Study: Gender pay gaps in nonprofits are even bigger when there is room for salary negotiations | Now
With increased media attention and political campaigns focused on the gender pay gap, the fact that women – on average – are paid less than men, has become an important public debate. While much of the focus has been on the corporate sector, a new study examining executive compensation in nonprofit organizations found that women earn 8.9% less than men, l The gap widens when there is room for wage negotiations.
The study co-authored by Curtis Hall, PhD, associate professor at LeBow College of Business at Drexel University; Andrew R. Finley, assistant professor at the Robert Day School of Economics and Finance at Claremont McKenna College; and Amanda R. Marino, a doctoral student at LeBow College of Business, analyzed data from IRS Form 990 filingsâWhere the salaries of heads of nonprofits are made public – for four years in various industries.
The researchers first investigated whether or not there is a pay gap between executives in the nonprofit sector, and then to what extent bargaining opportunities – real or perceived – contribute to that difference.
âFor a variety of reasons, we cannot expect to see a gender pay gap in the nonprofit sector, even though recent research has revealed pay gaps among for profit executives,â Hall said. . âFirst, there are more women in the nonprofit workforce than in the for-profit sector. Second, stakeholders, such as donors or boards of directors, can be expected to reduce the gender pay gap, but we did not find this factor to be sufficient to avoid gender pay gaps. “
To better understand the role of negotiation in contributing to the wage gap, the researchers examined contexts with expected variation in opportunities and willingness to negotiate. They examined external employment options for nonprofit executives, the organization’s constraints on executive compensation, the gender composition of its leadership, and salary variability within its executive ranks. Each of these factors uniquely influences the trading environment, according to the authors.
They found that external employment options and executive competition lead to wider pay gaps between men and women, with male executives more likely to take advantage of a larger external labor market or job market. ‘other opportunities to negotiate additional compensation.
However, in organizations where female representation on the board is higher and / or the presence of a female CEO, the pay gap is reduced. This may be because female leadership increases the willingness of female employees to negotiate, according to the authors.
“This study documents the contexts that influence bargaining over the gender pay gap, which is part of a larger societal issue,” Hall said. âEmployers need to be aware of how the compensation negotiation environment within their organizations can lead to gender pay disparities. Perhaps more importantly, business leaders and educators should think about ways to empower female workers to get the most out of wage negotiations, which would hopefully help reduce the pay gap between women and men. genders in the future.
The paper, “Negotiation and pay gaps between men and women in non-profit organizations â, has been accepted for publication in the Review of accounting studies.