When it comes to the pay gap is having too many women in management and leadership positions just as bad as having too few?

A majority of women, when surveyed by Women’s Agenda for their Ambition Report published last week, said they wanted more money. Straightforward and simple. Just pay us more money, thanks.

But it turns out when women come to dominate management positions in an organisation – making up 80 per cent or more – the pay gap between male and female managers increases from eight to 17 per cent!

In other words, having more women in charge exacerbates the problem of low pay for women.

The author of this research, Gender Equity Insights 2017: Inside Australia’s Gender Pay Gap, Professor Rebecca Cassells says: “Not only do female-dominated organisations tend to be lower paid, but this analysis shows that in workplaces with heavily female-dominated management teams there are large gender pay gaps in favour of men.”  

Putting the question to Cassells of why this should be happening, she believes that it’s a question of values. “The theory is that when there are very few men in a female dominated environment, the value of those men increases due to their rarity.”

It is being called the “seraglio effect” in reference to the sequestered living quarters used by wives in an Ottoman household. Cassells also refers to it as the “pedestal effect”, where “a man is perceived as being more distinguished and authoritative relative to his female counterparts.”

The implication is that an imbalance in gender has a negative effect on pay for women, whether there be too many men clustered in senior roles or too many women. It’s like the Goldilocks story, too hot or too cold, the porridge temperature has to be just right.

The research report commissioned by Bankwest Curtin Economics Centre (BCEC), in collaboration with the Workplace Gender Equality Agency (WGEA), followed several organisations over two years. What Cassells found was that when there was a change in the female leadership team by 10 per cent or more in a single year, making the gender balance more equitable, the organisation-wide gender pay gap reduced by three per cent or more. “For those companies, it shows that increased diversity in leadership roles is delivering better, more equitable outcomes,” says Cassells.

The pay gap isn’t only confined to senior management. Cassells research reveals just how early the rot sets in.

“You would expect graduates entering work are going to be paid the same. But what we find is that the top 10 per cent of male graduates typically earn $88,000 whereas their female equivalents earn $81,000.” It’s not an insignificant gap says Cassells.

“Already we see cracks appearing at such an early stage in the wages of men and women. Although men are more likely to choose STEM fields which are higher paid, hopefully we will see a reversal as more men enter into female-dominated fields and more women enter into STEM professions. Nevertheless, I still think there is a great deal of unconscious bias at work here and companies really need to examine this.”