Wage Differences Between Men and Women: Performance Appraisal Ratings vs. Salary Allocation as the Locus of Bias

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Abstract
This article explores the nature and origins of wage differences between men and women in the context of a single large financial services organization. Data collected on 800 women and 1831 men showed that modest wage differences do exist and that they tend to be concentrated primarily in managerial levels. Two possible sources of bias in evaluation were assessed – performance appraisal ratings and the translation of performance appraisal ratings into salay. Our analyses showed that performance appraisal ratings, on average, do not differ between men and women at the same level; however, the relationship between performance appraisal ratings and salary was stronger for men then women, particularly at higher levels. This suggests that the salary allocation process, and not the performance appraisal process, may be the source of bias in large organizations.

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