Female executives are still paid 30-35 per cent less than male counterparts by the majority of Australian employers.
Despite being of equal calibre, education and achievement, it’s the case in eight-out-of-10 workplaces, according to a world-first study of 539 ASX-listed companies across a decade.
With almost 3000 scenarios analysed, the University of South Australia project also reveals the impact goes beyond the individual, with the disparities directly associated with lower-performing companies.
Professor Carol Kulik says Australian businesses which fail to offer gender pay parity are effectively self-sabotaging diversity efforts and overall profit.
“It might surprise people that gender pay gaps exist at very senior levels but with senior performance criteria often vague and subjective and gender stereotypes still rife, the resulting imbalance is commonplace,” she said.
“We hear a lot about the benefits of women in executive levels. They provide different views and perspectives, reduce risks, improve decision-making and promote performance.
“But if a firm has a large gender pay gap, promoting women to the top team will neither deliver benefits for the individual nor the organisation.”
Pay disparities in top management teams negatively moderate the relationship between the representation of women and subsequent organisation performance, Prof Kulik says.
“In dollar figures, if a male executive is paid 2.6 times that of their female counterpart, every woman added to the team will lower the firm’s annual return on assets by 2.2 per cent.
“The cause, we suspect, is that underpaying women sends a powerful signal that the organisation has low expectations about women’s contributions – that women executives have a lower status and less influence than their male counterparts.”
As a result, women executives become less forthright and men more likely to discount their opinions.
Ultimately, a gender pay gap reduces the extent to which women’s voices can influence the executive’s actions and decisions, so the firm gets no value from diversity within the team.
The study considered men and women executives of comparable education, tenure and board memberships.
“Organisations pay a price for gender inequality,” co-researcher Yoshio Yanadori said.
“Just because an organisation has a good representation of women at the top doesn’t mean that they are a gender equal firm. Women’s representation is only one indicator.
“Gender diversity must be matched with equal pay. If organisations have women in senior leadership roles but pay them less than their male counterparts, they’re simply shooting themselves in the foot.”
The top-three industries with large gender executive pay gaps are energy (oil and gas drilling but excluding mining), information technology (hardware, software, semiconductor) and industrials (machinery, transportation).
Those with small gender pay gaps are healthcare (both products and services, pharmaceuticals), financials and consumer staples (food, beverages and personal products).
Publication of the UniSA findings coincide with the release of Average Weekly Earnings data by the ABS used to calculate the overall national gender pay gap at 14.2 per cent.
Accordingly, the Workplace Gender Equality Agency has declared August 31 as this year’s Equal Pay Day, recognising the average 61 extra days from the end of the previous financial year that women must work to earn the same annual pay as men.