The prospect of increasing earnings potential is a key factor that draws people to business school. For the most part, female and male graduates holding MBAs see a bump up in salary right after receiving the degree. But gender gaps in salary and promotion soon set in and widen within a few years of graduation, especially for women of color.
Women who secure MBAs still trail White men in almost every measure during their careers, according to the latest research from the Forté Foundation, a nonprofit advocacy organization that works with business schools to help more women gain MBAs. In a report based on a survey of about 1,500 MBA graduates from 60 programs in the US, Canada and Europe, Forté’s research has found that when it comes to pay, promotions, the number of direct reports and levels of responsibility, men continue to outpace women as their careers advance.
“No matter where we looked, women are always behind men,” says Elissa Sangster, the chief executive officer of Forté. “And under-represented minority women were even further behind all of them.”
Men get promoted faster and secure higher-paying line jobs such as running a business unit. Women reported fewer promotions and were more likely to be placed in staff positions in such divisions as human resources and marketing, according to the report.
The findings confirm persistent pay and promotion gaps in the overall US workforce. Women, who make up about half of US workers, trail men in nearly every measure of corporate power. They fill fewer than 10% of chief executive officer roles among S&P 500 companies, according to Bloomberg data, and hold about a third of the seats on those companies’ corporate boards. Most estimates show women occupying fewer than a third of C-suite roles.
A 17% pay gap for later-career men and women with MBAs nearly matches the median pay gap for all men and women in the US, according to the US Census.
For women of color, the later pay gap is even greater. They earned about $74,000 prior to getting an MBA and gained an initial bump to $116,565, which then rose to about $162,000, the Forté report shows. White men in the same trajectory started at $77,000 and ended up at about $202,000, the data show. White men secured 2.3 promotions post-MBA, and all other groups had fewer than 2, with women of color at 1.5. White men averaged 3.5 direct reports; women in general averaged closer to 2.
An MBA is worth the time and cost for people who seek higher pay and management roles, Sangster says. But she emphasizes that companies need to be more deliberate in measuring how they assign and promote executives after they get MBAs. Companies are good at looking for ways to streamline manufacturing processes or improve marketing campaigns, but, she says, they often fail to apply comparable rigor to developing and acquiring talent.
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