Gender Bias and Compensation in the Executive Suite of the Fortune 100

Article excerpt

ABSTRACT

The current study examines two gender-related phenomena, the existence of a glass ceiling and the magnitude of a gender pay gap, with respect to the upper echelons of management in the Fortune 100 companies. The results show that the glass ceiling is far from being shattered in the executive suite of the nation's largest companies as women currently hold only 5.8 percent of the top positions. However, the glass ceiling is showing signs of weakness as this represents twice the rate from just a few years ago. For women having reached the top levels of management, no gender pay gap exists as females overall are paid virtually the same as their male counterparts. These findings suggest that, when appointing and rewarding key executives, many corporate boards rightfully recognize that employee value and ability trump gender. Perhaps this gender-neutral tone at the top will serve as a beacon for the elimination of gender bias at all levels of employment.

INTRODUCTION

Three terms, the glass ceiling, comparable worth, and the gender pay gap, have commonly been used to describe some of the challenges women face in the workplace. The glass ceiling represents a "metaphorical barrier preventing women from rising to the highest organizational levels (Daily and Dalton, 1999, p. 4)." Catalyst, a New York based organization dedicated to the advancement of women in business, notes that only 61 (2.5 percent) of the 2,458 most highly paid executives in the Fortune 500 companies are women (Women's International Network News, 1998). Male executives surveyed by Catalyst noted that lack of experience is the primary reason women are advancing to top management positions in such low numbers. Although female managers responding to the same survey stated that lack of experience is a stumbling block for women, they believed it was secondary to "male stereotyping" of women as the top impediment to corporate advancement for women (Leonard, 1996).

Comparable worth is a term frequently used inappropriately to describe the general notion of equal pay for equal work. In reality, comparable worth does not deal with equal pay for equal work but rather equal pay for equivalent, yet different, work. Comparable worth implies that differential wage rates for predominantly male occupations (e.g., construction work) and female occupations (e.g., clerical work) are a subtle form of wage discrimination that undervalues traditional female occupations (Jennings and Willits, 1986). Advocates of comparable worth argue that salaries should be equal for jobs that provide equivalent value to an organization, despite differences in skills, education, working conditions, or responsibility. The problem with comparable worth is how does one determine the equivalent value to an organization?

Implementing comparable worth pay scales typically requires government intervention and the results often lead to surpluses in some fields and shortages in others. Weidenbaum (1999) notes that the most extensive use of comparable worth has been in the public school systems where teachers are paid not according to the subject areas taught but according to their seniority and level of education. Thus, science teachers are paid the same as gym teachers, which results in a shortage of science teachers and a surplus of gym teachers. Although a noble concept, opponents of comparable worth believe that market forces, not government intervention, are best suited for setting the value of occupations.

The gender pay gap refers to the notion that men on average earn more than women. Blau and Kahn (2000) note that the weekly earnings ratio of full-time female workers to male workers was constant at about 60 percent from the late 1950's to 1980. This gender pay ratio began to rise in the early 1980's and by 1995 it had climbed to about 75 percent. However, the ratio's upward progression appears to have stalled around 1995, and significant gains have not occurred since that time (Blau and Kahn, 2000). …