Faculty Research

How Women Can Beat the Wage Gap Trap

higher pay for both men and women. with respect to bosses, it is beneficial to initiate contact and to be a provider of information. In the case of peers, there is a benefit to relationships that allow for the exchange of information. Finally, individuals who have close, trusting, and open relationships with their subordinates earn higher pay. Interestingly, not only do women have greater potential to raise their pay through these effective network relationships, but other research seems to indicate they may be better equipped to do so.

Three ways wOMeN May iNcrease pay:

The wage gap between women and men continues to be a troubling fact in the U.S. workplace. while it is clear that issues such as discrimination remain, recent research from the Villanova School of business (VSb) offers some suggestions about how women can manage their network relationships to help narrow the gap. the original intent of VSb professors of management and operations Kevin Clark and patrick maggitti and co-author holly Slay of Seattle University was to examine how network relationships in an organization affected pay. they found that the nature of these relationships matters for all employees; however, to their surprise, women appeared to have more of an opportunity to increase their pay by effectively managing those relationships. the study of 315 early career, whitecollar professionals enrolled in part-time mba programs examined the influence of three distinct corporate networks to determine which was the most influential in increasing compensation for both men and women: subordinate networks (those working below you), peer networks, and networks with superiors. perhaps not surprisingly, the results confirmed that the relationship an employee has with his or her boss can have a positive effect on an employee’s pay. Interestingly, Clark, maggitti, and Slay found it is actually the subordinate networks that matter the most—despite the fact that study participants and conventional wisdom indicated they believed the relationship with their boss was the most important factor driving compensation. these findings are critical for anyone tempted to advance their careers only through ingratiating themselves with the boss—it appears that treating your team better and providing leadership is a surer path to a bigger paycheck. In some ways, this makes perfect sense: If you connect with those below you, they will perform well, making you look good to your boss, and you get a raise. In addition to substantiating the relative importance of subordinate networks, the study found specific factors that are linked to

Motivate and get to know your teaM

women are thought to be better than men at establishing group consensus and managing teams. Drawing upon this strength, they should focus on building stronger and closer relationships with subordinates.

Find out what your Friends know

Since women have a strong awareness of their work community and groups, they should try to make an increased effort to obtain information specific to work and job opportunities from their peers.

inFluence your supervisor

make chance run-ins meaningful with your boss by always having something in your pocket that is a value add-on. Instead of chatting about the weather, bring up a recent project or accomplishment or suggest solutions to problems instead of seeking answers to questions. over time, your boss will come to view you as a thoughtful and effective person—one who needs to be rewarded and retained.

the researchers emphasize that these tactics will not eliminate the wage gap but, given the abundance of attention focused on the persistent existence of the gap, it is good to see studies that provide women with suggestions about what they might do proactively to increase their pay.

Playing the Winning Percentages

The paCe anD FLow oF SoCCeR generally make it difficult for managers to affect the outcome of a match once it begins. Since soccer has almost no stoppages for coaches to draw on clipboards or strategize with their players, a manager’s most critical in-game decision may be choosing when to use his or her three substitutions. according to VSb professor of management and operations and former professional soccer player for the Richmond Kickers bret myers, managers can obtain significant lift from their team if they sub earlier when behind. Unlike other sports where coaches can call a timeout mid-game and diagram a play, soccer managers use substitutions as one of the major ways they can influence play. as soccer fans know, a set of fresh legs on the field can be enough to change the dynamics of the game. myers used data collected from more than 1,500 observations from four different european Leagues (english, Italian, Spanish, and german), major League Soccer in the United States, and the 2010 world Cup. he found that if teams are behind, managers should make their three substitutions at the 58th minute, 73rd minute, and 79th minute, according to his “proposed Decision Rule.” teams that follow these guidelines improve—i.e., score at least one goal—roughly 36 percent of the time. teams that do not follow the rule improve only about 18.5 percent of the time. In soccer, managers tend to delay substitutions when ahead, but hasten substitutions when behind.

If the “proposed Decision Rule” is followed when a team is behind, managers have a .4227 probability of success in gaining advantage in goal differential. If the rule is not followed, they have a .2052 probability of success. professor myers found that the timing of substitutions does not matter when a team is tied or ahead nor does it matter what league they are playing in. whether the game is home or away also has minimal impact on substitutions.

Foreclosure Contagion: Coming to a Neighborhood Near You?

The newS RepoRtS oF the paSt two years have made it clear—the current foreclosure crisis is the worst the nation has seen in more than 60 years. but one little-known fact is how foreclosures can spread like a disease, making once-proud homeowners willing to abandon their homes and walk away from their mortgages, seemingly unfazed by the consequences.

Recent research by VSb professor of Finance paul hanouna at the Center for Financial Research at the FDIC (Federal Deposit Insurance Corporation), with Carlos Ramirez and Christof Stahel of george mason University and Ryan goodstein of the FDIC, shows that homeowners who are underwater on their mortgages are far more likely to “strategically default” and walk away from their homes if other homeowners in the neighborhood have done the same. according to the research, “it’s all about who you know,” says professor hanouna. homeowners are up to 24 percent more likely

“chaNNels” ThaT Make fOreclOsures cONTagiOus

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The Learning ChanneL: neighbors who default on their mortgages help potential strategic defaulters navigate the process with credible information. Learning through the experience of others when it relates to foreclosures is more powerful and more cost effective than learning through the media, accountants, or lawyers.

The SoCiaL CapiTaL ChanneL: as more people default, the less morally objectionable it becomes to homeowners. when defaults become widespread in a neighborhood, the stigma declines with the proportion of people defaulting.

The SoCiaL neTwork ChanneL: a significant factor is a homeowner’s willingness to make payments on an underwater mortgage. the loss of social networks and the degradation of public infrastructure and security caused by high neighborhood foreclosure rates give homeowners further reasons to “strategically default.”

to walk away from their homes in a ‘strategic default’ if a neighbor within a five-mile radius has done the same thing. this contagion effect is much stronger among borrowers who are severely underwater on their mortgages and do not appear to be financially distressed. “borrowers with current Loan-to-Value (LtV) ratios of above 120 percent and FICo scores above 720 are six times more likely to be influenced by surrounding area foreclosures than borrowers with lower ratios and scores,” says hanouna.