Female Branch Managers Create Pay Equity for Female Tellers

Equal pay may depend on the presence of female managers and the level of employees they oversee, researcher says

By Kathy Gurchiek May 11, 2017
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Female bank managers are more likely than their male counterparts to foster pay equality for female bank tellers, says a new study in the Academy of Management Journal.

Women working as tellers in branches headed by women had base salaries about the same as those of their male colleagues, while female tellers in branches headed by men had base salaries about 7.5 percent less than male tellers, according to Mabel Abraham, Ph.D., assistant professor of management at Columbia University Business School in New York City. Prior to her career in academia, she worked in defined benefits consulting and risk management at Fidelity Investments. 

Abraham, who conducted and authored the study, also found that when it came to annual bonuses—which were awarded on "a highly formalized basis" that used a formula to calculate them—there was little or no gender pay gap among male and female tellers working under male or female managers.

Her findings are based on a 41-month analysis of personnel records and other company data for 897 full-time employees, and 156 branch managers, at 120 branches of a large U.S. bank. Employees in the study performed one of five jobs, from tellers—who earned the lowest salary—to relationship managers, who work to improve a bank's relationships with both partner firms and customers. Employee age, tenure, race, marital status, performance ratings and weekly hours were among factors the researchers considered.

What the Findings Mean

Female bank managers' efforts to address pay equity only went so far, however, the study found.

Just low-ranking female bank tellers, the study found, benefited from their female boss's actions, Abraham says in her report, which appeared in the journal's February-March issue. Wages for women in other positions ranged from 4 percent to 13 percent less than those of men in the same job, whether the branch was headed by a man or a woman.

"These findings demonstrate that it is critical to take manager gender and the organizational position of the employees being evaluated into account when assessing the relationship between the formalization of pay and gender pay inequality," she wrote in the study abstract.

Formalization uses detailed written rules to determine compensation. An organization can use its employment information to identify wage disparities and, from there, look at its hiring practices and other policies to resolve pay gaps, SHRM Online reported April 20.

[SHRM members-only toolkit: Managing Pay Equity]

It's an issue that has garnered headlines in recent years with events such as Equal Pay Day on April 4 and the "A Day Without a Woman" strike on March 8 to underscore the value women bring to the socioeconomic system. 

"Some economists have found that as much as 40 percent of the gender pay gap could be due to factors that cannot be measured, including outright gender discrimination," according to the April 2016 congressional report Gender Pay Inequality: Consequences for Women, Families and the Economy.

The wage gap is worse for some groups of female workers, according to the Economic Policy Institute in Washington, D.C. It found that women in male-dominated occupations are paid significantly less than similarly educated men in those occupations.

Abraham thinks formalization of pay practices is more effective for reducing gender- pay inequality when there are no women in management positions or when managers oversee employees in higher-status jobs.

A second approach—increasing the presence of women in management—more likely will lead to gender- pay equality when female managers have discretion on pay decisions and oversee employees in lower-level positions, according to Abraham.

"From a practical standpoint, my research warns against blindly assuming that either increasing [pay] formalization or increasing the presence of women in management will provide an effective means for reducing gender pay inequality," she wrote. "Organizations must concurrently consider the potential role of both female managers and [the] level of the employees they oversee."
 

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