Gender Bias: Remuneration of CEOs - Literature review Example

Gender bias – remuneration of CEOs       Since very commencement of the new millennium, participation of women workforce has increased drastically inthe modern corporate sector ambiance. Thanks to the MBA boom in the education sector across the globe women along with men are receiving equal opportunities to enter the highly lucrative corporate sector. Looking at the whole situation from an apparent background it seems quite optimistic for common people as well as women, who wish to pursue high designation in the corporate field. Unfortunately, looking at the whole matter from deep judgmental perspective reveals several other aspects that are capable of exposing the fact that corporate avenues for women are not so easy to deal with as it appears apparently. Gender discrimination and work culture politics are two important factors that are mainly responsible for all sorts of injustice added with ignominy that women have to face in the modern business sector. Talking about U.S. context, participation of women is not something new though it has increased to a huge extent in the recent years. Since the time (1960-70) United Sates of America was rising as one of the most powerful corporate powers across the world, women were participating in the process of empowerment at the equal level like that of their males counterparts. After crossing almost 4 decades, those women, who have still retained their corporate identities in the U.S. business sector, have created a special arena for them that can easily claim for them highest level designation in any corporation. In the book Gender and Communication at Work, Jennifer J. Peck has said that the basic traits in women character “are identified as the result of socialization processes, with women being socialized into roles that involve nurturing and sharing and men being socialized into roles that equate with competition and individualism. “ (Davidson and Barrett, 2006, p.50) In addition to all these aspects, government’s attitude towards toward the fact of women participation in the corporate sector has become more liberal. It is due to this reason the government has also come up with certain initiatives that would help them to enhance their capacity to receive better position in the corporate sector.  Despite all these optimistic initiatives scholars and corporate researchers are not ready to believe that situation of women has changed in the corporate sector. When it comes to considering the situation of women in the corporate sector, actually we have to focus over certain aspects like compensation distribution factor and treatment of women by management of the company as well as by their fellow colleagues. Such discriminative approaches sometimes amount to sexual harassment, where workingwomen remain the only sufferers. (Trentham and Larwood, 1998) However, considering the situation of women in these aspects it cannot be said that women are treated as human beings. Factors of the discrimination, though it is more conspicuous at the normal executive level, but also can be cited in top corporate level as well as higher manager level positions. Pay discrimination at the highest-level corporate bodies is one of the most explicit examples of discriminative approaches of corporate bodies toward women. (Trentham and Larwood, 1998)       Such observation can easily be contradicted with certain statistical data that women are progresses at a better rate than that of the males. Survey done by Lissy and Morgenstern in the year 19994 reveals that, during 1993 “women made $.67 for each dollar earned by men compared to $ .58 in 1983.” (Burress, Healy, and Linda, 2004) Will’s analysis shows that earning capacity of women has increased to almost $.75 compared to every dollar earned by men in the year 1999. On the contrary there are numerous examples that show that no matter how much the above mentioned data try to provide us with the impression that condition of women in the modern corporate sector has changed but actually their plight has remained the same, as discrimination against women have taken different forms. Groshen in 1991 and O’Farell in 1999 have argued that when it comes to specific job positions, men are holding their hierarchical positions. In this context Pamela Todd, the Manager of Executive Compensation Research and Development for Towers Perrin shares her feelings that, “There’s a problem with women becoming highly paid. But the problem is getting the high-level job in the first place, not getting paid fairly once you get there.” (Burress, Healy, and Linda, 2004) A study done over highest paid female officials in the corporate sector of U.S. has shown that among 1000 largest U.S. industrial and service companies, where more than 4012 executives are enlisted only 19 were women, who have fulfilled the criteria to enlist themselves (1990). (Zucca, The Gender Equity Gap in Top Corporate Executive Positions) Hence, these data are clearly indicative of the fact that no matter how much it appears that women have claimed a very advanced position in the society but actually their situation has remained unchanged. Only change that has happened is at the level of statistics and appearance of such incidents. Ellen Isaacs has observed in the context women obtaining higher designation in the corporate houses that, “In almost every industry, women occupy a very small proportion of the higher-level positions.” (Isaacs, 1995, p.55)       Social scientists and corporate philosophers have observed such incidents for a long time but at the same time they have also realized if such discriminative factors cannot be eradicated, it would not be possible for the corporate sector to make further advancement. Thus, they have put forth a great deal of attempt to search for actual reasons behind such discriminative approaches. According to the social scientists and psychologists basic features or behaviorist approach of a woman does not suit are not in accordance with modern work culture. Since the post globalization period, the private enterprises have expanded to a great extent and the work culture that is followed there, has also affected huge effect even over the public enterprises also. When a person is elevated at the managerial position he is supposed to fulfill a lot of job responsibility, managing and planning his team for achieving target and sometimes putting adequate pressure over the team members in order to churn out the best results for the company. Psychological analysis has shown that management style of a male is generally aggressive and initiating, while on the other hand, as a woman is cooperative and considerate in approach, it is taken for granted that in the process of managing her team as well as company affairs she would take the same approach. As a neutral observer an individual will see that woman have the capacity to maintain a perfect balance between her personal and professional life but such capacity of women is desperately denied through patriarchal approach. “Organisations need to encourage managers and executives to conduct formal and informal career planning sessions with all employees on a regular basis.” (Moss and Metz, 2008, 64)             In the context of paying equal amount of packages, the companies have a tendency to pay less compensation to women compared to the male counterparts. Statistical data of 1985 is showing that women used to earn only 68% of the total amount, as was earned by men and in 1999 this difference raised to an astonishing rate of 77%. In this context Raymond F. Gregory has mentioned in his book, Women and Workplace Discrimination, “At this rate, another fifty years will elapse before women achieve pay equality. The youngest women now working cannot reasonably expect to achieve income parity in their lifetimes.”(Gregory, 2003, p. 2) It is quite encouraging to see that total workforce of U.S. comprises 46.5% women (2000) but a deeper observation shows that attitude of the companies in accepting women at higher raking has not changed much. Among the Fortune 500 companies percentage of women as board of director is only 11.7% and total number of female employees in those companies in comparison with total employee power is only 12.5%. Among these top 500 companies of U.S, ninety of them do not have a single female corporate officer (according to 2000) and statisticians have predicted that by 2020 though more number of women will be appointed, compared to male, total 75% of the managerial positions will be under control of men. (Gregory, 2003, p.2) Hence it is quite clear that the factor of gender discrimination is still very much existing at all levels of employment. All knows it that until and unless people will be educated from inside, such discrimination will not abolish but the attempt to hide the reality is doing more harm to the whole situation. Federal as well as anti-discrimination law makers always try to convince people about the fact that the main reason is not gender discrimination but socio-cultural aspects that influence the upbringing of a woman. This factor is not denied but at the same time it is also not true that socio-cultural influence is the only factor. Patriarchal approach that finally generates the feeling that women are inferior to men contributes to a great extent in discrimination against women. Thus the situation of complete equality at workplaces is hard to reach in near future. The matter of wage discrimination between male and female CEO’s is observed very explicitly in the context of Norwegian tourism and manufacturing firms. Tourism business is one of the greatest revenue earning avenues in Norway. Over 20% CEOs in this sector are women but quite startling contrast to the tourism business sector only 6% women are provided with the role of CEOs in manufacturing firm of the nation. (Skalpe) These data are clearly indicative of the fact that wage discrimination is prevalent and sector wise the aspect of gender discrimination is also playing important role.       While working in corporate sector it is not very optimistic for women to wish that they will be promoted to higher managerial positions just on the basis of their performance, though it is often claimed. Women employees face such situations, where, despite their full efforts they do not receive adequate support from the management of the company. Few years back, in 1999 a woman was selected as the CEO of the Hewlett-Packard, the second largest company in the field of computer business, and that news was highlighted by the company as well as by media in a grand manner. People, who support this view that gender discrimination no longer exists and there is no barrier for women to get selected at the higher managerial position of a company, often represent this single represent as effective defense of their opinion. On the other hand if we take the real scenario into account, we will find that there are lots of women employees in the same organization, who are at the same position or they have received a very low rate of promotion, since their employment. The author, Raymond F. Gregory, in this context has represented a landmark case, “A former sales representative in Hewlett-Packard’s Long Island office alleged that company policies and practices barred female sales representatives from promotion to sales managerial positions.” (Gregory, 2003, p.6) Not only in Hewlett-Packard, but such examples are not hard to trace also that though women have received official recognition as excellent performers but their names have not been considered for promotion to higher managerial posts. While searching for a proper reason behind such discriminatory approaches it is often said that ‘dependable’ and ‘perceptive’ qualities of a woman makes her eligible for selection in managerial positions, while the conceptualized ‘dynamic’ and ‘intelligence’ qualities make a man considered for managerial posts. It is clear through such belief that a woman cannot have virtues like dynamism and sheer intellect, while a man is completely devoid of qualities like perceptiveness or dependability. Hence, a counter-argument can easily be put forward, if a person is not dependable how he can be chosen for managerial position of a company. On various occasions, he will represent the company and any wrong action on his part will degrade reputation of the company before the whole market. On other hand, if a woman is not dynamic then how she can receive the award of a great performer, while she is working as sales executive for the company. Answers to such questions are hard to find if these are asked to management of a company and they will come up with various other data in support of their actions. All these arguments and counter-arguments cannot hide the fact that women are considered less dependable for selection at higher managerial positions. Thus is not at all tough for us to understand how deep roots of the traditional belief have expanded their scope. It will be hard to eradicate such feelings soon. Such approaches, which are abstract sometimes, do not add any advantage for the growth of a company. As proper recognition is not provided to the female employee, not once but on multiple occasions, she definitely feels demotivated and at the macro level the company only suffers. In this context of wage discrimination a scholarly article, Influence of firm performance and gender on CEO compensation, written by Nancy Mohan and John Ruggiero, is extremely important. The authors have adopted the method of calculating potential compensation of the executives, depending over two different standards. “First, each executive’s performance and compensation are evaluated relative to members of the same gender to produce a same-gender measure of under-compensation. Each executive’s compensation is also benchmark against the other gender’s potential compensation, producing an other-gender measure of under compensation.” (Mohan and Ruggiero, 2007, p. 1107) Aftermath they have applied the total procedure in case of both male and female executives, proving that women are under the trap of great wage discrimination in modern corporate sector. Education sector is also not beyond the scope of wage discrimination. Bedabati Mohanty and Trilochan Tripathy in the paper, Socio-Economic Implications of Gender Earning Differentials, have shown truth behind such observation through the method of decomposition analysis. They have also emphasized over the status of women within the family and the possible association between earning and the status of women. (Mohanty and Tripathy, 2009)  In the year 1996, through the Human Development Report, The United Nations Development Program clearly remarked that, “no society treats its women as well as men.” (Croucher, 2003, p.154) Women development programs have been provided with more importance among the developing countries but in the developed countries also the condition of women is not remarkably good. In both cases women are equally oppressed, only the forms and expression of violation are different. Gender discrimination and providing equal facilities to women at workplace are two major issues, where male employees have contributed to a great extent in their development. After that they have been used consciously or unconsciously as a very useful weapon that will check the women from reaching a higher managerial position. These days a considerable number of women are reaching at a great height in their respective company and it is considered to be quite optimistic sign. On the other hand, if we compare the situation with progress rate of their male counterparts, it is quite discouraging at the same time. If it is judged from a neutral perspective, it will be found that women are in no ways inefficient to men and in certain areas they are far better performers than their male colleagues. But the sense of patriarchal domination and inherited sense of ignoring women, even though they are efficient, have stopped them from being exposed to success at the equal rate with men. Starting from the distribution of compensation to desperately ignoring the capabilities of women, all the factors have made the whole situation hostile for females to expose their capabilities properly. So many people, including women are coming forward to join the corporate arena as they love to undertake challenging paths to pursue their career. In addition to this, they also expect that the companies will provide them with all sorts of facilities to make proper advancement in their career. The most important reason is definitely the financial aspect, which plays the main motivational factor to commit themselves completely to their work. In this regard, it has been widely witnessed that women have suffered a lot, as they do not get expected rate of appreciation in terms of monetary compensation from the owning companies, as they compare their position with their male colleagues.       The title VII of the Civil Rights Act (1964) and several other anti-discrimination laws formed by the states have discouraged discrimination in employment on the basis of sex, race, national origin and religion. Such legal empowerment encouraged the women to join the national workforce at more numbers and huge response was received from them. There are various anti discriminatory and federal laws that have extended opportunity of women to work in a more liberal manner in workplaces, yet they have been refused to enjoy the complete equality on the basis of gender at workplaces. If we compare the early times with the modern days, we will see that most gender discrimination has been lessened in the workplaces to a considerable amount due to legal as well as awareness of the authority but the undercurrent of such discrimination is still there. If we hark back to the statistics available just two decades back, we will be surprised to see that in the ‘civilized world’ women are discriminated in their workplaces in a distinguishable manner.       However, despite all these factors it is quite optimistic to observe that different government and private sectors have realized the importance of providing equal amount of facilities to their female employees, compared to the males. Britain has made its constitutional provision for equal pay and equal opportunity legislation more strong to ensure equal treatment of women in the corporate sector. In the context of U.S of America also grip of federal laws over unequal treatment of women have become stronger. Perhaps, it is due to these reasons participation of women and the process of gaining their rightful claim in workplaces have increased to greater extent than that of the previous times. There is no denial of the fact that women have established themselves over a stronger foundation in case of corporate scenario. Though men are still having stronger hold over women in case of hierarchical corporate designations and discrimination in pay package but the situation is fast changing in the recent times. Women are not only holding a stronger corporate dimension but at the same time, their spontaneous participation in corporate level shows that future of womanhood is really bright. The day is not far when women will be able to gain their successful claiming over higher corporate designation and equal compensation package.        References 1. Adams, M S., Gupta, A., Haughton, M D., Leeth, D J. (2007), Gender differences in CEO compensation: evidence from the USA, Women in Management Review, Vol. 22, No. 3., pp. 208-224 2. Burress, J. Healy, Z. and Linda J. (2004), The Gender Equity Gap in Top Corporate Executive Positions, American Journal of Business, Spring: Vol. 19 No. 1, available at http://www.bsu.edu/mcobwin/majb/?p=111, (accessed on April 11, 2009) 3. Croucher, S. L. (2003) Globalization and belonging, Rowman & Littlefield 4. Davidson, M, Barrett, M. (2006), Gender and communication at work, Ashgate Publishing, Ltd. 5. Gregory, Raymond F., Women and workplace discrimination: overcoming barriers to gender equality, Rutgers University Press, 2003 6. Isaacs, E. (1995), Gender Discrimination in the Workplace: A Short Literature Review, Communications of the ACM, Vol. 38, No. 1, 55-65 7. Larwood, L., Trentham, S. (1998), Gender discrimination and the workplace: an examination of rational bias theory, Sex Roles: A Journal of Research, Issue: Jan 8. Mohan, N., Ruggiero, J. (2007), Influence of firm performance and gender on CEO compensation, Applied Economics, Volume 39, No. 9, 1107-1113 9. Moss, S, Metz, I. (2008), Workplace gender discrimination: do women over-attribute slow advancement in management to gender discrimination?, The Melbourne Review, Vol 4 Number 2 November 10. Skalpe, O. (2007), The CEO gender pay gap in the tourism industry—Evidence from Norway, Tourism, Volume 28, Issue 3, June, 845-853 11. Tripathy, T., Mohanty, B.(2009), Socio-Economic Implications of Gender Earning Differentials, Economic and Political Weekly, VOL 44 No. 14 April 04 - April 10 Read More