ADP Research Institute, the research arm of the giant payroll firm, released a major report last week called “State of the Workforce: Pay, Promotions, and Retentions.” It relied on the anonymized HR and payroll records of about 13 million employees from 30,000 firms across eight sectors in the United States, including construction, education and health, finance and insurance, leisure and hospitality, and manufacturing.
By analyzing metrics such as employee turnover, wages, promotion rates, and organizational hierarchy, the report is meant to help employers understand if they are in the right place according to those benchmarks. (The report is broken up into mini-reports by industry.)
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“The reason we published this research is in this tight labor market, the employers need insight in how U.S. firms are designed in terms of the hierarchy level, in terms of the span of control, so they have the benchmarks to really get the insight their business needs and compare it with other competitors,” said Dr. Ahu Yildirmaz of ADP Research Institute, one of the authors of the report.
In general, the report found that, on average, companies promote 8.9% of their employees annually. The average time for an employee to receive their first promotion to manager is 6.9 years. Although there’s a promotion gap – men are more likely to get a promotion compared to women – 9.3% to 8.4%, respectively. The average number of years to first promotion for women is 6.6% and 7.3% for men.
Millennials are the group most likely over any other any group to get a promotion, at 10.5%; Yildirmaz explained that partially as a positive correlation between youth and promotability.
The precise location of the glass ceiling
The most striking piece of information that jumped out of the data was the decline of women between the 3rd and 4th levels of management, said Yildirmaz. It was, in a way, the precise location of the glass ceiling: it seems that women keep banging their heads against the 4th level of management – typically the senior director level.
More than a pay gap, this is also a hierarchical gap.
“We know that for every dollar a man earns, a woman takes home 80 cents, but we wanted to go deeper,” Yildirmaz said. “When you look at the hierarchy levels, it’s not surprising that there are less women at high-paid jobs, so when you look at hierarchy level – when you look at the first level, second level, third level, you don’t see a gap. But we found that when you move from the third level to the fourth level – these are the senior directors – that’s where the inflection point is.”
At the 3rd level of management, there are 35% women, and 65% men.
At the 4th level, there are 23% women, and it only declines precipitously from there.
“The 4th level appears to define the glass ceiling, which is a steep decline in female representation,” says Yildirmaz. “If you climb up the ladder, the percentage of women decline.”
As you can see from the below chart, even as you climb the corporate ladder, the pay gap remains intact.
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