workers negotiate, they always ask for promotions and are happy to switch employers to improve upon aspects of their jobs which they feel can be bettered.

So optimism pays off in the labour market – it drives the pursuit of employment with better wages. Optimism may also be beneficial in other ways. Psychologists have often linked optimism with motivation and our ability to cope with stress. Believing in ourselves and in our abilities may also help us to convince others, especially our boss, that we are brilliant.

After all, to convince others of your competence, you really need to believe it yourself. If psychology is the problem – even in labour markets with no discrimination – women will continue to earn less, simply because they are too easily satisfied with lower pay.

It is difficult to know how laws and policy makers can solve this pessimistic female outlook, since personality traits tend to be established and fixed early on in pre-adult life. But perhaps one step in the right direction would be for employers to adjust their recruitment and promotion policies, by pulling up women with potential instead of waiting for them to come knocking.

 

the-conversation

 

This article was originally published on The Conversation. Read the original article.

Getting women onto the board – why some countries fare better than others

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📥  Business and society, Gender equality, Policy

 

The world over, there are more men than women in corporate boardrooms. This means that business is missing out on the talent and skills of a hugely important group that could make business more competitive. Here, Dr Johanne Grosvold and Dr Bruce Rayton discuss research which shows how four key institutions - family, education, economy, and government - either facilitate or hinder women’s rise to the boardroom.

Following the collapse of Lehman Brothers in 2008, Christine Lagarde of the World Bank questioned whether the bank would have collapsed had it been the Lehman Sisters, rather than the Lehman Brothers. She suggested that insufficient gender diversity in the upper echelons of financial institutions was partly to blame for the financial crisis and corporate collapses.

The continued under-representation of women in corporate boardrooms across the world remains a thorn in the side of big business and politicians alike. Increasingly though, governments and businesses are beginning to consider what can be done to redress the balance. Some countries such as France and Sweden are leading the way with up to 41% of women on the board, while others such as Greece and Malta lag behind with rates of only around 5-10%.

Given such cross-national variation, we set out to understand why it persists and to identify what could be done better to make gender diversity in the boardroom a reality. Taking a sample of 23 countries, including most of Western Europe, the USA, Asia and Latin America, we analysed the role of education, family, religion, economy and the role of the government in influencing board diversity. Our results were both surprising and encouraging.

Out of the five institutions we analysed, four were statistically significant in helping to explain why women do or don’t make it to the boardroom. Family, education, economy and the government all played a role while religion was the only factor that had no apparent effect.

Education - in countries where women and men enjoy similar levels of enrolment in higher education, women are better represented in the boardroom.

Family - in countries where there are fewer incidents of divorce, there are fewer women on the board. In other words, we found that an unintended outcome of higher rates of the divorce over the last few years has been greater labour force engagement and executive ambitions amongst women.

Economy - where women make up a smaller proportion of the managerial labour force, there are fewer women on the board.

Government - in countries where governments back their welfare legislation and family friendly policies with money and, for example, subsidise childcare, women are better represented in the boardroom. Passing legislation and instigating initiatives designed to encourage women to balance family and working life only give the desired results if there is adequate funding to make these initiatives meaningful and effective.

We believe these results may be good news for business and women alike. Increasingly more women than men are pursuing higher education, which means they are giving themselves the best starting point for climbing the corporate ladder. It is important, though, that governments consider the potential effects of their broader policies on women and families, to ensure that these help rather than hinder women to capitalise on the benefits of higher education.

In many countries, women retain the role of primary carer. Governments are, however, increasingly attuned to the need for providing better funded welfare provisions such as subsidised childcare to ensure that women are able to contribute fully to society and economy. This suggests that going forward, business is likely to reap the rewards of even more and better talent. To maximise these benefits, business could play a more active role in complementing government action, for example by including subsidised childcare in remuneration packages in countries where such provisions are not routinely provided by the state.

Welfare provisions of this kind have typically been associated with liberal or social democracies. But the growing acknowledgement of the business case for supporting women's career progression means that governments and employers in all countries should do more to encourage gender balance in the boardroom.