Gender inequality in the workplace: factors, and how to combat it

The bottom line is clear: companies with greater gender diversity are 25% more likely to experience above-average profitability.

Yet despite the European Union’s groundbreaking “Women on Boards” directive requiring 40% female representation by 2026, women currently hold just 35% of non-executive positions at the EU’s largest listed businesses, with only 21% of senior executive roles across the EU-27 held by women.

This isn’t just a fairness issue, it’s a business imperative. Organizations that fail to address gender inequality are leaving money on the table, stifling innovation, and missing out on the full potential of their workforce. Meanwhile, companies that actively combat workplace gender discrimination see measurable improvements in employee retention, decision-making quality, and financial performance.

The challenge isn’t identifying the problem, gender inequality manifests clearly through wage gaps, leadership disparities, and systemic barriers that affect women at every career stage.

The real challenge is implementing effective solutions that create lasting change.

From pay transparency and bias training to flexible work arrangements and mentorship programs, there are proven strategies that work. But success requires more than good intentions; it demands a systematic approach backed by leadership commitment and measurable accountability.

This article examines the key factors driving gender inequality in today’s workplaces and provides actionable strategies that organizations can implement immediately to create more equitable, profitable, and innovative work environments.

1. What are the factors that contribute to gender inequality in the workplace?
2. What are the consequences of workplace gender inequality?
3. How to combat gender inequality at work?
4. How to empower a future of gender equality in the workplace?

What are the factors that contribute to gender inequality in the workplace?

Wage disparities and pay transparency

The gender pay gap remains one of the most visible manifestations of workplace inequality. In the United States, women earn 83.7 cents for every dollar earned by men, while in the EU the average disparity as of 2023 sits at ~12% according to the European Commission’s Gender Equality Strategy.

These disparities often begin at the hiring stage, where women’s salary expectations tend to be lower than those of equally qualified men. The gap then widens throughout careers as fewer women advance to leadership positions that command higher compensation packages.

The Solution in Action: States and countries implementing pay transparency laws are seeing measurable improvements. The EU’s Pay Transparency Directive, adopted in 2023, requires employers to provide clear salary information and strengthens workers’ rights to challenge pay discrimination.

Leadership representation crisis

The underrepresentation of women in leadership positions creates a self-perpetuating cycle that limits both individual advancement and organizational performance.

The Numbers Tell the Story:

• Only 10% of Fortune 500 CEOs are women (as of 2023)
• Women hold just 21% of senior executive roles across the EU-27
• While women make up 35% of non-executive board positions in Europe’s largest companies, most hold non-executive roles with limited decision-making power

This leadership gap has profound implications beyond individual careers. Research consistently shows that companies with diverse leadership teams make better decisions, are more innovative, and achieve superior financial performance. Organizations with women in top positions are 48% more likely to outperform those with minimal gender diversity.

Systemic bias and stereotyping

A gender stereotype is a generalized assumption about a person’s characteristics that reinforces sexism. Racial stereotypes compound gender stereotyping for women of color, who often experience microaggressions within the workplace. These brief messages can be verbal, nonverbal, or environmental, and they communicate a negative message about a marginalized or underrepresented group.

Gender stereotypes continue to shape workplace dynamics in subtle but powerful ways. These biases affect everything from performance evaluations to project assignments, often operating below the conscious level of decision-makers.

Common Manifestations:

• The Competence-Likability Paradox: Women who display assertive leadership qualities may be perceived as “difficult” or “aggressive,” while the same behaviors in men are viewed as strong leadership
• The Maternal Bias: Assumptions about women’s commitment to work after having children can limit career opportunities, even for women without children
• The Confidence Gap: Women’s contributions may be overlooked or undervalued due to unconscious biases about expertise and authority

Gender stereotypes disadvantage women’s input before it can even be shared. Because of the common unconscious bias that assumes women are more emotional (and, therefore, less rational) than men, a female employee’s idea might be overlooked in favor of one raised by her male counterpart. Or, a man might share the same idea that a woman shares at work and end up getting credit for it because he’s seen as more of a leader.

There’s no easy solution to battling gender discrimination. Conforming to gender stereotypes makes a woman appear less competent, but challenging them can mark her as difficult or aggressive. However, there are ways to reclaim the upper hand by learning, speaking up, and reacting in ways that shut down discrimination.

Work-life integration challenges

The persistent expectation that women shoulder primary responsibility for caregiving creates additional barriers to career advancement. This “second shift” of domestic responsibilities affects women’s ability to pursue demanding leadership roles and can influence employers’ perceptions of their commitment and availability.

The Pandemic Effect: Remote work has highlighted both the challenges and opportunities in this area. While flexible arrangements have benefited many women, they’ve also made the disproportionate burden of household responsibilities more visible and, in some cases, more demanding.

Discover IMD’s Wellbeing in the Workplace Initiative, developing human-centric organizations »

What are the consequences of workplace gender inequality?

Gender discrimination within the workplace hinders personal success as well as company success. Below are just some of its negative impacts.

Economic drawbacks

Because women are often overlooked for promotions, they’re also stuck with lower compensation. As a result, female employees might be more likely to change jobs or industries or leave the labor force entirely. 

This undervaluation also impacts company success. When female employees’ contributions aren’t recognized, organizations miss out on ideas, projects, and sales that could have positioned them as industry leaders

Mental health implications

Sexism is also a mental health issue, threatening female employees’ well-being. Working as hard as their male counterparts without receiving the same recognition is draining. Discrimination and sexual harassment can quickly lead to burnout and a decline in productivity.

Burnout from discrimination contributes to why women prefer to work remotely. After the pandemic, many women of color were especially hesitant to return to the office because of their experiences of isolation and discrimination there.

Stunted innovation

Diverse perspectives drive innovation. So, when women are excluded from key decision-making, research and development (R&D) can stagnate. 

Fostering gender diversity, equity, and inclusion results in increased employee engagement and better employee retention. When companies fully invest in their employees, they can spend less time hiring and training and more time innovating.

How to combat gender inequality at work?

How can gender inequality be addressed in the workplace? By prioritizing the following actionable steps, companies can ensure that their DEI initiatives go beyond a marketing promise. 

Equal pay and transparency

States with pay transparency laws, such as New York, require employers to list salary ranges in the job description. This transparency supports salary parity by creating more competition for human resources and higher salary offers for employees. 

Beyond pay, organizations can share the hard numbers of their employee demographics. Making these records publicly available holds C-suite leadership and human resources departments accountable for their diversity and inclusion plans.

Development and mentorship programs

Personal development and mentorship initiatives create more equitable workplaces for women. Creating a diversity and inclusion training program, like those that prioritize LGBTQ+ employees and racial minorities, results in more diversity within leadership roles. Allowing women to network with female role models in C-suite and management positions opens opportunities for them to take the same path. 

Companies can also offer and support leadership programs for women within the organization. This helps women develop the skills necessary for stepping into management and C-suite roles. 

Flexible work arrangements

Implementing flexible work hours within the organization means that fewer women are sidelined due to family obligations. Including options such as remote and part-time work also helps women maintain work-life balance. Additionally, providing parental leave for fathers gives women more childcare support and increases equality among parents. 

Anti-discrimination policies

Anti-discrimination policies within a company provide security for employees and attract more diverse talent. For example, creating standardized diversity and inclusion procedures for hiring can help prevent unconscious bias and the persistence of gender stereotypes. 

Internal anti-discrimination policies might also include protocols for reporting misconduct, discouraging backlash against female employees who lodge discrimination complaints.

Addressing unconscious bias

Unconscious bias training in the workplace creates awareness of the hidden assumptions that influence decision-making. When employees are trained on how to recognize gender bias, women are not only included in key conversations — their ideas are more likely to be heard.

How to empower a future of gender equality in the workplace?

Empowering a future of gender equality in the workplace requires a multifaceted approach that combines policy reform, cultural change, and education. Firstly, it’s crucial to establish strong anti-discrimination policies and ensure they are rigorously enforced. This includes creating transparent processes for reporting and addressing gender-based discrimination and harassment. Companies should also implement equitable hiring and promotion practices, focusing on diversity and inclusion at all levels of the organization.

In addition to policy changes, there must be a shift in workplace culture. This involves regular training and workshops for employees at all levels to foster an understanding of gender biases and how to combat them. Promoting a culture of respect and inclusion, where all voices are heard and valued, is essential. Mentorship programs can be particularly effective, especially when they support underrepresented genders in leadership development and career progression.

Moreover, flexible work arrangements and parental leave policies should be gender-neutral, encouraging both men and women to balance work and family responsibilities equally. This not only supports employees but also challenges traditional gender roles and stereotypes.

Despite significant progress towards gender equality, there’s much more work to be done. That’s why at IMD, we’re steadfastly committed to fostering a more equitable work environment. Through our world-class education programs, we empower individuals and organizations to challenge gender bias, nurture inclusive leadership, and advance workplace equality.

Finally, continuous evaluation and adaptation are key. Organizations should regularly assess their gender equality initiatives, gathering data and feedback to refine and improve their strategies. By committing to these practices, businesses can create a more equitable and productive workplace, paving the way for a future where gender equality is not just an aspiration but a reality.

Article: ⚽️ Four lessons from women’s football for advancing gender equality »