Do Political Beliefs Impact Year-End Bonuses?

As the time of year for year-end bonuses rolls around, many workers will be seeing annual rewards for their services.

But the rewards in many places still show sizable disparities in the annual bonuses given to women and to men. Gaps in pay between the genders – the often-cited statistic of $0.78 for women to every $1.00 for men – persist in part because of the larger bonuses given to men.

In recent years, attempts to explore the subtleties of the reasons behind pay disparities have increased. A recent study in the Harvard Business Review, part of a larger study forthcoming in the Academy of Management journal, indicates that one reason might be the political beliefs of the managers who allocate the bonuses.

Political Beliefs Significant in Determining Bonuses

The authors tracked the political beliefs of managers by determining whether they had contributed to Democratic (liberal) or Republican (conservative) candidates and causes over a 24-year span.

Although the political beliefs of many managers is on a continuum between liberal and conservative (many contribute to both parties), there was a clear difference in bonuses given to women by managers who fell at the end of either side of the spectrum.

Under clearly conservative managers, there was a clear difference in year-end bonus compensation given to each gender. Men received more than women. The difference was about $5,000 per year for mid-level employees and rose to $15,000 per year for upper-level employees. Under clearly liberal managers, there was no significant difference in bonuses between men and women.

Annual differences, of course, would mount up even more significantly over time.

The study pointed out that there were no significant differences between the genders in terms of background or work performance.

So what accounts for the gender disparity?

Politics as Indicators of Larger Beliefs

The authors cite two related factors as the underlying causes. First, methods of assessing bonuses vis-à-vis performance are rarely tightly structured. While guidelines exist for bonuses, promotions, and annual raises, bonuses are likely to be an area in which managers have a greater degree of discretion than either promotions or raises.

Second, in the absence of a tight structure, an individual manager’s values and beliefs are likely to have more influence on the bonus-granting process. The authors hypothesize that the bonuses reflect those values and beliefs.

Liberals tend to focus more on structural inequalities in society and are interested in efforts to correct them as part of business leadership. A liberal manager, then, might see equal bonuses between genders with the same background and work process as a goal – or might simply see the genders as more equal, with equivalent bonuses being the result.

Conservatives, on the other hand, tend to favor the status quo. They are far less likely to see society as needing change or rectification, and far more likely to favor preservation of the existing arrangement. This translates into their view of individual behavior. Conservative managers focus more on individual contributions. They are likely to see variation in compensation, moreover, as reflecting individual differences in motivation and capability rather than as potential structural inequality.