{"id":3945,"date":"2025-04-23T19:26:25","date_gmt":"2025-04-23T19:26:25","guid":{"rendered":"https:\/\/aomtodayprod.wpenginepowered.com\/?p=3945"},"modified":"2025-07-09T15:38:16","modified_gmt":"2025-07-09T15:38:16","slug":"pay-gaps-undermine-diversity-and-inclusion","status":"publish","type":"post","link":"https:\/\/www.aom.org\/today\/pay-gaps-undermine-diversity-and-inclusion\/","title":{"rendered":"Pay Gaps Undermine Diversity and Inclusion"},"content":{"rendered":"

By Daniel Butcher<\/a><\/p>\r\n

Lack of pay equity can undermine an organization\u2019s efforts to improve diversity and hurt the effectiveness of the leadership team.<\/p>\r\n

Academy of Management Scholar Carol Kulik<\/a> 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\u2019 financial performance actually went down.<\/p>\r\n

\u201cIn other words, the firms are shooting themselves in the foot, as they\u2019re trying to have more gender diversity in the senior team, but they simultaneously have this gender inequality in pay,\u201d Kulik said. \u201cThey are sending a signal to the leadership team: \u2018We\u2019re putting women on the team, but we don\u2019t value them as much,\u2019 so as a result, the team doesn\u2019t operate as effectively as it should.<\/p>\r\n

\u201cThe leadership team isn\u2019t able to take advantage of the gender diversity that it has,\u201d she said. \u201cI’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\u2019s employers, that when they have gender pay gaps at the top, they\u2019re actually making their whole executive team function less effectively.\u201d<\/p>\r\n

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\u2019s decisions and activities. Unheard and discounted, the women become demotivated and less engaged in the leadership team.<\/p>\r\n

\u201cIt\u2019s actually an interaction effect, so it\u2019s not the gap itself that lowers performance; rather, it\u2019s the exacerbating effects of the gap as you add more women to the team,\u201d Kulik said. \u201cSo if you have one woman on the team, you\u2019re probably not going to see that drop quite as strongly.<\/p>\r\n

\u201cBut 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,\u201d she said. \u201cAnd so that\u2019s when it becomes a problem for the organization.\u201d<\/p>\r\n\r\n

A sample of Kulik\u2019s AOM research findings:<\/strong><\/p>\r\n\r\n\r\n\r\n