Gender wage gap handicaps female MBA enrolment

December 20, 2015, 8:23pm

While women account for more than 60% of tertiary degrees in SA, the gender wage gap as well as social pressures deter them from pursuing MBAs and other postgraduate studies. Picture: BLOOMBERG

By David Furlonger, Business Day Live

THE gap between men and women’s salaries is undermining business schools’ attempts to attract more female MBA students, say academics.

Some women are questioning the return on an academic investment that can cost up to R250,000 in SA, and schools may be deterred from enrolling more women for fear of losing ground in global rankings.

Like those in many other countries, South African business schools are anxious to attract more female students. But with post-MBA salary increases accounting for up to 100% of the weighting in some global rankings, there is a disincentive to enrol them.

Rankings are an important marketing tool. To be considered among the top 50, 100 or even 200 of the thousands of institutions across the world attracts more students and allows schools to charge more.

However, with local research showing that, on average, women earn 15%-17% less than men for the same job, the potential to drag down rankings performance is considerable.

At executive level, the gender wage gap can get as high as 35%, says Wits Business School academic head Prof Chris van der Hoven.

Prof Bernard Garrette, associate dean of the HEC business school in Paris, says: "Business schools that try to break out of the pack by enrolling more women will probably suffer a hit in several major rankings."

The best-known rankings, by the London Financial Times, apply "a 40% weight to salary information provided by MBA alumni, more than any other metric", Garrette says. Forbes magazine’s ranking is 100% salary-related, while BusinessWeek has just introduced earnings to its formula, at an initial 10%.

Garrette first raised the issue this year in an academic paper. He says a possible solution to the problem is for rankings formulae to take account of the number of women in classes "so that schools which are more successful in enrolling women are not hurt in the rankings".

Although it’s not clear to what extent schools are influenced, Van der Hoven says no one must be allowed to "play the system. In the end, the rankers have to ask themselves what are their genuine intentions with these rankings."

Stellenbosch University Business School’s Marietjie Theron-Wepener observes: "The question is whether rankings should have a rethink on the dimensions they use."

Female students are the minority in South African MBA classrooms. Research prepared for the Financial Mail’s 2015 Ranking, The MBAs, shows they currently account for 111 of 294 full-time MBA students and 1,601 of 3,468 part-time students.

Internationally ranked South African schools say earnings potential plays no part in their student selection. It’s already hard enough attracting female students without putting more barriers in place.

Whether it’s a one-year full-time course or a three-year part-time one requiring the constant sacrifice of evenings and weekends, many women think twice before committing, says Tanya van Lill, academic head at Pretoria University’s Gordon Institute of Business Science.

They may have to consider family responsibilities, cultural demands and possible gender biases from employers more likely to support the study demands of male employees. "Without a solid support structure at home and at work, women find it difficult to dedicate up to three years of their lives to an intense qualification such as the MBA," says Van Lill.

Henley Business School SA has introduced a "family friendly" MBA designed specifically to reduce these pressures — a move other schools say they are watching with interest.

However, this gender imbalance is not unique to MBAs. Van der Hoven says that for postgraduate study generally, a "very low number" of women apply.

Much as they want to attract more women, most schools do not do them any favours. They want the best students irrespective of gender, says Theron-Wepener.

"We try to create an inclusive environment and do not make a differentiation between accepting men or women on the MBA. We would, however, welcome more women," Van Lill says.

Business certainly wants more women with MBAs to help redress the low level of female management and boardroom representation.

A PwC report says that internationally, "women represent the majority of entry-level employees in many organisations and outnumber men in college-graduation rates".

In SA, women account for 60% of all tertiary degrees. That’s above the global average of 58% reported by the Organisation for Economic Co-operation and Development.

However, in SA, as elsewhere in the world, the proportion of women within organisations reduces at every senior level, reports PwC.

A report by the Businesswomen’s Association of SA two years ago found that women comprise 17% of board members, 9% of CEOs and just more than 5% of chair positions.

You would think, says Garrette, that the desire for more senior businesswomen would make those who are available more marketable; that they would be paid more.

This, in turn, would encourage more women into MBAs and the corporate world. But no. At every tier, they get less.

"Faced with the possibility of a smaller pay cheque, women take a greater financial risk than men when enrolling in business school — a daunting and even dissuading prospect," he says.

That’s true only insofar as women undertake MBAs for financial gain, says Van Lill. Others do so to learn new skills, change careers or start their own businesses. But if there is salary imbalance, she says women themselves may be partly to blame.

Men are prepared to fight for more money, but many women are lousy at negotiating salaries.

Garrette agrees: "Women are less prone to enter into negotiation discussions than men. Most employers expect that men will negotiate and take this expectation on board even before they start the discussion.

"Conversely, they expect a less confrontational salary discussion with women, so behave differently and do not create the same latitude for a compensation negotiation."

He adds that when women do fight their corner, employers are often surprised and "a woman could take advantage of that and get a higher salary". Schools can teach female students bargaining skills, "to equip them with more efficient negotiation approaches to propel them to reach the compensation level they are actually worth", he says.