Likelihood of holding a senior management position: gender gap largest in financial sector

Press Release of September 23, 2016

Availability for full-time work still a prerequisite for climbing the career ladder in all sectors

Overall, women in Germany have considerably lower odds of holding a senior management position than men, particularly in the financial sector. These are the findings of a study conducted by the German Institute for Economic Research (DIW Berlin) based on data from the Socio-Economic Panel (SOEP) study for 2001 to 2014. Although the financial sector has a comparatively high number of senior management positions, this is a structure that primarily benefits men. According to DIW Berlin’s Research Director Gender Studies, Elke Holst, one of the biggest career barriers faced by women is their tendency to more frequently work part-time. “Companies still prefer management positions to be full-time,” says Holst. “If we don’t want flexible working time models to end up being career killers in the rush hour of life, a change in mentality is required.”

The gender leadership gap

The study focuses on senior managers as defined by the 1988 version of the International Standard Classification of Occupations (ISCO-88, major group 1). Holst and her co-author Martin Friedrich first calculate the gender leadership gap, i.e., the difference between the share of all employees who are women and the share of women holding senior management positions such as chief executives, production department managers, and personnel department managers. In Germany as a whole, the gender leadership gap stood at an average of 17 percent during the observation period: although 48 percent of all employees were women, they accounted for an average of only 31 percent of senior managers. The gap varies considerably across different industries. In the information and communication sectors, it was comparatively small at ten percentage points and the largest gender leadership gap was observed in the financial sector (31 percent) and in the industries grouped under public administration. While half of all employees in the financial sector were women, the share of female senior managers in this sector was only 19 percent. Women accounted for more than two-thirds of all employees in public administration but only held just over one-third of senior management positions.

Comparatively large number of senior management positions in the financial sector primarily benefits men

Controlling for factors that play a key role in an individual’s career—education and professional experience, for instance—revealed that the probability of a female employee in the financial sector occupying a senior management position was rather low (only four percent during the observation period) whereas the probability for men was three times as high at almost 12 percent. This means that, in an industry comparison, the inequality of opportunity between women and men is most pronounced in the financial sector. Women in the trade, transportation, and storage sector had the highest probability of holding a senior management position (6.4 percent). In construction and in the information and communication industry, there was no statistically significant difference between the odds of women and men holding a senior management position.

What is the biggest career barrier—having children or working part-time?

The authors also examined the effect of selected characteristics on the likelihood of women holding a senior management position. At first glance, having children seems to dramatically reduce women’s career prospects. If we consider this factor only, a negative correlation can be observed: women in senior management positions were less likely to have children than their male counterparts. However, if women’s working hours are also taken into account, the effects of children take a backseat and lose their statistical significance. “It is evident that working full-time, in particular, helps women’s career prospects,” explains Holst. Policy-makers should continue working on measures to reconcile family and working life. Companies should review their existing practices and organizational processes and dismantle obstacles to women being promoted to senior management positions. “The low share of women in management positions is one of the main reasons for the gender pay gap. More women in senior management positions—and hence more women with high incomes—should contribute to bridging the gender pay gap.”