Executive Summary
There is evidence of gender pay discrimination in the United States with such figures as those of women in sales occupation, male and female professors at medical school faculties and full-time physician jobs earning lesser than men at equal positions indicating this trend (LCCR & LCCREF, 2000). Women have been found to occupy lesser executive positions that places them at a better chance to earn more even than men. Explanations that can be put forward to give guideline on the gender pay disparities include women occupying fewer executive positions than men. Law in the United States has not been silent on the demand for elimination of gender pay disparities, with the practice being criminalized in such acts like the Equal Pay Act which discourages companies to pay more or lesser in terms of gender aspects. Although the women’s choice for lesser paying jobs may not explain the reason for paying women excecutives lower salaries than their male counterparts, it may result to low average score in the gender pay gap. The fact that women faced reluctance in their appointments to the boards of largest companies in the United States may indicate the reason for the low presence of female employees at top positions.
The study on gender pay disparity may help application of mitigations which can help companies, for example, to take advantages of the cultural and financial benefits that a more diverse company (in terms of gender) would get (Shannon, 2009). Because the education system in most of the countries rears employees, females may be encouraged by solving problems related to issues that encourage their discrimination on pay aspects.
The problem of gender discrimination was also present in the not-for-profit organizations according to a 2006 Chronicle of Philanthropy.
Theories that can be put forward to help understanding the gender pay differences in women and men include the human capital theory and the social capital theory. The first one theorized that the amount of income was proportional to the level and quality of education. This view has been diluted with the complexity entering at the workplace, and the management becoming of more importance. Other factors that come into play to determine the level of pay include continued improvement at the workplace, lifelong and organizational learning, and all having an inverse relationship with human capital. The idea of increasing skill at workplace and the level of knowledge would become important (Hietela). Women would be placed at a disadvantage to developing their human capital than men because of lesser ability to cope or adapt to changing technical environment and economic aging. This is because of added responsibilities at home. Men would be better placed to earn more skills and career development at workplace, and these skills would help in making judgment for their promotion to high or executive positions and earning better pay, than women who had lesser time to have career development because of added responsibilities at home.
Another theory that has been put forward here is that of social capital development which links attachments at workplace, interactions, social networking, mentoring and mutual support of employees to likelihood of promotion to executive positions and better pay, as well as favorable judgment from colleagues or peers, and other benefits. Women can be perceived to have or forming lesser linkages, interactions and networking at workplace which would otherwise let them enjoy the aforementioned benefits, and thus the disparity.
Problem Statement and Significance of the Study
Gender discrimination remains a problem not only in the societal context, but also in the pay disparity at work place. For example, women in sales occupations in 1999 earned 59.9% of the men’s wages in equivalent positions, while women full-time physicians earned 62.5% of the male physicians. This is the case even with women calling for equal gender treatment. To help champion the rights of women in an attempt to end discrimination has been equal opportunity programs and acts seeking to open more opportunities for women. Gender pay disparity has also been revealed for pediatricians at the medical school faculties for male and female professors at every rank (LCCR & LCCREF, 2000). According to LCCR & LCCREF, women’s choice for low-paying jobs for a number of reasons cannot explain the difference in gender pay.
The absence of women as executives at highly paid positions, which may finally influence the outcome of the studies for gender pay disparities among top executives, has been documented. It was reported last year that from the InterOrganization Network (ION) tracking of 1161 companies in nine out the ten U.S regions, no woman occupied the top-compensated executive positions. Results which could lead to the hypothesis that highest paying positions are still being left for men, were evident from this tracking, with the number of companies without female occupants in the top compensated executive ranks exceeding that of those companies with no women executives in the United States (Shannon, 2009). This study also found reluctance in the appointing of women at boards of the largest companies in the United States despite good progress in the number of women in the labor force over the past.
This study seeks to review the status of the situation of gender pay differences, its causes and possible solution. Discovery and understanding of the trends in the gender pay disparities can help in solving the root cause problems so as to advance further the rights of women. Pay discrimination can directly or indirectly cause low motivation to the girl child because people in many countries are largely being trained to become employees and look forward to working in large firms with very good pay. Solution to the related problems can result in the pay equality between men and women which can motivate those women aspiring to occupy high paying executive jobs.
Factors that lead to pay discrimination at work place among the executive positions may negatively influence the company where it does not take the full advantages (financial and cultural, for example), which would otherwise be brought about by workplace diversity in terms of gender (Shannon, 2009).
Statistical methods that shall be considered in this paper to test the two hypothesis; male business executives earns more than female colleagues in the same positions, and there is no significant difference between the salaries of male and female executives.
Literature Review
Evidence to the pay disparity among men and women executives in the United States exists despite the presence of legal regulations like The Equal Pay Act of 1963 barring discrimination at workplace on the base of the sex of an individual. The Act prohibits companies to paying less or more than on the basis of gender. This means that since the legal regulation has not eliminated the vice, there is more explanation as to the causes of it.
The problem of gender pay discrimination is also present among non-profit making organizations for executive positions according to Chronicle of Philanthropy dated 2006. Women earned lesser 26% less salary than men, and elsewhere, 12,500 USD less than men executives in accounting profession (Bird, McCraw & Malley, 2007).
The Human Capital theory can be put forward to explain the gender pay disparity between men and women. It holds that the employees’ income is directly proportional to the quality and level of their education. With the increasing complexity of jobs over past and the management becoming prominent, the situation has changed where the determinant of the income is not the level of education or its quality. There is a general belief that organizational learning, lifelong learning and continuous improvement at workplace are also directly related to the human capital. It was possible to increase productivity and performance at work and in life through human capital- i.e. the increased skills and “stock of knowledge” (Hietela). It was possible that technical or economic aging would occur to human capital, where the former refers to the technical knowledge becoming obsolete or the individual is unable to cope with the technical changes in the job environment, whereas the latter refers to a situation where the individual is unable to keep up with the fast changes in the job environment and may happen prematurely. Because of the fact that many women carry more than one role, coping up with job requirements and the accompanying changes may be challenging or impossible. In addition, men may be advantaged or better placed than men to be able to advance with development (in terms of organizational learning, lifelong earning and continuous improvement) of their skills that links them to be rated as more productive or with higher performance than women. The fact that women a times choose jobs which are lesser paying because of added responsibilities may be hypothesized as resulting to better chances of occupying positions with higher pay, and their lack of availability in commitments that would lead to improvements of their careers or career development which is a major determinant of employee income.
The linkage of traditional perceptions relating to the role of women may also have influenced the tendency to promote women to higher or executive positions that qualifies them for higher pay. The social capital theory can also be put forward to explain, though partially, the impact of social networking, interactions, mentoring and mutual support. Those individuals who scored high on social capital were likely to earn more salaries, receive favorable evaluation from peers, be more efficient in completing assigned tasks, and be promoted faster according to Woolcock. The linkage of men being at a better advantage than women to exploit the opportunities and become more empowered in terms of social capital can be perceived in the fact that women may establish lesser linkages with their peers at work which can be linked to chances of promotion and amount of salary. A pay gap of 27% between men and women executives in the United States was found in a study involving 1171 female executive-year observations in relation to gender bias in reference to human capital and social bias theory. The percentage was low as a result of some factors, namely, low number of women executives compared to men (4.5% of the total) and a lot more women being employed in smaller companies even when holding similar or same positions (Anderson, Banker, Rong & Jiangxia, 2008). The ability of the men to interact more with the organizational components, longer working hours available to men employees, multiplicity of roles by women employees (McBrier, 2003) could also result in pay disparities. Companies were unable to exploit the potential, qualifications and capabilities of women compared to men employees hence having a lower social capital than men.
Women have been found to occupy lesser positions of management of organizations and firms in addition to being paid lesser amount of money than women in the same positions. One of the reasons why men earn higher than women at executive positions on a general scale may be the fact that there are a few numbers of women in occupying these positions. According to Isaacs (1995), women do not get promoted to executive positions as men, and this may resist their occupation of the top positions which are highly paid. According to Dwyer (1993), the wage gap increased as the management level increased as revealed by a 1993 ComputerWorld survey of IS managers’ salaries. For example, women made 98% of men’s salaries among the programming managers whereas they earned 82% of men’s salaries among the IS directors or managers.
Women take time to take care of children and choose professions that pay less and therefore increased pay gap according to Isaacs (1995). Only three female CEOs were present in the Fortune 1000 companies according to a study carried out in 1988 (White, 1992) as reported by Isaacs (1995). Only 34% of women had reached four rungs of management according to Smith and Mitchell (1993; Isaacs, 1995).
Another aspect that may be thought to cause the difference between the found gender pay disparities is the power of negotiation and influence. Although the difference in negotiation between the two sexes may not have direct evidence according to Harvard Business School, men performed better under certain circumstances. In case of presence of unclear limits and opportunities in the negotiations and the “sensational cues in these ambiguous situations trigger different behaviors by men and women”, different outcomes for negotiations done by men and women may be witnessed according to Pradel, Bowles & McGinn, (2006). Unclear terms would include variance of compensation standards for the job, across different companies and where the job is not easily quantifiable. Ambiguity in negotiations could occur in high-ambiguity industries such as real estates, health services, media and telecommunications. More or less equal salaries and negotiating outcomes was observed among both genders in low-ambiguity industries. A study involving MBA graduates found out that men were able to negotiate a higher average salary to the extent of 10,000 dollars per annum even when job performance for both sexes were similar. Another factor reported is that men were better placed to increase performance to outdo colleagues, than would do the women, and this would subsequently lead to higher pay.
Method
The purpose of this study is to find out if there is any difference between the salaries earned by male and female business executive; in essence, the study aims to prove that the male executives earn a larger salary than their female contemporaries.
- The Hypothesis: male business executives earns a higher salary than their female contemporaries.
- The Null Hypothesis: there is no significance difference between the salaries of male and female business executives.
- Variables: in this study, the Independent variable is gender and the dependent variable is the Salary. The two variables are classified as above due to their nature; while we will know the gender of the subjects of the study (thus the independent variable) the amount of salary they earn will be differentiated by their gender (thus the salary scale is dependent on the gender).
Data collection
The data will be collected from 100 business management firms in one city, the method of data collection will be through self administered questioners with the questions formulated specifically for this study. The scope of the study will extend from when the person was first employed, the starting salary, the regular increments (if any) and the expected increase in salary in the near future. Since the salary data is numerical to indicate difference in value between the parameters, the Likert scale measured at interval level will be used; the salary scale will be separated in intervals of $20,000. The gender question is dichotomous while the rank-question is ordinal-polytomous; for this latter, the Rasch model will be used for scaling. The list of questions in the questioner can be found in appendix A.
The data on gender will be nominally collected through probability sampling since we already know the gender of the subjects; the dependent variable, that is the salary scale will be generated from the data collected during the study. The reason for using probability sampling is to eliminate bias that may arise from an overrepresentation of one gender in the total population of executives in the city; since gender is independent then an equal number from each gender is selected. The population will be divided into the male and female populations in each of the firms; then an equal number of subjects will be selected randomly from each of the groups. In each business management firm five representatives from each gender will be selected randomly from each gender-group where they will fill closed questions in a questioner that will take about 15 minutes to fill.
The names of the executives will not be part of the data collected; only the gender will be used in grouping the subjects accurately. Additionally, the level in the corporate structure will have to be assessed so that contemporaries can be paired accurately; this grading will be used in the generation of the score that will be assigned to each of the respondents during the analysis of the data.
The study has a major limitation since it will be carried out as a single-capture study; the respondents of the study may not be representative of the population thus affecting the internal validity of the study (Davis, 2005). For example, in the face of the economic recession, the lay-offs or resignations may be overrepresented in one gender than the other. The result is therefore that the results of the study can be interpreted in more than one way; with the various outcomes being attributed to factors other than the gender of the respondents.
The external validity of the study may also be at risk (Davis, 2005); for example, can the results that we will acquire from one city be generalized to the whole population of executives in the country. Here we have to note that different cities are supported by different industries; and that the representation of the genders may not be equal in these industries. Additionally, depending on the type of industry, the remuneration packages may not be formulated in the same way for the two genders.
Data Analysis
The data will be analyzed in an attempt to rule out the null hypothesis that there is no significant difference between the salary of the male and female business executives between the two genders; and to test the hypothesis that the salary of the male executives is significantly more that that of their female contemporaries. For these purposes, the t-test will be employed to determine whether there is a significant difference between the salaries of the two genders.
However, before the test is administered, the raw data collected from the study will have to be collated to meaningful statistical data. Each the respondents forms will have to be analyzed for accuracy in filling in order to eliminate any entry errors that may be present (for example, responding positively for both male and female genders in the questioner). This will be followed by the conversion of the data into digital form by entering it into a computer database; in order to further reduce entry errors, a double entry method will be used. Additionally, any missing information can be added to the data (for example, the amount of experience in the job can be generated from the date of hiring to the day of the study if the respondent failed to provide such information).
A descriptive analysis of the data will follow the computerization; this involves the generation of statistical values such as the mean, median, mode (that measure the central tendency of the data); the variability of the data will also be defined by the calculation of the standard deviation and the variance of the data. Finally, the data will be represented in diagrammatical format either in graphs and/or histograms.
This will immediately be followed by the formal statistical analysis of the now coherent data; the t-test will be used to test the hypothesis of our study by defining the significance of difference between male and female salaries; both hypotheses will be tested independently to ascertain whether they are accurate. In this study, we expect to demonstrate a causal relationship between gender and salary; whereby male business executive will have a slightly higher salary that their female contemporaries.
This will effectively result in the rejection of the null hypothesis [Cooper and Schindler, 2006]; that there is no significant difference between the salary of the male and female executives; and the acceptance of the hypothesis of the study, that there is a difference.
Discussion
As mentioned above, the results seen after the statistical analysis of the collected data shows that there is a significant difference between the salary of men and women in executive position; with the men earning higher salary than the their female contemporaries. This study therefore will prove the earlier discussed reason which put women at a disadvantage in their pay packages. Among the factors that were discussed to have caused or influenced the gender pay disparity, the number of women in the executive positions had the greatest influence in the pay disparity between the two sexes. Women were found to be less likely promoted as compared to men which influenced the number of women at high or executive business positions. Women were likely to be influenced by family factors in making job-related decisions like making them to take positions that are lesser paying because of added responsibilities.
By defining this difference in statistical terms this study links the social aspects attributed to the lower salaries in females to the actual effects that this aspects have on the pocket of the lady; for example, it would be impossible to quantify statistically, the influence of the social circle of the executive has on the salary offered since such relationship are numerous, non-quantifiable and complex. In addition, although gender bias has been discussed in terms of social factors, it would also be difficult to define social (gender) bias against (for example) women since sentiments of this kind cannot be revealed by the subjects in an empirical study without causing further complications.
Ideally, according to the Human capital theory mentioned earlier (Hietiela), there should not be any difference in the amount of salary paid to people with the same amount of education, expertise and experience; by directly linking gender with salary, this study discuses the disadvantaged position of the females despite rules and regulations to prevent this.
However, as mentioned above, the study’s relevance is threatened by issues of validity (Davis, 2005); for example, the different sectors of the economy may not have similar pay dynamics. Future studies should aim at isolating individual industries all over the country and analyzing them as different entities in-order to solve the issue of external validity. This would enable proper measures to correct this anomaly in the sectors that are most severely affected by this pay difference.
Additionally, methods of quantifying the individual factors that are attributed to the disparity between the two genders should be created for the purposed of discovering which of them is the most influential in reducing the chances of a female executive getting an equal or larger salary to that of the male. For example, how much does a social network or social bias contribute to the lower salary? This would allow for each of these issues to be attacked individually, rather that trying to deal with a poorly defined problem that is not even widely acknowledged in the society and is subject to speculation and conjecture.
The results of this study will therefore add to the mounting amount of evidence that women are clearly disadvantaged in the place of work in terms of salary; by concentrating only on women in the executive positions, this does not exclude the possibility that a similar phenomenon might be affecting women in all other positions in the country’s economy; in fact, concerns have already been raised about this issues in the lower grades of employment. Future studies should also try to quantify this disparity in a similar manner.
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