Bridging the Gap: Policies to Tackle Gender Inequality in the Workplace

Executive Summary

The persistent gender gap in pay and promotions represents a critical issue within today’s workforce, with women frequently facing barriers to career advancements. Even though we’ve made strides towards gender equality, the closing of the gender gap has slowed down in recent years. This policy brief identifies several contributing factors and offers recommendations of how to implement corporate-level policies to address the issue. To mitigate hiring discrimination, firms must diversify candidate pools to be more gender-neutral, thereby promoting equitable representation of men and women across all job levels. Additionally, to reduce biases in promotion practices, managers should be required to explicitly define their expectations and justify their evaluations when rating subordinates using metrics. Finally, this brief advocates for flexible work policies that accommodate the disproportionate caregiving responsibilities borne by women, thereby facilitating their continued participation in the workforce. These recommendations collectively aim to create a fair workplace where gender does not dictate professional growth and success.

What is happening?

Institutional gender inequality is a topic that has attracted considerable attention, particularly with respect to disparities in wage and advancement opportunities. Women’s concurrent responsibilities as mothers, spouses, and full-time workers introduce complexities that their male counterparts generally do not encounter. Research has pinpointed a variety of factors that contribute to gender-based salary discrepancies. These include entrenched gender biases related to personality traits (Zimmermann & Collischon, 2023), the disproportionate caregiving demands placed on women (Glynn, 2018), obstacles to career advancements often referred to as the “glass ceiling” (Fernandez & Campero, 2017), and the biased application of evaluation metric in promotion decisions (Benson et al., 2022).

Gender stereotypes regarding personality traits contribute to the persistent wage gap between genders. Leadership roles often valorize characteristics traditionally ascribed to men — outspokenness, assertiveness, and dominance (Somers, 2022). This perception leads supervisors and peers to view men as more competent, a notion supported by Collischon and Zimmerman (2023). Consequently, it hampers their ability to see women as suitable for high-level leadership roles, often resulting in women being overlooked for promotions (Somers, 2022). Success at the workplace, when it occurs for women, is frequently attributed to luck, whereas men’s success is often seen as a result of their abilities (Kohler, 2023). Personality traits significantly affect gender wage differentials, potentially accounting for up to 12% of the disparity. This is especially true at the higher end of the wage scale, where direct wage impacts of traits that vary between genders may influence outcomes through differences in productivity and negotiation (Collischon, 2021). Collischon (2021) also suggests that “certain personality traits could affect productivity and, if these differ systematically between men and women, could thus affect gender wage gaps” (p. 2). For instance, openness to experience, often associated with creativity, may influence productivity and therefore, financial rewards. Conversely, traits such as agreeableness are negatively correlated with wages, as more agreeable individuals tend to be less demanding in wage negotiations (Collischon, 2021).

In addition to the factor of gender stereotypes, the unequal distribution of family responsibilities, which often fall more heavily on women, exacerbates the gender pay gap. According to Glynn (2018), in households where both parents are employed full-time, mothers typically work an hour less per day than fathers but dedicate more than an extra hour daily to childcare. Empirical evidence suggests that men receive wage bonuses for extended work hours, whereas women face a motherhood wage penalty (Glynn, 2018). Statistics underscore this imbalance: “…mothers put in 92 percent of the hours put in by men and earned 47 percent less money,” and “…fathers work only 90 percent as many hours as men without children, while taking home 122 percent as much pay” (p. 23–24). Moreover, as work experience is highly valued by employers, women, despite increased participation in the workforce, accumulate less work experience on average than men. This disparity is often linked to women’s predominant role in child and elder care (Glynn, 2018). Consequently, the challenge for many women to fully engage in their careers and ascend to higher ranks leads to their underrepresentation at senior levels. Given the direct relationship between rank and salary, the absence of equitable career advancement opportunities perpetuates the gender pay and promotion gap. Women, earning lower wages on average, face a lower opportunity cost to become family caregivers compared to men. This can lead to even lower wages as women spend less time at work, thus accumulating less work experience. However, women’s incomes are crucial components of family earnings. Pay inequality between men and women reduces household spending power, particularly in single-parent households (Glynn, 2018).

Debates surrounding the “glass ceiling” have traditionally centered on internal career advancement. The original concept suggested that barriers to progression were embedded within organizational structures, as indicated by Fernandez and Campero (2017) that “…the glass ceiling was thought to be rooted in the ways employers sorted individuals within organization” (p. 75). Subsequent research has often echoed this perspective, examining how organizational processes affect women’s advancement within firms and exploring gender disparities in internal promotions. Additionally, Fernandez and Campero (2017) argue that an exclusive internal analysis of gender inequalities may overlook certain limitations, particularly the misleading assumption that higher-level jobs are not open to external hiring. This assumption is conditional and, as Fernandez and Campero (2017) summarize, “…the population of those at risk for obtaining jobs can be clearly identified, so that the gender composition of those at risk of filling positions can be compared with the gender of those who ultimately obtain those positions” (p. 76). In fact, this premise does not always apply. As indicated by their study, companies sometimes recruit externally for executive positions, and these externally hired executives typically receive higher compensation than those promoted from within (Fernandez & Campero, 2017). Given that job competition occurs both internally and externally, studies focusing solely on internal processes cannot fully account for the organizational barriers to women’s advancement. Fernandez and Campero (2017) assert that “…if employers are going to discriminate, they have the most opportunities to do so at the hiring interface” (p. 77). And in case of external hiring discrimination, it is hard to identify complainants when the person is not hired. Thus, it is critical to consider gender bias in external hiring practices, as they contribute to limiting women’s progression within organizations, and gender disparities widen at higher organizational levels.

Besides glass ceiling effects, in managerial promotion decisions, “potential” is a key factor, often weighed alongside performance ratings. Performance is retrospective, focusing on what has been accomplished, whereas potential is predictive, and inherently more subjective (Benson et al., 2022). Despite women frequently receiving higher performance ratings, they are paradoxically assigned lower potential ratings, which results in them being 13 percent less likely to be promoted compared to men, as highlighted by Benson et al.’s (2022) paper. A common tool for assessing potential is the “Nine Box” grid, which evaluates employees across two dimensions: current performance and future potential. This tool positions employees within a 3x3 matrix: the horizontal axis signifies current performance, categorized into low, medium, and high levels, while the vertical axis denotes future potential, also segmented as low, medium, and high. These ratings are instrumental in determining promotions, compensation, and career opportunities (Benson et al., 2022). The subjective nature of potential ratings is critical because it significantly influences the gender promotion gap. The article suggests that discrepancies in potential ratings between male and female employees could explain up to half of the gender gap in promotions (Benson et al., 2022). Consequently, if women consistently receive lower potential ratings, their promotion prospects diminish, perpetuating the gender disparity within the organization.

Furthermore, Benson et al. (2022) point out that low potential ratings fail to accurately forecast the valuable contributions women can offer. Studies demonstrate that women, when given comparable potential ratings to men, not only sustain their high performance but also exceed future performance expectations. Moreover, women are more likely to remain with their employer, even when faced with continual undervaluation of their potential. In contrast, men show a lower organizational commitment, often leaving the firm if advancement opportunities are not forthcoming. This misjudgment in potential and the resultant promotion misallocation is a significant issue, calling for a critical reevaluation of the metrics and tools used to gauge an employee’s future impact (Benson et al., 2022).

It’s frustrating to observe that women are often overlooked for promotions despite receiving high performance ratings, which are deemed more objective than potential ratings. The subjective nature of potential ratings allows employers’ biases to influence decisions, as they are based on predictions without substantial evidence (Benson et al., 2022). Additionally, the combined pressures of caregiving responsibilities (Glynn, 2018) and entrenched gender stereotypes (Zimmermann & Collischon, 2023) continue to impede women’s career advancement and pay equity. While there has been progress toward gender equality from 1970 to 2018, the pace has slowed since the 1990s (England et al., 2020). Research shows the wage gap between women and men narrowed from 0.61 to 0.83 during this period, with the 1980s marking the era of most rapid improvement. However, this progress has since stalled, underscoring the need for continued efforts to advance gender equality.

Options and Analysis

Given the persistence of gender wage disparities in organizations, reducing the gender wage gap should be a shared goal for corporate executives. Contributing factors include individual elements such as personality traits and caregiving, as well as organizational dynamics, such as biases in hiring practices which affect the distribution of job offers by gender at each hierarchical level, and gender imbalances in the candidate pool. While policies aimed at addressing gender inequalities offer potential solutions, their effectiveness varies.

Because potential is highly subjective, managers should offer a precise definition of potential to clarify criterias used when evaluating employees. Setting a transparent expectation can benefit both managers and employees: managers can rely on the definitions to justify their decisions, and in turn mitigate effects of individual biases in this process, while providing employees with a clearer picture of how to improve themselves to elevate their assessment scores at the same time.

Given the complexity of gender disparity in pay, focusing solely on internal processes is insufficient for addressing the barriers women face in advancing within organizations. Fernandez and Campero (2017) contend that the formation of applicant pools from the supply side at different levels of positions can play an important role in reinforcing the glass ceiling pattern, thereby can be targeted to help close the gender pay gap (98). Adding to the debate, policies aimed at reducing gender discrimination during the screening process are evident, but screening biases play a minor role in producing glass ceiling patterns as demand side discriminations do not differ by level of organizations meaning that this does not account for the decreasing number of females going up the hierarchy. (Fernandez and Campero, 2017).

The disproportionate burden of caregiving responsibilities on women often impedes their career progression. The consequences of constrained work opportunities and lower wages extend beyond individual women and households, potentially harming a country’s overall economic performance due to wage losses. Glynn suggests that policies facilitating the equal distribution of family duties and paid time off could be beneficial. Such policies would not only provide women with greater flexibility to manage family responsibilities while remaining engaged in the workforce but also incentivize fathers to participate in caregiving activities. The federal Family and Medical Leave Act of 1993 provides qualifying workers with unpaid leave, but the absence of federal legislation for paid family leave remains problematic. However, there is good news: several states, including California, have enacted laws for paid family leave, indicating increased governmental attention to gender pay disparities. Corporate policies should align with this trend. For instance, enacting policies that guarantee paid leave for caregiving could help narrow the work experience gap between women and men by incentivizing shared family responsibilities. According to Glynn, data shows that access to paid leave can reduce the likelihood of wage loss by 30 percent.

Recommendations

Given the complexity of gender disparities in pay and promotion, no single policy is sufficient to address the issue fully. As these disparities manifest differently across organizations, a combination of strategies targeting various aspects of the problem is likely to be more effective. Implementing a comprehensive package of policies — including diversifying the hiring pool, holding executives accountable in employee evaluations, and promoting equal family responsibilities between men and women — would effectively mitigate the gender gap in pay and promotion at the corporate level.

Step 1: Diversifying Candidate pools

The initial step is to diversify candidate pools. Recruiting strategies should aim for a gender-neutral pool across all levels of hierarchies. Such an approach is likely to lead to more balanced gender representation in various job roles, thereby reducing the prevalence of the glass ceiling effect (Fernandez & Campero, 2022). However, implementing this policy faces hurdles. It would be more feasible implementing such policies in companies committed to gender equity. However, if a firm is indifferent to gender equality issues or fails to recognize them, this policy’s success could be significantly hindered. Additionally, in industries with a highly imbalanced gender representation among available candidates, policies promoting gender-neutral hiring pools may not be practical.

Step 2: Managing managerial stereotypes

After establishing a diversified hiring pool to address recruitment discrimination, implementing policies to reduce biases within organizations, particularly those stemming from managerial stereotypes should be the next step. Managers often use ratings to decide on promotions, valuing perceived potential over actual performance. This system places women at a disadvantage, as they typically receive higher performance ratings but lower potential ratings, making the evaluations susceptible to managerial stereotypes to influence decisions. Therefore, managers should be required to define evaluation criterias clearly, providing justifications for their ratings (Somers, 2022). This requirement would increase managerial accountability, and in turn reduce the influence of stereotypes in these evaluations. However, it is hard to regulate people’s thoughts on certain issues. Although holding managers accountable can help diminish managerial stereotypes, managers might still find ways to discriminate against women and justify unfair ratings, circumventing corporate policies intended to curb workplace gender bias.

Step 3: Enacting family-friendly policies

Lastly, mothers usually bear the majority of family caregiving (Glynn, 2018). To address this issue, family-friendly policies are in urgent need. Policies that increase mothers’ workplace flexibility and encourage fathers’ participation in caregiving can enhance women’s labor force participation and reduce the career sacrifices mothers often make due to family responsibilities. Yet, potential contradictions arise: companies may criticize governments for not instituting paid family leave, even though several states have already implemented such policies. This suggests that firms should work in tandem with state-level policies to offer greater flexibility to families.

Tackling gender disparity in pay and promotion will be challenging. Past efforts have made some progress in closing the gap, but we must continue to make improvements to further reduce wage disparities.

References

Collischon, M. (2021). Personality traits as a partial explanation for gender wage gaps and glass ceilings. Research in Social Stratification and Mobility, 73, 100596-. https://doi.org/10.1016/j.rssm.2021.100596

England, P., Levine, A., & Mishel, E. (2020). Progress toward gender equality in the United States has slowed or stalled. Proceedings of the National Academy of Sciences — PNAS, 117(13), 6990–6997. https://doi.org/10.1073/pnas.1918891117

FERNANDEZ, R. M., & CAMPERO, S. (2017). GENDER SORTING AND THE GLASS CEILING IN HIGH-TECH FIRMS. Industrial & Labor Relations Review, 70(1), 73–104. https://doi.org/10.1177/0019793916668875

Glynn, J. S. (2018). Gender wage inequality: What we know and how we can fix it.

Kohler, L. (2023). Why Women Are Being Left Out of The promotion Conversation. Retrieved from https://www.forbes.com/sites/lindsaykohler/2023/05/25/why-women-are-being-left-out-of-the-promotion-conversation/

Somers, M. (2022). Women are less likely than men to be promoted. Here’s one reason why. Retrieved from https://cdo.mit.edu/blog/2022/04/12/women-are-less-likely-than-men-to-be-promoted-heres-one-reason-why/

Zimmermann, F., & Collischon, M. (2023). Do Organizational Policies Narrow Gender Inequality? Novel Evidence from Longitudinal Employer–Employee Data. Sociological Science, 10(2), 47–81. https://doi.org/10.15195/V10.A2