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Women leadership capacity is underestimated

How women leadership is underestimated

Women are 14% less likely than men to be promoted because they are consistently judged as having lower leadership potential than men. Women’s performance is rated higher than men’s on average. But their potential is rated lower. 

These are conclusions from a study of a large US retail chain by Professor Kelly Shue, Yale School of Management, Associate Professor Alan Benson of the University of Minnesota and Associate Professor Danielle Li of MIT.

“We show that the widely-used practice of forecasting workers’ “potential” as a basis for allocating training and job assignments contributes to gender gaps in promotion and pay”, the study says. 

It is based on promotion records from close to 30 000 staffers at the retail chain. More than half of entry-level workers—56%—are women. But higher up in the organisation, there are fewer and fewer women: women are 48% of department managers, 35% of store managers, and 14% of district managers.

The study concludes:

  • Our results show that there may be large gains from finding ways to de-bias assessments of potential. One approach is to boost potential ratings and promotion rates for women who are rated as low-potential and high-performing. Such women are rarely promoted despite their tendency to succeed when they are. 
  • An alternative approach would substitute indicators of potential with one that is less prone to stereotypes of who may be an effective leader.
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The study, presented in Yale Insights, shows managers use a “nine-box” grid—a commonly used tool at large organizations—to evaluate their employees, giving them a low, medium, or high score on their performance over the prior year and a low, medium, or high score on their potential for growth and development. 

“What is commonly talked about in terms of management and potential are characteristics such as assertiveness, execution skills, charisma, leadership, ambition,” Shue told Yale Insights. 

“These are, I believe, real traits. They’re also highly subjective and stereotypically associated with male leaders. And what we saw in the data is a pretty strong bias against women in assessments of potential.”

While women receive higher performance ratings—they are 7.3% more likely than men to receive a “high” rating in performance—their potential ratings are 5.8% lower which explains the gap in promotions.

The study found that managers consistently underestimate women’s ability to perform in the future. Women continue to receive lower potential scores after they have demonstrated through their performance that the previous period’s potential score was inaccurate.

“Women get progressively lower potential scores relative to their actual future performance as we rise up the corporate ladder. So this is going to contribute to a stronger and stronger glass ceiling.”

 “Women get progressively lower potential scores relative to their actual future performance as we rise up the corporate ladder. So this is going to contribute, I think, to a stronger and stronger glass ceiling the higher up we go”, Shue said.

The study estimates that 70% of the gender pay gap at the company is attributable to gender differences in job levels.

The study found that female managers also give lower scores for potential to their high-performing women subordinates.

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