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Does Whom You Work With Matter?

Managerial Pay is Related to the Gender and Age of Subordinates, Peers and Supervisors

A new study on managerial pay, conducted by researchers from Teachers College and Arizona State University West, found that not only do women managers earn approximately 12 percent less than male managers, but that pay of both men and women managers is also related to the gender and age of those they work with. The study will appear in the Journal of Applied Psychology.

The researchers, Cheri Ostroff, Professor of Psychology and Education, and Professor Leanne E. Atwater from the School of Management, Arizona State University West, examined whether the gender and age composition of managers' referent groups, their subordinates, peers, and supervisors, were related to the managers' performance ratings and compensation level. Data were based on a sample of more than 2,000 managers from more than 500 organizations across a wide variety of industries and functional areas. The managers' sex, age, race, organizational level, experience, education, performance, and functional area (e.g., sales, engineering, operations, marketing, human resources) were taken into account prior to examining the impact of the gender and age composition of managers' referent groups.

The results of this study indicated that the performance evaluations of male and female managers do not differ and their evaluations are not impacted by the gender and age composition of the manager's subordinates, peers, and supervisor. However, managerial pay becomes substantially lower as the percentage of females that the manager supervises increases.

Managerial pay remains relatively constant when the percentage of females that the manager supervises is less than 50 percent, but once females become the majority in the workgroup, both male and female managers' pay decreases sharply as the percentage of female subordinates in the workgroup increases. For example, a manager who supervises a group comprised of all women receives approximately $9,000 less than one who supervises a group comprised of 50 percent women. On average, managerial pay decreases by approximately $500 for each 10 percent increase in the percentage of his or her female peers.

As the average age of a manager's subordinates become younger or older than 40, the manager's pay also becomes lower. Managers whose peer group is younger than age 40 on average receive lower pay than managers whose peer group is over 40. Managers whose supervisor is younger than 40 receive lower pay than managers whose supervisor is over 40.

One explanation for the negative impact on a manager's compensation based on the gender of their subordinates, peers, and supervisors is that women are perceived as less valuable in the workplace, due to the presumption (true or not) that women are more likely to be absent more often than men, take maternity leave, acquire less training and skills due to family responsibility and be less committed to their work and jobs. Women may also receive less authority and power in their positions than men, thereby receiving fewer of the resources they need to contribute in more substantial and valued ways in the organization. A manager who supervises or works with more females may be viewed as dealing with less valuable employees, thereby lowering their own value.

For women managers, the effects of lower wages are compounded due to clustering. In addition to the general wage gap between male and female managers, women managers are more likely than male managers to work with and supervise other women, hence reducing their compensation even further.

Published Thursday, May. 1, 2003