She Works Hard for the Money

September 14, 2018 | Sandra Pierce


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♫♫She works hard for the money

So hard for it honey

She works hard for the money

So you better treat her right ♫♫

Donna Summer

 

I’ve regrettably said words and I’ve never got a game penalty”, Andy Roddick, 2013 U.S. Open Champion

"I will admit I have said worse and not gotten penalized”, James Blake, Former Top U.S. Tennis Player

Tennis great, Serena Williams’ heated dispute with the umpire during last Saturday’s U.S. Open’s Tennis Women’s Finals seems to have reverberated around the world.

Whether Carlos Ramos was being pedantic or sexist is impossible to know – what is true is that he has never penalized a player a game in such a high-stakes match.

And it’s not just the tennis world that has been split in two. It feels like the entire universe has taken sides on whether or not women are allowed to express themselves, specifically anger, without being treated differently. What isn’t being talked about is an aspect of discrimination that has received little attention --- “The Punishment Gap”.

The gender pay gap – that women earn lower wages than men- is well known. And this is what existing research has generally focused on. But that doesn’t seem to be where the disparity in the workplace ends.

In a recent working paper, When Harry Fired Sally: The Double Standard in Punishing Misconduct, Professors Mark Egan, of Harvard Business School, Gregor Matvos, at the University of Texas at Austin and Amit Seru, at Stanford Business School, decided to explore whether gender discrimination carried over to punishment of undesirable activities as well.

In other words: Are labour markets more forgiving of missteps by men than women? But what does the research say?

The financial advisor industry offered them a unique setting to study gender differences in punishment and leniency in the workplace. Their analysis covered the career trajectories of more than 1.2 million men and women registered in the US from 2005 to 2015, and examined how their careers evolved following misconduct.

Although both female and male advisors are disciplined for misconduct their research found that female advisors are punished more severely. They are 20% more likely to lose their jobs and 30% less likely to find new jobs relative to male advisors.

At first they felt the explanation could be that women engage in different types of misconduct; for example, maybe they engaged in more costly offenses or were more likely to be repeat offenders. This could explain why they face more severe punishment.

The data shows the exact opposite. Men are twice as likely to be repeat offenders and engage in misconduct that is 20% more costly. Could an alternative explanation be differences in productivity? A firm is less tolerant of a financial advisor who brings in less money to the company?

Again, not the case. The punishment gap persisted even when the researchers account for the amount of money an advisor manages.

After reading the research I personally conducted an email interview with Professor Egan who confirmed that there is no doubt the financial industry is willing to give male advisors a second chance, while female advisors are cast from the industry for similar or less severe missteps.

“We found evidence that the gender punishment gap is driven by in-group favouritism yet dissipates at firms with a greater percentage of female managers.”

When I asked him if he felt it was germane just to their speciality, the world of finance, he replied , "there was no reason to think that gender punishment gap is specific to the financial sector”

“There is actually a recent study by a Harvard PhD student that shows a similar pattern in the medical industry”.

In an emotional post-Open press conference Serena spoke for many female trailblazers:

I just feel like the fact that I have to go through this is just an example for the next person that has emotions, and that wants to express themselves, and want to be a strong woman. They’re going to be allowed to do that because of today. Maybe it didn’t work out for me, but it’s going to work out for the next person.”

Sadly, according to the World Economic Forum, it may take another 217 years to close “The Economic Gender Gap” globally. How long is it going to take for us to close “The Punishment Gap”?