Female Entrepreneurs Pay Themselves Less, Feel More Satisfied

Female social entrepreneurs pay themselves an average of 29 percent less than their male colleagues, according to new research conducted at the London Business School and published by the London School of Economics. The data point to what researchers are calling the “contented female social entrepreneur” paradox.

“Simply put,” writes study leader professor Saul Estrin, “women are motivated differently than men, and consider salary independent of (and to be less important than) satisfaction and social impact.”

Estrin is careful to recognize another pay gap that exists in which women earn approximately 71 percent of what men do for the same job. This is a result of several factors: conscious and subconscious discrimination against women, that women tend to cluster in lower-paid sectors, and that female workers prioritize family and tend not to be aggressive when negotiating salary.

However, Estrin was surprised to notice that female entrepreneurs chose to pay themselves less than their male colleagues:

“These differences are hard to explain by discrimination since these CEOs set their own pay. Income may not be the only aim in an entrepreneurial career, so we also look at job satisfaction to proxy for nonmonetary returns. We find female social entrepreneurs to be more satisfied with their job as a CEO of a social enterprise than their male counterparts.”

If we can’t put a price on happiness, does it mean we should be willing to accept less money if our work makes us happy? Or does it literally mean that happiness and money operate independently when it comes to being compensated for work, and that feeling good shouldn’t mean earning less?

In either case, corporations would be wise to take stock of female talent, argues Northwestern University social psychologist Alice Eagly. In her Big Think interview, she explains that in the complex world of contemporary business, a broad team of talented individuals is needed to make a company successful, and women are excellent at managing diverse teams:

“[Management] is a job of much more complexity that of course takes on more of the soft skills or social skills. So the fact that the nature of management has so profoundly changed in order to be successful for a company, it also moves it away from masculinity that is sort of an old-fashioned, top-down type of leadership to something that is more, by the way, happens to be more culturally favorable to women than the old kind of management.”