Playing golf? Finding better paths to pay equity

Leanne Cutcher, The University of Sydney

Louise Marie Roth Selling Women Short—Gender and Money on Wall Street, Princeton University Press, 2006 (272 pp). ISBN 9-78069112-643-2 (hard cover) RRP $47.95.

Tracy earned $US200,000 in 1999, yet she is a victim of pay inequity. That might seem implausible, even offensive. But consider the fact that her colleague Roger, who had identical qualifications and equivalent industry experience, earned $US600,000 in the same year. Why did Roger earn three times more than Tracy? In Selling Women Short: Gender and Money on Wall Street, Louise Marie Roth sets out to answer this question. The answer matters, not just for big earners on Wall Street, but for all women. If pay inequity plagues those who top their MBA class, who are prepared to work incredibly long hours and who forgo having children, it leaves little hope for women in ordinary jobs.

Selling Women Short compares the fortunes of men and women who worked on Wall Street during the long bull market of the 1990s, when opportunities in the securities industry were abundant. This market environment should have provided a best-case scenario for the women working there. Yet Roth discovered those women’s mean earnings were only 60.5 per cent as much as those of their male peers from business school a mere four to seven years after they had graduated. Even accounting for differences in background, area of industry, rank and firm prestige, women earned 29 per cent less than similarly employed men (p. 70).

Roth’s findings are echoed in a recently released report by the Equal Employment for Women in the Workplace Agency in Australia. A survey of the top 200 companies listed on the Australian Stock Exchange showed that female chief financial officers and chief operating officers earned on average 50 per cent less than men in the same positions (Jenkins 2008). Commentators have suggested that this pay inequity is a result of the persistence of the ‘male breadwinner myth’ in Australia, such that senior management assumes that men will have longer careers than women, who inevitably leave the workforce to rear children. This assumption results in men being given access to higher salaries and promotional opportunities.

Roth paints a complex picture of why pay inequity persists.

Such assumptions alone, however, cannot account for the stark differences between men and women’s salaries. Roth paints a much more complex picture of why pay inequity persists, showing that it is the result of a mix of subjective performance evaluations, biased bonus schemes, lack of mentors, and the all pervasive ‘boys’ network. She shows that these structural forms of discrimination ‘do not rest on individual acts of meanness, in which some people consciously limit the opportunities of women’ (p. 10), but on the interpersonal and organisational dynamics that subtly re-create inequality. The result is that women receive less pay than their male colleagues even when they work in the same areas of Wall Street and at the same occupational level.

Dominant perceptions hold that money markets are gender-blind, and all that matters for employee performance is how much business he or she brings into the firm. But Roth shows how gender shapes an individual’s capacity to bring in business. Wall Street firms claim to pay for performance, by evaluating individual performance and awarding bonuses on that basis. However, the bonus review system is open to manipulation and performance evaluations are subjective because individual contributions are not always easy to measure and women’s performance faces greater scrutiny. And although the performance system produces systematic inequalities, Roth found that the majority of workers view the bonus system as fair, thereby maintaining a ‘myth of meritocracy’ on Wall Street. The persistence of this myth provided a potent interpretation of bonus pay that levelled blame back on the individual, whereby workers who didn’t get a good bonus believed they just weren’t good enough at ‘bringing the business in’ (p. 188).

Strong client relationships built on trust are the key to bringing in business and Roth has some really interesting things to say on perceptions about these relationships and their impact on women’s pay. On Wall Street there is a strong perception that clients prefer bankers, salespeople, and traders of the same sex. She shows how this perception has shaped the opportunities presented to women by their managers, as well as the career choices they have made themselves. These opportunities and choices have a major impact on women’s earning capacity. This is because even at a junior level, strong client relationships could increase access to accounts and lead to better performance evaluations. Roth uses the term ‘homophily’ to describe the way individuals automatically and unconsciously prefer to associate with others similar to themselves.

Managers assumed that male clients would want to associate with
male bankers.

Thus, women were excluded from developing strong client relationships because their managers assumed that the predominately male clients would want to associate with male bankers. It seems many Wall Street bankers share New York Post Editor Col Allan’s penchant for strip clubs, because visits to these clubs, as well as hunting trips, during which cigar smoking seems mandatory, are favoured client outings. Women could not participate in these activities, it seems, without stepping over the boundary of appropriate female behaviour. Playing golf was acceptable and several women Roth interviewed talked about learning to play golf so that they would be able to cement relationships with high value clients.

However, it seems that the majority of women would rather take a cut in pay than learn to play golf: most of the women in Roth’s study avoided the overtly masculine culture of client-centred jobs by moving into jobs on Wall Street where client relationships were less important. Roth makes it sound as if they made these decisions dispassionately, but there must have been painful experiences of exclusion behind them. One doesn’t leave a much more lucrative area of work lightly.

The high paying areas of Corporate Finance and Sales and Trading are the areas of banking with the most intense client relationships. When women moved to areas such as Equity Research and Asset Management, the need to ‘entertain’ clients diminished significantly—as did the women’s pay. However, it would be wrong to assume that not having to ‘entertain’ clients meant working shorter hours or that women chose lower-paying positions because they provided more time to devote to families. In fact, despite the lower compensation in Equity Research, workers in this area worked longer hours than their counterparts in the high reward area of Sales and Trading, which had the most reasonable and predictable hours and was among the most male-dominated areas of Wall Street. Even when women worked longer hours than men employed at the same level in the same areas of the organisation they still earned less for each hour they worked than those men. Roth concludes that work effort, measured as hours devoted to the job, could not explain the gender pay gap.

Fortunately, there are other ways to pay equity apart from playing golf. Roth shows how some women overcame the dependence on friendships with clients by establishing specialised expertise that made them indispensable to their clients. They also chose jobs where their productivity would be harder to question. For example, Emma took a job in asset-backed securities because the quantitative nature of this work insulated her from some of the biases in evaluations based on intangibles like the strength of client relationships. By choosing a position with clear performance criteria, she avoided the subtle, structural discrimination that occurs when ‘good’ performance relies on the subjective evaluations of male managers and peers, or on her ability to establish ‘buddy’ relationships with male executives from client firms.

Clients need finance capital more than they need white men to provide that capital.

However, as Roth rightly points out, there are a limited number of such jobs. She asks why should women be excluded, or exclude themselves, from high-paying jobs that are dependent on relationships with clients? Women and their managers need to challenge their assumptions about client preferences. To a large extent client expectations are governed by what the firm offers them. Indeed Roth reports that there were Wall Street clients who were indifferent to the gender of their banker as long as they obtained the necessary financial experience. As one female banker said, clients need finance capital more than they need white men to provide that capital.

As more women reach senior levels in client firms, Wall Street bankers will need to re-think their customer relationship strategies. They will need to change the way they do business to ensure that they don’t alienate these potentially lucrative female clients. Strip clubs, hunting, even golf, are unlikely to appeal to female clients. That said, it is unlikely that day spa sessions or other stereotypically ‘female’ activities will appeal to time-poor working women who presumably prefer to just get down to business.

Significantly, Roth did not interview Wall Street clients for her study. Indeed very few studies of service work provide us the client or customer perspective. Researchers need to talk to clients themselves so that we can use their voices to challenge the narrow gender stereotypes that often inform management customer relationship strategies that lock women out at the high end of the market.


Jenkins, M 2008, ‘Breadwinner myth “holding back’ women”, AAP Bulletins, January 25.

Leanne Cutcher is a Lecturer in Strategic Management and Human Resource Strategy in the Faculty of Economics and Business at The University of Sydney. Her PhD thesis, Banking on the Customer, examined the link between customer relations and human resource strategy in the retail banking industry in Australia. Leanne’s current research interest is concerned with older women workers in the service sector.