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Work hard, produce stellar results, receive a top performance rating and a promotion is on the horizon. That's how it should work, but this process doesn't happen consistently. According to a study out of MIT Sloan which looked at 30,000 employees at a large retail chain, women, on average, received higher performance ratings than their male colleagues — yet still were marked as having less potential than said colleagues. This resulted in women being 14% less likely to be promoted than their male colleagues.
This begs the larger question of how we decide who to promote. What biases are leading us to make the wrong decisions? And, more importantly, how does this lack of promotion exacerbate the gender pay gap?
How we make promotion decisions
Promotion decisions are generally based on a mix of evaluating past performance and predicting future performance. Past performance, while easier to quantify, does have a level of subjectivity involved. But it is when it comes time for a manager to assess future performance that things become more problematic.
Potential is largely defined as an individual's ability to contribute to the company in the future. Unfortunately, potential can't be directly observed as can past performance. This leaves room for bias to creep in.
Workplace behaviors and biases that reinforce stereotypes regarding potential
One very outdated mindset hampering a woman’s ability to be marked for promotion is that some simply find it hard to see a woman as a leader. This is because the qualities stereotypically associated with being a strong leader — such as assertiveness or ambition — are also usually associated with men. This aligns with research out of The Inclusion Initiative at The London School of Economics that found that when women succeed at work, their success is attributed to being lucky, whereas a man's success is due to his ability.
Women are more often tasked with "women tasks," such as note-taking or going on the coffee run. Increasingly, women are asked to take on more hefty initiatives that are still sometimes viewed through a softer lens, and that extra work goes unrecognized. McKinsey's Women in the Workplace 2022 report notes that 40% of women leaders say that their diversity and inclusion work isn't recognized.
There are also gender-based differences in networking and connection in the workplace that can impact a woman's ability to be promoted. For example, research out of Harvard found that men who report to other men are promoted faster than any other group.
A long road to closing the gender pay gap
PwC just released a reflection on the six years of mandatory gender pay reporting in the U.K., and the impact is disappointingly low. Their analysis found that the decrease in the median gap was only 0.7%. At that rate, it will take 50 years to reach pay parity.
Given that salaries are closely tied to job levels, women not being promoted as readily as men is a driving factor in the gender pay gap. According to the MIT Sloan paper, they find that gender differences in potential ratings can explain almost half of the gender promotion gap.
The key takeaway is that potential ratings matter for both promotions and pay, and firms continue to incorrectly undervalue the potential of their female employees.
