What Would Gender Parity Look Like in the C-Suite—or in Business School?
Our new GMAC® white paper explores the possibilities.
Imagine living in an ideal world, where working men and women earned equal pay for performing the same or equivalent jobs, and the makeup of corporate leadership reflected the fact that women constitute nearly 50 percent of the labor force in developed nations worldwide and more than half of college-educated workers. In this scenario, one could perhaps imagine that a substantial share of the companies listed in the S&P 500 would have female CEOS.
The hard reality is that the ranks of female CEOs in the S&P 500 number exactly 20—or four percent of the total, despite the fact that women constitute 45 percent of the workforce in these companies.1 And across the globe, there is a persistent gap in women’s earnings compared with men that cuts across industries, professions, and job levels regardless of work tenure or educational attainment.
These gender gaps in earnings and corporate leadership and their impact on women’s business careers are the focus of a new white paper published last month and authored by two GMAC researchers, Paula Bruggeman and Hillary Chan. The report, “Minding the Gap: Tapping the Potential of Women to Transform Business,” examines recent GMAC survey findings about women’s progress in the pipeline for graduate management education and the outcomes they have achieved. A review of outside industry studies reveals the scope of the gender earnings gap and shortage of women in top corporate leadership positions, pointing to the need for further progress in the business world and in business schools to address workforce gender disparity.
Women’s Progress in the B-School Pipeline
Since 1971, the number of women earning graduate-level business degrees in the United States has grown from 1,000 to 88,000 in 2014, comprising 47 percent of the total, which includes both MBA and specialized master’s degrees.2 GMAC surveys of prospective students and b-school alumni show that women enter the GME pipeline with the same career ambitions and motivations as men and achieve similar professional, personal, and financial outcomes including: skill development, quicker career advancement, robust employment rates, and improved job satisfaction.
Among business school alumni, men and women also experience an identical salary bump between pre-degree and post-degree salary after graduating, for a median increase of US$20,000 overall.
But female graduates of MBA and business master’s programs are not immune from the gender pay gap. Median annual salaries for female business graduates in the United States, for example, are lower at all job levels, ranging from 85 percent of men’s salaries in entry-level jobs, where they are closest in parity to men’s earnings, to an even wider gap at the executive level, where they earn only 80 percent of men’s salaries. This earnings gap is in sync with larger global trends. In Organization for Economic Cooperation and Development (OECD) countries, wage gaps between men and women range from less than seven percent in New Zealand to a high of 36 percent in South Korea.3 GMAC alumni data show that globally, regardless of degree earned, the wage gap between men and women widens over the span of their careers, growing to nearly US$400,000 in cumulative annual earnings over 20 years after graduation.
The report argues that this gap may be tied in part to the scarcity of women in upper leadership roles. GMAC’s global alumni employment data from 2015 mirrors the S&P 500 statistics on the scarcity of women in the c-suite. Among alumni of full-time two-year MBA programs, for example, men outnumber women in in the c-suite by a ratio of 4 to 1. This trend holds across most other program types and graduation years.
Closing the Education Gap Will Address the Leadership Diversity Gap
Graduate schools of business constitute one of the main talent incubators for future business leaders. Expanding women’s enrollment in MBA programs particularly would go a long way toward expanding the pipeline of women prepared to step into leadership roles in business. Not that an MBA or GME itself is a prerequisite for corporate governance, but an MBA is a highly valued credential, sought by companies the world over that are intent on hiring top talent to fill their ranks.
According to the Forte Foundation, with whom GMAC partners to promote greater participation of women in MBA programs, more than 40 percent of CEOs of both genders in the top 100 companies have MBAs. So it would seem that an MBA is a natural pathway for women to ascend to the ranks of corporate leadership.4
Though women have earned 47 percent of graduate degrees in business conferred in the United States, recent Association to Advance Collegiate Schools of Business (AACSB) data show that women still fall short in MBA degrees conferred worldwide, earning an average of 36 percent of MBA degrees in 2012–13 compared with 64 percent earned by men.5 But the metrics are slowly shifting. Recent GMAT® exam data show that women represented 44.4 percent of all exams taken in testing year 2015 for the highest female-to-male ratio in GMAT history. In testing year 2015, 60 percent of women who sat for the exam intended to pursue an MBA.6
Business schools, which have worked diligently for years to attract and recruit more women to the MBA programs are seeing their efforts pay off. As reported in GMAC’s 2015 Application Trends Survey, the representation of women in the applicant pools for full-time two-year MBA programs reached 40 percent last year, five percentage points higher than 2011. The share of women in the applicant pool for part-time, online, and flexible MBA formats also grew and ranged between 42 percent and 45 percent of total applications.
With MBA enrollments for women climbing to 40 percent, there is much to celebrate, but much work left to do to change the gender dynamics in the classroom to ensure that all students, men and women, are being prepared for the diverse future business environments in which they will lead.
The authors suggest that a set of 25 best practices adopted last year by more than 50 business school deans in the United States provide an excellent blueprint for how schools can take the lead in expanding opportunities for women.7 Evolving from a White House conference on the challenges for business schools in preparing their students for the future workplace, the best practices were featured in a workshop discussion at GMAC’s 2016 winter leadership conference in Miami, FL. More information about these best practices can be found through the AACSB diversity website.
To download the full GMAC white paper, visit gmac.com/researchreports. If you have any questions, please feel free to contact the Research Services Department at firstname.lastname@example.org.
 NCES. Digest of Education Statistics 2015: http://nces.ed.gov/programs/digest/d15/tables/dt15_325.25.as
 OECD (2014) Employment Database. http://www.oecd.org/gender/data/genderwagegap.htm.
 C. Hymowitz (November 9, 2015). “Men Sit Up and Listen as Women Fill 40% of Business School Seats.” BloombergBusiness
 AACSB, Business Degrees Conferred, by Gender, Level, and Region. Retrieved April 12, 2016 at: http://www.aacsb.edu/knowledge/data/frequently-requested/degrees-conferred/degrees-by-gender.
 GMAT testing year data, TY2006 to TY 2015.
About the Authors
is Research Publications Manager at GMAC.
Hillary Chan is Research Analysis Associate Manager at GMAC