How Incentive Compensation can Persuade Managers to Foster Gender Diversity in their Organization?

Abstract

The diversity management literature underscores the critical role played by managers. However, the determinants of their commitment to diversity management have been overlooked so far. This paper aims to contribute to closing this gap. It reports a 4-year ethnography in “BeBank” the main subsidiary (6,000 employees) of a European retail bank which implemented a new reward system: 10% of senior managers’ incentive compensation depended on their actions in favor or gender diversity. BeBank succeeded in dramatically advancing women’s careers after the implementation of this incentive plan. This paper focuses on the mechanisms explaining how incentive compensation can persuade managers to foster gender diversity. This paper contributes to closing the research-practice gap by providing insight into how to persuade managers to reduce gender inequality. It also extends the theory of inequality remediation in the workplace and contributes to integrating change management and the attention-based view of the firm in the diversity management literature.