Here is one way to close the gender pay gap

“Gifted advancement” is the term Laura Ryan, head of research at Ardea Investment Management in Sydney and the survey’s lead author, has helped coin to describe the phenomenon.

When controlling for variables such as education, experience, career breaks and function, 76 percent of male finance industry professionals in Australia received an unsolicited promotion compared with 60 percent of female respondents. That’s leaving a rich source of leadership talent on the table.

“The pay gap is hidden by the promotion gap,” Ryan told me in a recent interview. “Promotion rates should be equal if the promotion process is not inherently biased.” Over time, especially in large organisations, if the rates are very different, there’s probably a problem with the process, she added.

Not only is women’s elevation to more senior roles being hindered by unofficial career elevation, but also by “perceived competence.” In other words, men continue to be seen as more hireable.

And yet when women do put their hands up for promotions at the same rate as men, they have a better chance of getting them (25.9 percent versus 17.2 percent), Ryan’s study found. Perhaps because women are more likely to do so when they are 100 percent confident that they have the skills and abilities. Another interesting finding: Women who had a career break were less likely to put themselves forward than men whose careers were interrupted — the “motherhood penalty, fatherhood bonus.”

If you want greater representation of females at the top, a narrowing of the gender pay gap and better career opportunities for women, it reasons you have to ensure they are not being disadvantaged when it comes to job progression.

That won’t happen if over-beers and behind-closed-door opportunities that tend to favor men are part of a shadow promotion process. This line from the study resonated: “The impact of bonds between males and their direct male managers is clearly established as a significant factor in explaining higher male promotion rates.”

Globally, women remain underrepresented in the investment industry. They held one in 10 leadership positions, such as chief executive officer and chief investment officer, according to the US-based CFA Institute. The number of female portfolio managers remains pitiful.

The pipeline of female talent is healthy — women are entering the workforce at the same rate as men and are leaning into career opportunities. Yet while they are crushing it on performance, they are still underrated on potential. That shows inherent prejudices abound and men have the upper hand when it comes to advancing in the workplace. That has to change. Companies must ensure females have the chance to develop at the same rate with open career progression paths.

Instead, progress on initiatives to boost gender and ethnic representation has stalled;  gender diversity metrics have barely improved in recent years. More than a third of global firms still have no women in their executive teams, according to McKinsey & Co. As a result, diversity fatigue — the emotional toll of pushing against a seemingly immovable wall of resistance to change — has set in.

In the meantime, there’s an intensified focus on the pay gap as governments force businesses to report it. But what if employers were held accountable not only for the difference between what they pay men and women, but also for initiatives that ensure that gap is closing. A level playing field for promotions is a good place to start.

Andreea Papuc is a Bloomberg Opinion editor. Views are personal and do not represent the stand of this publication.

Credit: Bloomberg