The gender pay gap is persistently large, with various reports suggesting at the current rate of change, it will be a couple of generations before parity is seen.  Do female executives lead to a more equitable situation?  A new study suggests things may not be quite so straightforward.

The study finds that female executives do indeed appear to decrease the gender pay gap at the top of their organizations, but the picture is less positive for women at the bottom.  The study also examines the impact of female leadership on organizational performance, and suggests that there is generally a boost.  Indeed, they suggest that if organizations with at least 20% female workers were led by a female CEO, their performance would grow by 14%.

They believe this boost to performance is largely because female leaders are better able to judge the qualities of female workers, and will therefore assign them to tasks that are better suited to their ability.

Equitable workplaces

The findings emerged from a study of Italian manufacturing firms between 1980 and 1997, with the data incorporating around a million workers.  Of these firms, 795 had at least 21% of the workforce being female and 2.5% of the executive team.

In these firms, the researchers found that female leadership did reduce the gender pay gap for women at the upper end of the wage distribution, but had the opposite effect at the bottom end of the spectrum.  Interestingly, the opposite appeared to be the case with male workers, for whom the wages of those at the top decreased by 25% and increased at the bottom by 25%.

“We explain our results with a model where executives learn about the skills of their workers and they are better at assessing workers of their same gender.” the authors explain. “In a world dominated by male executives, female workers prove it hard to show their skills, and therefore to climb the firm’s hierarchy. In firms with many women, therefore there is a lot of unexploited talent. When a woman becomes the CEO, she is better able to assess the qualities of the female workers and assign them to tasks more in line with their ability, thus boosting firm performance.”