Jill A. Gould

Despite the expected advantages of appointing women to corporate leadership roles, empirical evidence provides mixed support for the positive relationship between women's representation in the top management team (TMT) and subsequent firm performance. Considering the evidence that female TMT members are often paid less than their male colleagues, this study examines the implications of a gender pay disparity for the relationship between women's representation in the TMT and firm performance. Our analysis that draws on TMT pay data in public Australian firms demonstrates that gender pay disparities within TMTs negatively moderate the relationship between women's representation in the TMT and subsequent firm performance. Specifically, when female TMT members are paid less than their male colleagues, and this gender pay disparity is large, women's representation in the TMT is negatively associated with firm performance.

Female representation at senior organizational levels lags well behind male representation. We investigate whether there is a positive nonlinear relationship between female board representation and female executive representation: the trickle‐down effect. We investigated 1,387 organizations listed on the Australian Securities Exchange between 2003 and 2012 and found the hypothesized nonlinear trickle‐down effect operating between board and executive levels. The trickle‐down effect was strongest after 1 year but still significant after 5 years. We investigated two potential moderators of the effect: organization size and gender diversity recommendations. There was no moderating effect of organization size, but contrary to expectations, gender diversity recommendations slowed the trickle‐down effect. Our findings suggest that organizations can address the paucity of women at senior organizational levels by starting at the top. Specifically, organizations making multiple appointments of female board members should expect improvements in female executive representation. However, the signaling and advocacy opportunities afforded by female board appointments may be less potent in the context of external interventions. Our findings contribute to the ongoing policy debate about the value of regulatory interventions to increase female representation at senior organizational levels and highlight the need for research on the unintended consequences of these interventions across national contexts.

Organisational strategies to achieve gender diversity have tended to focus on ‘bottom‐up’ approaches such as mentoring or leadership training. We investigate an alternative ‘top‐down’ approach: the trickle‐down effect. We integrate theories from the psychology and management literatures to hypothesise a positive relationship between female representation at two levels. Data from 20 departments in an Australian public service were collected for the period 2002–2012. Female executive representation in 1 year had a positive impact on female representation in the executive feeder group in the following year. The trickle‐down effect was strongest in the first 2 years, but still significant after 5 years. We investigated two moderators, department size and gender diversity target. The effect was stronger in large departments. Surprisingly, the gender diversity target strengthened the trickle‐down effect only when female executive representation was under 15%. Our finding of a trickle‐down effect suggests public sector departments should consider appointing women to senior roles as a top‐down strategy for increasing organisational gender diversity.

In virtually all economies, executive positions are highly male dominated. This study examines the pay gap between male executives and female executives in large Australian firms from 2011 to 2014 to evaluate whether female executives are paid equitably compared with male executives. The mean pay comparison shows that female executives earn 80.7% of the total pay earned by male executives. A large part of the gender pay gap is explained by differences in positions held; female executives are particularly underrepresented in highly paid executive positions. After controlling for executive position and other relevant individual and firm characteristics, there remains a 15.1% gender gap in total pay. Our findings suggest that to achieve the goal of gender equity, both the proportion of women at executive level and the executive-level gender pay gap need to be monitored.