Glass ceiling: Pay gap between women and men CEOs doubles

MUMBAI: Women executive directors (EDs) earned 45% less than their male counterparts in the last fiscal year as male CEOs and CXOs took home bigger salary increments. Salaries of women EDs remained near stagnant, data revealed.

An analysis of PrimeDatabase numbers showed the gender pay gap between male and female directors doubled in FY19 from what it was a year ago as the average salary of male EDs rose 8% while it fell marginally (-0.12%) for women. The findings are based on the latest annual reports of 1,747 companies listed on the NSE and compiled by nseinfobase.com, run by PrimeDatabase.

Experts attribute this to the strong bias against women CXOs in the corporate world, affecting career growth and promotions. Simply put, men choose more men.

“As you rise up the corporate ladder, particularly as one reaches the middle-management level, there is an unfavourable bias against women in promotion,” said Kiran Mazumdar-Shaw, chairperson, Biocon. “There is a natural selection of more men because the people deciding are also mostly men. The pay parity problem starts at that stage.”

Data also suggest that wage inequalities become more blatant as the years of work experience rise. According to the Monster India Wage Index Report 2018, men and women with 0-2 years of tenure earned almost identical median wages (Rs 121.25 and Rs 120.28, respectively). In the tenure group of 3-5 years of experience, the pay gap was a moderate 3%. However, in the tenure group of 6-10 years, men earned a 13% higher median wage than women, while men with 11 or more years of tenure earned 10% more than women.

This needs to change, said Harsh Goenka, chairman, RPG Enterprises. “I always thought one does not pay salary based on gender,” he said. The pay disparity “shows the mindset and that needs to change. Companies need to have multidimensional approach in hiring, retention and development of women”.

According to nseinfobase.com data, the median salary comparison of male and female executive directors showed that in FY19 women earned 45% less, which was double the pay gap in FY18 when women directors took home 22.5% less than men. Comparison of the average salaries of executive directors showed that women earned 30% less than men in FY19, compared with a pay gap of 24% and 20% in FY18 and FY17, respectively.

BCCL – Non Copyright

THE FUNNEL EFFECT & TENURE

Experts cited the dwindling representation of women in the management hierarchy as one of the contributing factors. “The funnel effect is a bigger worry,” said Mazumdar-Shaw. “Talent pool of women leaders is so small as you go up the cadre. Companies need to get more women in middle-management levels.”

The data reveals the underrepresentation of women in leadership and corner rooms, where 90% of EDs are male.

Also, more women are needed in revenue-generating roles that are more remunerative such as sales, finance, etc.

“We need to see more women in P&L roles. That could be a factor in the pay parity problem,” said Mazumdar-Shaw. But men are preferred for such roles, she pointed out. Male directors in the majority of the cases have a longer tenure as promotions kick in earlier and faster, said experts. “If there is a male director, the number of years in the director position will be much higher than a woman CEO or CXO and this also leads to higher payouts to men,” said Debabrat Mishra, partner and leadership expert at Deloitte India.

UPSKILLING/RESKILLING EFFORTS

Some feel factors such as career intention, efforts to upskill and lack of clear orientation toward money also come into play.

“Reasons for a gap between the incomes earned by men and women, also include factors such as the socialising of women in a manner that they do not place their careers as priority, poor economic centeredness of women, causing them to look for name/fame as against money as a key motivator and low upskilling/reskilling efforts by women,” said Saundarya Rajesh, founder of diversity and inclusion consulting firm Avtar Group.

Avtar’s research on women’s workforce participation conducted in 2013, 2015 and 2019 revealed that only 9% of women attributed their careers to being raised in an environment that encouraged them to pursue a vocation. For 68% of men, meeting financial goals for themselves and the family was the top career driver, while for women it was to self-actualise their talents. A majority of men (55%) invest in selfdevelopment enablers such as upskilling themselves while women focus on family-based enablers for the same purpose, as per Avtar’s research.

Navnit Singh, chairman of India for Korn Ferry, said there could be other reasons for the pay gap.

“There could be factors that are not intentional,” he said. “One of the reasons is the career break that women often take during key life stage such as maternity and when they come back sometimes the pay is not leveled and as a result the gap continues.”

Suresh Tripathi, vice president of human resources management at Tata Steel, is of the view that good organisations don’t deliberately pay female employees less.

“It could be more due to factors such as career breaks and sabbaticals that female employees might take due to maternity or childcare-related reasons that leads to missing out on several increment cycles,” he said. “For instance, if one is away for 4-5-6 years, when the person gets back they will be assessed at the same level and on a cumulative scale this may lower the salary as the number of years increase in the long term too.”

But experts said that’s when the organisation should step in and provide a support system with flexible policies for women to continue work.