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Companies Are Losing Female MBAs Because Of The Gender Pay Gap

According to the latest Forté Foundation research, women are more likely to leave their jobs than address the problem


Thu Jan 17 2019

MBAs are viewed by many as the key to unlocking the door to the top echelons of the business world.

But new research conducted by the Forté Foundation has shined a spotlight on how that’s not always the case, especially for female and minority MBAs.

Even with an MBA, women are still hitting their heads on the glass ceiling above them, with some women even choosing to leave their companies because of the inequality.

The research, led by Michelle Wieser, interim dean at St. Catherine University’s School of Business, found that 40% of the respondents (both men and women) had experienced a gender pay gap—and the two most likely reactions to this from respondents were either to take no action, or leave their company.

Though not a surprise to many, the figures are nevertheless worse than many would have expected, with minority women being paid 52%—$76,589—less than non-minority men in their current position after an MBA.

Elissa Sangster, CEO of Forté Foundation, said that the research has implications for employers.

"When we asked women MBAs how they intend to address the gender pay gap they’ve experienced, it’s more common for them to leave the company rather than speak about it," she explained.

“Companies need to take proactive steps to lessen the pay gap, or risk losing highly-skilled women employees.”

Worse than anyone thought

The survey also found that only one in three men believes there is a gender pay gap, compared with two in three women, with the scale of the gap also understated in respondent’s estimates.

Respondents largely expected the gap to be 24% when, in fact, Forté Foundation found that men are paid 28% more than women, representing $58,994 annually.  

However, the research did find that whilst minorities are paid less than non-minorities at every juncture from pre-MBA to their current job, the pay gap does half in size from 24% for pre-MBA to 12% in their current position.

And the post MBA pay gap should not be equalled to no pay rise. The research shows a positive return on investment from an MBA with a 63% salary bump for women and 76% for men from the last pre-MBA job to the first post-MBA role.

The report also provided interesting insight into job functions, which paints a picture of the unequal world of business. While women significantly outnumber men in marketing and human resources roles, men outnumber women in finance, general management, consulting, and IT.

This is reflected in the fact that finance (60% gap) and operations (48% gap) are the job functions that contribute most to the gender pay gap.

Marketing is the only job where women were shown to earn more than men, and even in this instance, the margin is significantly smaller at 2%.

A wake-up call 

The research highlights something that many have known for a long time, namely, that on average men achieve a director-level post within their organizations, whilst women trail behind as senior managers post-MBA.

It is no surprise then that due largely to discrepancies in pay, female MBAs also have significantly lower career satisfaction.

For Elissa, the research is a wake-up call for companies. “While some salary disparity can be explained by the job functions women choose, there is likely unconscious bias and other factors at play,” she said.

“The whopping gender pay gap and income disparity for women and minorities needs to be addressed, and soon,” she said.