Tuesday, October 20, 2015

Why does Deloitte pay its women managers more than men?


Bloomberg has an article documenting a gender pay gap for MBA's, that shows up only after several years in the work force:
One explanation for the gender gap may be that women are less likely to be bosses. Women in our survey say they’re responsible for a median of three employees; men manage five. Twenty seven percent of women say they had no direct or indirect reports, vs. 20 percent of men.

Deloitte appears to be an outlier:
A company that bucks the trend is Deloitte, which is known for going to extra lengths to keep mothers in the workforce. For the 33 female MBAs at Deloitte who responded to our survey, the typical salary was $169,000—$4,000 more than the 65 men at the firm.

My question is whether the $4000 is a compensating differential, the compensation paid to women to keep them at Deloitte?

6 comments:

  1. ESC, Economics Blog Post, Managerial Economics FALL 2015

    Bloomberg business discusses the gender pay gap. Female
    MBAs who graduate from top business schools now earn 93 cents for every dollar their male counterparts make. Stanford MBA men make more than women as well, with women earning 79 cents on the male dollar (Damast, A 2012).

    During a time when women make less than men, it is refreshing to see a change. Not as refreshing that we are questioning the why though, as it is some crazy notion that the organization would pay women more… a “differential” to keep women at Deloitte.

    McCombs women beat MBA Gender Salary gap with their female grads out-earning the men in 2012. The difference, women earned 2cent more per dollar than men (Damast, 2012). TWO CENTS… NOT 7 cents or 21 cents… but 2! Stop the presses people. Apparently, it was due to leadership credentials and negotiating skills.

    Wage gaps are sometimes due to the field one goes into after graduating. Private Equity, Leveraged Buyout Firms, Finance and Consulting will have a higher wage base than technology, consumer products or venture capital (Damast, A. 2012).

    In the past, many women stayed home and raised a family. Choosing to continue to work and trust someone else to practically raise your child is not an easy decision to make. More fathers work full time than mothers….According to research “75% of Americans feel a mother who does not work full time would be best for her young children, while 70% say fathers with young children should still work full time” (Ross, 2015). Perhaps the 4000 is a differential to keep them at Deloitte. But if that is the case, the women must have proven themselves valuable and worthy of the additional pay. I think its refreshing. It gives women an idea that perhaps the glass ceiling isn’t unsurpassable after all.

    Damast, Alison. (2012). McCombs women beat MBA gender salary gap. Bloomberg Business. Retrieved http://www.bloomberg.com/bw/articles/2012-12-12/mccombs-women-beat-mba-gender-salary-gap

    Damast, Alison. (2012). Why Stanford MBA Men make so much more than women. Bloomberg Business. Retrieved http://www.bloomberg.com/bw/articles/2012-12-21/why-stanford-mba-men-make-so-much-more-than-women

    Ross, Janell. (2015). Most Americans think mothers shouldn’t work full time. The Washington Post. Retrieved https://www.washingtonpost.com/news/the-fix/wp/2015/10/15/most-americans-think-mothers-shouldnt-work-full-time-the-reality-is-far-different/

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  2. Throughout human history, strength on the farm, factory or the battlefield was decisive. In the networked corporate environment; social savvy and the ability to work in groups is imperative. While the debate still rages on whether females are innately more adept at cooperative efforts; certainly brute force is not a corporate advantage. The digital world levels the playing field away from physical strength, toward emotional intelligence. As women enjoy their greatest freedom and equality in recorded human history, this may be a tipping point where women's skill sets shine in the workplace. With blurring gender roles in the family, societal awareness of income inequality, and more single heads-of-households; the stage is set for a woman's century and pay parity.

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  3. Making a claim that there is a compensating wage differential of $4,000 to keep women at Deloitte is a stretch, mainly based on sample sizes. Using a base of n=33 to make this conclusion in a study of over 12,000 MBA graduates is not enough data to justify this claim.

    I find it interesting that the article does not dare to suggest that plain discrimination can be used to explain the gender gap in wages. While the trends are changing in the right direction overall, the business landscape continues to be run largely by white males. Women and many marginal sub-groups are not given a fair shake at the table.

    The article does make a reference to “working mothers”, and I find that troubling. I don’t see “working fathers” penned in the article instead. Instead, the study should be recognizing the unique talents that women do bring to the business landscape. There are plenty of studies that show that women have superior collaborative and teamwork skills, and can proved to be more effective leaders than men, once given the opportunity. And perhaps Deloitte is ahead of the game by tapping into the right talents. Now that could make for a very interesting compensating wage differential argument, however, ultimately, the goal is equal pay for everyone.


    Supporting References:
    https://www.boundless.com/economics/textbooks/boundless-economics-textbook/inputs-to-production-labor-natural-resources-and-technology-14/labor-market-equilibrium-and-wage-determinants-79/compensation-differentials-302-12399/

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  4. As nice as it is to see that women are becoming more prevalent in the management workforce, I'm really hoping that this company is not paying women a higher salary just for the publicity. At my company, we have one regional office that happens to be run entirely by women, we have others that are mainly run by men, and the office that I am in is split right down the middle. I love that there is no preferential gender concerns when applying for a new position at my company, it's not an issue at all. It's easy to say that women are more sensitive and men are stronger, and all of those typical stereotypes that people talk about when trying to figure out why men get hired over women or vice versa. Honestly, everyone is different. There are a few women in my office that could probably give any of the men a run for their money in a physical challenge. There are also some men that more sensitive than many of the women. It should just come down to what the job is and who is most qualified.

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  5. As nice as it is to see that women are becoming more prevalent in the management workforce, I'm really hoping that this company is not paying women a higher salary just for the publicity. At my company, we have one regional office that happens to be run entirely by women, we have others that are mainly run by men, and the office that I am in is split right down the middle. I love that there is no preferential gender concerns when applying for a new position at my company, it's not an issue at all. It's easy to say that women are more sensitive and men are stronger, and all of those typical stereotypes that people talk about when trying to figure out why men get hired over women or vice versa. Honestly, everyone is different. There are a few women in my office that could probably give any of the men a run for their money in a physical challenge. There are also some men that more sensitive than many of the women. It should just come down to what the job is and who is most qualified.

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  6. I am curious to know if this is a deliberate move toward affirmative action in order to keep more female managers at Deloitte, or if it is coincidence. I currently work in a male dominated field; with 1 female to every 30 males; therefore it is hard for me to relate based on my current position. However, previously I worked for a community hospital that employed over 1,000 employees. Although there is a mix of male and female workers throughout the organization, the nursing floors currently are female dominated. With a merit based pay scale, it was easy ensure that males and females were getting equal pay. However, the organization found it difficult to hire nurse managers. We found the common concern for nurses to apply for a management level position was time and child care. Through a private survey, we found the top concern is providing daycare to children during the longer work hours. We also noted many female workers were behind males in their current age/length of employment bracket because many of them took one or more years off of work in order to stay home with children; placing them lower in experience. Because of these findings, my organization opened an on-site child care facility that accepted all ages; including infants. We found more employees (men and woman) took advantage of the discounted prices in order to return to work sooner after having a child. Because of the discounted prices, employees were able to afford to keep their children in daycare for longer hours on days it was needed. With the addition of the daycare facility, the organization found an increase in female applicants for management level positions.
    Looking at the diagram provided in this article, it appears as though the pay gap arrives later into the careers of employees; maybe after families start to grow. Although clich√©, if women with MBA’s are truly taking time from work in order to raise children, does this actually put them further behind in experience level—ultimately decreasing their pay. If more organizations looked into opening childcare or partnering with local daycare organizations to offer discounts to their employees, would this narrow the pay gap? As more men become stay at home dads while children are young, will we start to see a shift in the gap as well?

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