Yet Another Double Standard: Women in Finance Given Harsher Discipline

March 30, 2017

It seems women working in traditionally male-dominated industries, such as finance, do not just face pay inequity or discrimination and harassment – they also receive harsher, career-limiting discipline far more often than their male counterparts. That is the startling finding from a new study titled “When Harry Fired Sally: The Double Standard in Punishing Misconduct” conducted by researchers at the University of Chicago Booth School of Business, Stanford University, and the University of Minnesota.

Women Commit Less Misconduct but Punished Disproportionately

The statistics paint a stark and troubling picture for women in finance. After misconduct is revealed, 55 percent of women in the financial sector resign or are fired, as compared with 46 percent of men. In addition, women receive substantially lower severance packages than men.

Future job prospects are also disproportionately affected. Men will find a new position in finance 47 percent of the time. for women, it’s only 33 percent.

One reason for this discrepancy might be a perception that women commit worse infractions than men and more frequently. But that is definitely not the case, according to the study’s authors.

“Relative to women, men are three times as likely to engage in misconduct, are twice as likely to be repeat offenders, and engage in misconduct that is 20 [percent] costlier,” they write in the introduction to their paper.

Across the entire finance sector, in fact, only one in 33 women have been charged with misconduct as opposed to one in 11 men.

An Industry-Wide Problem at Firms Dominated by Men

The study’s authors looked at this issue across the entire U.S. financial sector. They reviewed data on 644,277 currently registered finance professionals, and 638,528 who had departed the sector from 2005-2015. This included both stockbrokers governed by the Financial Industry Regulatory Authority (FINRA) and investment advisors overseen by the Securities and Exchange Commission (SEC).

In addition to the statistics outlined above, the authors say their comprehensive research also revealed a clear pattern of “significant heterogeneity among firms.”

“Firms with a greater percentage of male executives/owners at a given branch tend to punish female advisers more severely following misconduct and also tend to hire fewer female advisers with past record of misconduct,” they write.

These male-led firms are also far more likely to find fault with the women they employ, according to the study.

“for females, a disproportionate share of misconduct complaints is initiated by the firm, instead of customers or regulators,” write the authors. Misconduct complaints about men came from their employers only 28 percent of the time as opposed to 41 percent of complaints about women.

No Second Chances: The Insidious Problem of Taste-Based Discrimination

The “When Harry Fired Sally” study reveals yet an other way in which women are held to a double standard in the workplace.

Speaking plainly, the paper’s authors say that “the financial industry is willing to give male advisors a second chance, while female advisers are likely to be cast from the industry.”

A man working in finance who transgresses – even seriously and repeatedly – is given a break by his superiors, who are likely also men. Women, on the other hand, apparently receive no such consideration.

This called “taste-based discrimination,” and occurs when men, either consciously or unconsciously, prefer and choose to work with other men. As with any other type of discrimination, this leads to the exclusion of anyone who does not fit in with the dominant group, such as women or minorities.

As the authors note, taste-based discrimination is also insidious because it is often hidden and hard to spot. In the case of women in finance, for example, “it is only after observing that, on average, male advisors were not fired for similar transgressions that one can detect discrimination,” they write.

Study Likely Applies to Many Industries

Though the researchers for the “When Harry Fired Sally” study only looked at the financial sector, it is quite likely their findings can be applied more broadly to other traditionally male-dominated industries, such as technology, the law, and medicine.

As with the other challenges women face in the workplace, it is important to confront taste-based discrimination, name it, and work to address it systemically. This study has brought the issue out into the open and, as with anything hidden, extra scrutiny can only help make more people aware of the problem.

Women confronted by discrepancies in discipline should document not only the nature of their own infractions, but those of anyone else in the firm, as well as the ramifications. This can help establish a pattern of discrimination when it comes to punishing infractions, and form the basis for a possible wrongful termination lawsuit. Because taste-based discrimination can be subtle and concealed, it can be helpful to talk things through with an experienced employment litigator who can take an impartial look at individual situations and identify issues of concern.

(*Prior results do not guarantee a similar outcome.)