Positive Signs, But Big Hurdles Remain For Women & Minority MBAs: Report
The gender pay gap is shrinking overall, but increases for women and minority MBAs as they progress through their careers, a new report finds
Two steps forward, one step back. Despite recent gains in closing the pay gap for women and minority MBAs, there is still fundamental unfairness in career outcomes of women and minority MBAs compared to their male peers, according to research published Thursday (September 23) by The Forté Foundation.
“Do MBA Programs Provide An Equitable Application Process, Academic Experience, and Career Outcomes?” is the second in a series of major reports examining gender and race inequity for MBA students and MBAs by Forté, a nonprofit alliance of top universities, B-schools, and corporations focused on gender equity in business. It finds that while the gender pay gap overall fell dramatically between 2016 and 2020, from 39% to 20%, it continues to widen as women advance further in their careers: As of 2020, the pay gap for MBAs with zero to two years’ work experience is 9%; for those with nine or more years’ work experience, it expands to a chasm of 35%.
Post-MBA, women in 2020 made, on average, $29,700 less than post-MBA men, a difference of 18%. (That’s $147,412 for women compared to $177,112 for men.) Factor in race, and the disparity grows. Minority women earned 42% less ($124,522) than men on average, according to Forté.
ENCOURAGING TRENDS, MORE WORK TO DO
Forté Foundation CEO Elissa Sangster: ‘MBA programs still have some work ahead.’ File photo
“Looking at career outcomes post MBA, women earn less, don’t advance to the same level, and have fewer direct reports than men,” Forté found. “This is especially true for minority women in terms of salary.”
Women MBAs have made significant gains in both enrollment and pay in the last 10 years. Last November, Forté reported that 22 of its member schools with full-time MBA programs had cohorts of at least 40% women, Forté’s highest number ever. That’s up from 19 schools in 2019, 12 schools in 2015 and just one school a decade ago. A record eight schools enrolled 45% women in their cohorts a year ago, including George Washington University, Oxford University Saïd Business School, Washington University in St. Louis Olin Business School, the University of Maryland Smith School of Business, the University of Virginia Darden School of Business, and Arizona State University Carey School of Business. Dartmouth College’s Tuck School of Business led Forté’s pack with 49% women in the class of 2022.
Overall, women’s enrollment in full-time MBA programs at Forté member schools rose from 33% in 2013 to almost 39% in 2019 while holding steady in 2020, a year when COVID shook up enrollment numbers and application processes at many schools. Progress seems to have resumed in 2021, if early reports are an accurate guide: According to the MBA Class of 2023 profiles that have so far been released, the proportion of women is up at 10 of 15 top-25 B-schools in the United States, including 52% at Wharton and 49% at Kellogg. Twelve schools report 40% or more women in the full-time MBA. Women are up at six of the eight top-10 schools that have published class profiles; across the 10 schools with increases, the average increase is nearly 5 percentage points.
GENDER PAY GAP
In its first study in the research series released in January 2019, “Outcomes and Perspectives of MBA Graduates,” Forté found that an MBA led to a 63% increase in salary, regardless of gender — reinforcing the view of the degree as a strong engine for economic mobility.
But Forté also found that widening gap, signaling that there’s much more work to be done to improve both gender and race equality in the MBA ecosphere. The 2019 report revealed that on average, women earned 97% of male counterparts before earning an MBA — but, counterintuitively, that percentage fell to 90% in their first job after earning their degree and 72% in current compensation after adjusting for years of service.
“It’s encouraging to see that an MBA provides greater economic mobility for women and minorities and narrows the pay gap for minorities in their first job post-MBA,” Elissa Sangster, CEO of Forté Foundation, said at the time, “but the whopping gender pay gap and income disparity for women and minorities needs to be addressed, and soon.”
GENDER GAP PERSISTS IN CAREER OUTCOMES
The Forté Foundation’s new report builds upon its 2019 research and focuses on the equitability of the MBA application process, academic experience and career outcomes. The online survey polled 3,133 MBA students, prospective students and alumni at 60 elite MBA programs and at Forté member schools. Michelle Wieser, Ph.D., dean of the School of Business and Technology at St. Mary’s University of Minnesota, led the research team.
Strikingly, it found that women with MBAs make fewer gains throughout their careers than do their male counterparts:
Women MBAs are less likely to be promoted, averaging 1.2 promotions post MBA compared to men who average 1.7 promotions.
Women on average climb one organizational level lower than men, achieving on average the role of senior manager while men achieve director roles.
Women have on average 1.2 fewer direct reports than men do.
What drives that disparity? Career ambition plays a role.
“When asked about their ideal job level five years from now, women MBA alumni outpace men in striving for ‘early leadership categories’ such as senior manager, director and VP (women 63%, men 54%),” the report found. “But women trail men aiming for the C-suite, including President/CEO (women 12%, men 22%).”
“When it comes to career outcomes, women are still lagging behind men, and aren’t aspiring as high,” Elissa Sangster says of today’s report. “This research tells us that the focus still needs to be on elevating women overall and, specifically, women of color when it comes to salary.
“Notably, our research found that in five years women MBA alumni seek to be at a level roughly equal to where men are now. Men may not be aspiring to bigger leaps in their early career than women because they are already further ahead on the career ladder. This might also play a role in why a larger percentage of men are striving for C-suite roles than women.”
OTHER KEY FINDINGS
Forté’s survey, conducted in the fall of 2020, also explored disparities in the MBA admission process and in diversity, equity. and inclusion (DEI). It found that perceptions of how much an MBA helps one’s career depends on who you ask: a man or a woman. While all respondents felt favorably about DEI in the admissions process, men were more favorable than women.
75% of men strongly agreed that their MBA admissions interviewer treated them with fairness and respect, compared to 67% of women.
57% of men strongly agreed that their MBA applications were handled fairly compared to 55% of women.
44% of men strongly agreed that they were treated the same as other MBA applicants compared to 32% of women.
Respondents also reported positive experiences on the survey in the admission process overall, but they were less positive about diversity, equity and inclusion (DEI) in their MBA programs.
22% of MBA students and alumni reported that their MBA programs’ DEI efforts did not meet their expectations. But, these percentages rose for both minority men (26%) and non-minority women (24%).
More than one third of minority women (33%) but just one in ten non-minority men (10%) said their programs’ efforts did not meet expectations.
DEI IN MBA EDUCATION: ‘SOME WORK AHEAD”
Forté’s research also found gaps by gender and race in functions of the MBA education experience such as course materials and faculty. For example, when asked to assess how well “case studies, course materials, classroom examples, and guest speakers presented in their in their MBA program covered a wide range of diverse perspectives on business,” 27% of minority women disagreed or strongly disagreed compared to 22% non-minority women, 16% of minority men and 7% percent of non-minority men.
Similarly, women were more likely to respond negatively to the question of whether faculty presented diverse perspectives: 20% minority women, 15% non-minority women, 11% minority men and 5% non-minority men.
“MBA programs must play a pivotal role in building leaders who are inclusive and prepared to lead in diverse environments. Employers and students expect it, and their commitment is on the rise in the last year,” Sangster says.
“This mismatch between expectations and what students are actually experiencing, shows that MBA programs still have some work ahead and shines a light on what areas need more focus now, including case studies and course work.”
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