Published on: April 23, 2025 at 7:26 pm
Lack of pay equity can undermine an organization’s efforts to improve diversity and hurt the effectiveness of the leadership team.
Academy of Management Scholar Carol Kulik of the University of South Australia said that her research has found that in organizations that had pay gaps within their executive teams, as organizations added more women to executive teams, the companies’ financial performance actually went down.
“In other words, the firms are shooting themselves in the foot, as they’re trying to have more gender diversity in the senior team, but they simultaneously have this gender inequality in pay,” Kulik said. “They are sending a signal to the leadership team: ‘We’re putting women on the team, but we don’t value them as much,’ so as a result, the team doesn’t operate as effectively as it should.
“The leadership team isn’t able to take advantage of the gender diversity that it has,” she said. “I’m really proud of that research, because we often think about gender pay gaps as being a problem for women, but our research shows that gender pay gaps are a problem for women’s employers, that when they have gender pay gaps at the top, they’re actually making their whole executive team function less effectively.”
Women tend to be paid less than their male counterparts in the same leadership group, regardless of the quality of their respective performance. Kulik and fellow researchers suggest that the voices of these underpaid women exert less influence on the leadership team’s decisions and activities. Unheard and discounted, the women become demotivated and less engaged in the leadership team.
“It’s actually an interaction effect, so it’s not the gap itself that lowers performance; rather, it’s the exacerbating effects of the gap as you add more women to the team,” Kulik said. “So if you have one woman on the team, you’re probably not going to see that drop quite as strongly.
“But the more women you have on the team, the clearer it becomes that this is a function of gender, and not one person having less skills or less experience, the more it becomes clearly a gender gap,” she said. “And so that’s when it becomes a problem for the organization.”
A sample of Kulik’s AOM research findings:
- Keeping Older Workers Engaged
- Engage Me: The Mature-Age Worker and Stereotype Threat
- Aging Populations and Management
- Physical Environments and Employee Reactions: Effects of Stimulus-Screening Skills and Job Complexity
- Relations Between Situational Factors and the Comparative Referents Used by Employees
