AA Officer Salaries and Managerial Diversity: Efficiency Wages or Status?

AA Officer Salaries and Managerial Diversity: Efficiency Wages or Status?

JEFFREY PFEFFER, ALISON DAVIS-BLAKE, and DANIEL J. JULIUS*

This paper examines how the salary paid to the chief affirmative action officer affects the amount of change in the racial and gender composition of senior administrative positions. An efficiency wage perspective and a status perspective are used to derive predictions about the effect of affirmative action officer salary on the pace of integration. These predictions are tested on a sample of 821 U.S. colleges and universities in 1978-79 and 1983-84. The results provide support for the status perspective but not for the efficiency wage perspective. The results also demonstrate the effects of leadership and institutional context on the pace of integration.

AFTER THE PASSAGE OF Title VII of the 1964 Civil Rights Act, many organizations created affirmative action offices as one way of mani- festing compliance with the act’s prohibition against employment discrimination. In her analysis of the formation of affirmative action offices, Edelman (1992, p. 1568) noted that “it remains uncertain at this point whether these structures [affirmative action offices and rules] act as a stepping stone toward the achievement of EEO/AA ideals or whether they exist merely as window dressing.” This lack of attention to the effects of affirmative action offices is part of a larger problem noted by Baron, Mittman, and Newman (1991, p. 1364), namely that “researchers have devoted little effort to examining why some work organizations integrate

*The authors’ affiliations are, respectively, Graduate School of Business, Stanford University; De- partment of Management, University of Texas at Austin; and Office of Academic Affairs and Labor Relations, University of San Francisco. The data used in this paper were made available through the generous cooperation of the College and University Personnel Association. The Association does not bear any responsibility for the analyses or interpretations presented here.

INDUSTRIAL RELATIONS, Vol. 34, No. 1 (January 1995). 0 1995 Regents of the University of California Published by Blackwell Publishers, 238 Main Street, Cambridge, MA 02142, USA, and 108 Cowley

Road, Oxford, OX4 lJF, UK.

73

74 / JEFFREY PFEFFER, ALISON DAVIS-BLAKE, AND DANIEL J. JULIUS

their work force faster than others.” The research reported here addresses some of the unanswered questions about the causes of work force integration by looking at one aspect of the relationship between affirmative action offices and work force integration. Specifically, does the salary paid to the chief affirmative action officer affect the amount of change in the racial and gender composition of senior administrative positions? In answering this question, we also examine how the characteristics of the organization and its leaders shape the pace of integration.

Although our primary research question is simply phrased, exploring it requires that we address the larger theoretical issue of how the salaries paid to key individuals affect organizational outcomes. Predictions about the effects of salaries can be derived from two different perspectives: an efficiency wage perspective and a status perspective. From an efficiency wage perspective, the effects of pay are straightforward. When an organization pays above-market wages for a given position, the incumbents of that position should make greater-than-average progress toward achieving organizational objectives for three reasons. First, high wages attract em- ployees with greater-than-average levels of human capital (Weiss, 1980). Second, high wages lower turnover rates by making it difficult for employ- ees to increase their wages by quitting (Price, 1977; Salop, 1979). Third, high wages lead to increased employee effort because the economic loss associated with shirking and being fired is high (Shapiro and Stiglitz, 1984) and because the employee may view the high wages as a “gift” requiring reciprocation (Akerlof, 1984). Whether this increased effort fully compen- sates the organization for higher wage levels remains a disputed issue (e.g., Levine, 1991a, 1991b).

A status perspective suggests that salaries not only motivate and reward performance, but they also reflect the existing status distribution in the organization. In other words, high wages are paid not only to high perform- ers but also to individuals who occupy positions that are critical to the success of the organization. Pfeffer and Davis-Blake (1987b) demonstrated that the importance of a position to an organization had a positive effect on the wages of the position incumbent. Pfeffer (1981, 1992) has argued that one indicator of the importance of an organizational subunit is the relative salary paid to the head of the subunit. For example, a recent A. T. Kear- ney study reports that human resource professionals are among the highest paid senior managers in Japanese firms and the lowest paid in U.S. firms (Milbank, 1991). These positions in the salary hierarchy may indicate the human resource function is seen as more critical in Japan than in the United States. The distribution of status has important consequences for

AA Ofjicer Salaries and Managerial Diversity I 75

organizations because high-status individuals are likely to be able to mobilize social and financial resources to accomplish organizational objectives.

Although the efficiency wage and status perspectives emphasize different determinants of salaries (e.g., individual productivity versus position importance), the perspectives have two important commonalties. First, both perspectives assume that individuals compare their pay to the pay of others. From an efficiency wage perspective, high salaries lead to low turnover because individuals compare themselves to others doing similar work in different organizations and find that they are relatively highly compensated. From a status perspective, an individual’s pay relative to others in the same organization provides a signal both to that individual and to others about the importance of that individual’s work (Festinger, 1954). Second, both perspectives suggest that relative pay affects individual productivity. From an efficiency wage perspective, high pay relative to others in different organizations increases effort and decreases shirking and turnover. From a status perspective, high pay relative to others in the same organization reinforces a high-status position and allows an individual to mobilize resources to complete tasks effectively.

Even though both perspectives highlight the importance of pay comparisons, each perspective focuses on a different type of comparison. From an efficiency wage perspective, comparisons to individuals doing comparable work in other organizations, or external pay comparisons, are particularly important. This emphasis on external comparisons is not surprising given that efficiency wage theory was originally developed, in part, to explain the existence of persistent wage differentials across firms and industries (Leonard, 1987). Akerlof defined efficiency wages as those in excess of “the market clearing wage” (Akerlof, 1984, p. 79) and developed four arguments about why it might be rational for firms to pay “more than the market clearing price” (Akerlof, 1984, p. 83). The few empirical analyses evaluating efficiency wage theory have relied on external pay comparisons; efficiency wages have typically been measured as the wage paid by a firm compared to the prevailing wage in an industry or local labor market (e.g., Leonard, 1987; Wadhwani and Wall, 1988; Cappelli and Chauvin, 1991; Levine, 1991a, 1991b). Although most treatments of efficiency wages focus on external pay comparisons, the fair wage-effort variant of the efficiency wage hypothesis draws on equity and social exchange theories to explore situations in which “workers compare their pay with that of coworkers in the same firm” (Akerlof and Yellen, 1990).

From a status perspective, the most critical pay comparisons individuals make are internal to the organization. Individuals learn about their status in


the organization by seeing how highly they are compensated relative to others in the same organization. For example, Pfeffer and Davis-Blake (1987b) used internal pay comparisons to assess the importance of positions. Similarly, the A. T. Kearney study (Milbank, 1991) sheds light on the status of various functions by comparing the relative salaries of manufacturing executives with those of other executives in the same organization.

In summary, the efficiency wage and status perspectives both suggest that relative pay affects performance, but each perspective emphasizes the importance of a different type of pay comparison. An efficiency wage perspective highlights the importance of external pay comparisons while a status perspective emphasizes internal pay comparisons.

The Effect of Affirmative Action Officer Pay on Racial and Gender Integration

The efficiency wage and status perspectives make different predictions about how the pay of the chief affirmative action (AA) officer affects his or her performance. We focus here on one important dimension of AA officer performance: increased levels of racial and gender diversity. One of the espoused purposes of affirmative action offices is to eliminate barriers to the hiring and advancement of women and minorities, thereby increasing the level of racial and gender integration in an organization’s work force (Dobbin et al., 1988; Edelman, 1992).

EfJiciency Wage Predictions. From an efficiency wage perspective, the higher the salary of the AA position compared to positions in different organizations, the greater the increase in the proportion of women and minorities. Paying the AA officer well relative to external positions should lead to the recruitment of an individual who is highly qualified and motivated to achieve the goals of the AA office.

Although this efficiency wage argument may be true for most types of positions, there are some reasons to suspect that it may not hold for AA officers. Affirmative action positions are not like football coaches, where the more victories, the better. Some organizations may create AA positions merely to provide symbolic reassurance that they are taking work force diversity seriously (Edelman, 1992). If the AA position is largely symbolic, then senior administrators may not want the AA officer to be too aggressive or too successful in pushing the cause of work force diversity. Under these conditions, compensating the AA officer well relative to others outside of the organization may either have no effect on the pace of integration or actually slow the pace of integration for two reasons. First,

AA OfJicer Salaries and Managerial Diversity I 77

the AA officer may be so grateful for the efficiency wage benefit that he or she does not push against an otherwise recalcitrant system. In other words, the AA officer becomes co-opted by the organization and is likely to reinforce existing norms and practices. Second, the high wage means that losing the position would be a substantial economic blow because it would be difficult to find a comparable position in another organization. Thus, a high wage may stimulate attempts to keep one’s job by not pushing to change traditional hiring and promotion practices.

Status Predictions. From a status perspective, the higher the salary of the AA position compared to other positions in the same organization, the greater the increase in the proportion of women and minorities. There are two mechanisms that may be responsible for this effect. First, organizations that have a strong commitment to building a diverse work force may view the AA position as critical and may pay the incumbent in that position a relatively high salary. When the AA position is primarily symbolic, the AA officer is unlikely to be near the top of the status hierarchy. Second, high pay may signal high status and may enable the job incumbent to mobilize the resources needed to significantly influence the hiring and promotion process. Both of these mechanisms lead to the same prediction: high pay for the AA officer relative to an internal comparison group will lead to larger increases in work force diversity than low relative pay.

By examining the effects of AA position pay relative to both internal and external positions, we can assess the merits of the status and efficiency wage arguments. We can also assess whether, in a potentially symbolic position such as AA officer, efficiency wages hasten or slow the pace of integration.

Other Determinants of Racial and Gender Integration In addition to examining the effect of AA officer pay on integration, we

control for the effects of other potentially important determinants of integration. The estimation of these additional effects serves two purposes. First, we control for factors that are likely to be correlated with pay and that may also influence the pace of integration (e.g., organizational size). Second, we obtain some evidence about the effects of several unstudied or understudied determinants of gender integration.

Institutional Characteristics. Kanter (1977) has written about the perva- siveness of homosocial reproduction-the tendency of people to hire others like themselves. We test our hypotheses about the determinants of racial and gender integration on senior administrators in colleges and uni-


versities. We would expect these senior administrators to interact on at least an occasional basis with the president of the college or university. A female or minority president might be favorably disposed toward the social values implied by having a diverse administrative hierarchy and might serve as a role model for work force diversity. Baron, Mittman, and New- man (1991) found that the gender of the agency head affected gender integration in California civil service agencies; gender integration occurred more rapidly in female-headed agencies. However, we examine the effects of race and gender of the president to see if any leadership effects exist in this context.

Research on wages has consistently demonstrated that there is less race and gender discrimination in public than in private settings (Pfeffer and Ross, 1990; Tolbert, 1986). Public organizations are under more pressure than private organizations to conform to general social norms and expecta- tions for appropriate employment behavior, and their employment practices may be the subject of greater scrutiny and surveillance. Therefore, we estimate the effect of public control on the pace of racial and gender integration. We expect public control to have a positive effect on the pace of integration.

Baron, Mittman, and Newman (1991) reviewed two contrasting positions on the effects of organizational size on gender integration. On one hand, they noted that structural inertia (Hannan and Freeman, 1984) suggests that large organizations should be more resistant than small organizations to changes such as gender integration. On the other hand, large organizations may also have highly formalized, and hence gender-neutral, hiring practices which would suggest a positive effect of size on integration. Large organizations are also visible and hence prone to public scrutiny and pressure. They found a negative effect of agency size on the rate of gender integration, providing support for the inertia argument. However, Salancik (1979) found that, in general, large organizations were more responsive to affirmative action-related requests than were small ones. Similarly, Pfeffer (1977) reported that individual differences not related to ability (e.g., socioeconomic status) had smaller effects on M.B.A. salaries in large organizations than in small ones. These two studies are consistent with the idea that race and gender are less likely to affect hiring and promotions in large organizations than in small ones. To see which effect of size, if any, dominates in this context, we control for organizational size.

Public control and organizational size are two organizational features that may affect the hiring of women and minorities. We also examine the effects of two other organizational features: type of institution (i.e., two- year college, four-year college, university) and the level of resources avail-

A A Uficer Salaries and Managerial Diversity I 79

able to the organization. Tolbert (1986) found more gender-based wage discrimination in wealthy, prestigious colleges and universities than in nonprestigious institutions with limited resources. Szafran (1984) reported similar results in his study of hiring and wage discrimination in college and university faculties. These results are consistent with the numerous studies that show that women tend to be confined to low-wage organizations (Blau, 1977). Based on these findings, we expect the pace of integration to be slower in universities and four-year colleges than in two-year colleges. Similarly, we expect that integration will occur at a slower rate in resource- rich institutions.

In order for the gender or racial composition of jobs to change, vacancies in those jobs must occur. Baron, Mittman, and Newman (1991) found that turnover increased the rate of gender integration in the California civil service. By itself, turnover does not guarantee changes in either the race or the gender of position incumbents. Konrad and Pfeffer (1991) reported that the race and gender of previous job incumbents were significant pre- dictors of race and gender of new job incumbents; both old and new incumbents were likely to be of the same race and gender. However, by creating job vacancies, turnover may facilitate the ability of a highly paid AA officer to increase the pace of racial and gender integration. There- fore, we examine both the main effect of the turnover rate and the interaction of AA officer relative pay with the turnover rate.

Some organizations tend to promote from within while others typically hire from outside. When organizations promote from within, the racial and gender composition of the senior administrative levels is constrained by the amount of diversity in lower administrative levels. External hiring is likely to lead to greater increases in diversity than is inside hiring, because external hiring permits the organization to draw on a more diverse appli- cant pool. Although external hiring does not guarantee that more diverse applicants will be hired, external hiring removes the constraints on diversity imposed by the composition of the organization’s current work force. Therefore, we examine the effects of the percentage of positions filled from inside (as opposed to outside) of the organization on changes in the level of racial and gender integration. We expect that internal hiring will slow the rate of change in racial and gender integration.

There may be regional differences in both the labor supply of women and minorities and in willingness to hire them. Therefore, we control for region in our analyses.

Afirmative Action Oficer Characteristics. In addition to examining the effect of institutional characteristics, we also explore whether the character-


istics of the AA officer affect the pace of integration. The tenure of the AA officer in his or her job and whether he or she was hired from inside the organization could have two contradictory effects. On one hand, a long- tenured insider could have much institutional knowledge and many per- sonal connections, allowing him or her to accomplish a great deal. On the other hand, a long-tenured insider may be co-opted by existing institutional interests and unlikely to push for change. We estimate the effects of tenure in the position and of being hired from inside of the organization to see if either of these effects dominates. We also estimate the effects of the race and gender of the AA officer. Again, two contradictory effects are possible. Female and minority officers may be particularly interested in hastening integration. However, if the AA officer is a token woman or minority, the types of barriers to interaction described by Kanter (1977) may prevent the AA officer from working effectively with others to accomplish integration.

Data and Measures The data used to explore our research questions were taken from the

College and University Personnel Association’s Annual Administrative Compensation Surveys for 1978-79 and 1983-84. The CUPA surveys, sent to over 1,000 U.S. colleges and universities each year, ask some general questions about the institution. Each survey also asks about the salary and other characteristics of the incumbents in several senior administrative positions such as vice presidents (e.g., academic vice-president), directors of financial and student services, directors of research institutes, and deans. The 1978-79 survey inquired about seventy-five positions. The 1983-84 survey inquired about ninety-nine positions. Each position has only one incumbent. To ensure comparability of reporting across institutions, each position is identified by both a job title and a brief description of duties. We restricted our sample to two-year colleges, four-year colleges, and universities that reported in both time periods, resulting in a sample of 821 institutions.

The survey asks about the race and gender of each position’s incumbent. Our dependent variables are the proportion of female or ethnic minority administrators in 1983. We computed the dependent variables by taking the number of female (or minority) administrators divided by the total number of administrators reported by the institution. We control for the proportion of female or minority administrators in 1978, so we are implic- itly examining the change in integration over time. Unless otherwise noted, all other variables are measured in 1978.

AA Officer Salaries and Managerial Diversity I 81

The key independent variables are the internal and external salary comparisons for each AA officer. The internal salary comparison is the reported salary of the AA officer divided by the average of all other administrative salaries reported by the institution. The external salary comparison is the reported salary of the AA officer divided by the average AA officer salary in the entire sample. Note that by measuring AA pay comparisons in 1978 and diversity in 1983, we rule out the possibility that the AA officer’s salary is a response to the officer’s success at achieving racial and gender integration.

The president’s race and gender were measured by two dummy variables: one coded one for a female president and another coded one for a minority president (both zero otherwise).

Institutional type was measured by three dummy variables (two-year college, four-year college, and university) coded one if the institution was in the category, and zero otherwise. Two-year college is the omitted category. Similarly, source of support was measured by a dummy variable coded one for publicly supported institutions and zero for privately supported institutions. Institutional resources were measured by the institution’s total budget (in millions). Institution size was measured by three variables: number of full-time equivalent students (in thousands), faculty (in hundreds), and administrative staff (in hundreds).

The turnover rate in each institution is the number of incumbents who have been in their positions less than five years in 1983 (i.e., who were not in their positions in 1978) divided by the total number of positions reported by the institution. This measure of turnover captures position openings that arise from all causes (e.g., voluntary and involuntary turnover, retirement).

Use of inside hiring is measured by the proportion of incumbents hired for their positions from inside the institution. This is computed as the number of incumbents hired from inside the institution divided by the total number of reported positions.

Six regional dummy variables were constructed based on the states where the institutions were located: East, Midwest, South, Southwest, Northwest, West. In all analyses presented here, Northwest is the omitted category.

Tenure of the AA officer in his or her position was measured in years. Other attributes of the AA officer (whether the AA officer was hired from inside of the organization, was a female, or was a minority) were measured by three dummy variables. Each variable was coded one if the officer had the characteristic, and zero otherwise.


Results Means, standard deviations, and correlations among the variables are

reported in the appendix. The proportion of women in high-level administrative positions increased from 20 percent in 1978-79 to 26 percent in 1983-84. However, during the same period, the proportion of minority administrators remained stable at 6 percent, although the percentage of minority administrators ranged from 0 percent to 100 percent in each time period. The absence of change in the overall proportion of minority administrators, coupled with the fact that Konrad and Pfeffer (1991) reported that most colleges and universities are segregated by race, means that there may not be much change in minority representation to be explained. More detailed analyses of the racial and gender composition of these institutions suggest that the increase in the proportion of women between 1978 and 1983 was primarily due to gains made by white women (the proportion of white women increased from 18.6% to 23.8%) while minority women made modest gains (increasing their representation from 1.4% to 2.2%). The proportion of minority men remained relatively stable (decreasing from 4.4% to 4.2%).

Table 1 presents the distribution of the internal and external salary comparisons for the affirmative action position in 1978-79. Not surpris- ingly, AA positions do not pay well compared to the entire sample of high- level administrative posts. On average, affirmative action officers earn 77 percent of the mean salary paid to all senior administrators in their institutions, but slightly more than 50 percent of all AA positions pay less than 70 percent of the mean administrative salary. The principal lesson from Table 1 is that there is reasonable variation in this critical independent variable. Almost 10 percent of all affirmative action positions pay more than the average for all administrative positions in their institutions, while about 10 percent of AA positions pay less than 50 percent of the average for all administrators. There is also a reasonable amount of variation in the external salary comparison, with salaries for AA positions ranging from 40 percent of the average salary for all AA positions to 160 percent of the average market wage.

Table 2 reports the results of four regression equations. In the first two equations, the dependent variable is the proportion of women in 1983. In the second two equations, the dependent variable is the proportion of minorities in 1983. The first equation in each pair includes as a control variable the proportion of women or minorities in 1979; the second equation in each pair removes this control variable. Thus, the first equation in each pair essentially predicts changes in gender or racial integration be-


TABLE 1 DISTRIBUTION OF AFFIRMATIVE ACTION POSITION SALARY COMPARISONS

Distribution of Internal Salary Comparison ~

Relative Salary Number Percent Cumulative Percent

.3 1 .4 .4

.4 6 2.6 3.0

.5 18 7.8 10.8

.6 39 16.9 27.7

.7 60 26.0 53.1

.8 47 20.3 74.0

.9 29 12.6 86.6 1.0 12 5.2 91.8 1.1 10 4.3 96.1 1.2 4 1.7 97.8

More than 1.2 5 2.0 100.0

Distribution of External Salary Comparison

Relative Salary Number Percent Cumulative Percent

.4

.5

.6

.7

.8

.9 1 .o 1.1 1.2 1.3 1.4 1.5 1.6

More than 1.6

6 5

11 22 21 43 34 34 20 9 5

11 4 6

2.6 2.2 4.8 9.5 9.1

18.6 14.7 14.7 8.7 3.9 2.2 4.8 1.7 2.6

2.6 4.8 9.5

19.0 23.1 46.8 61.5 76.2 84.8 88.7 90.9 95.7 97.4

100.0

tween 1979 and 1983, while the second equation predicts the level of integration in 1983.

The primary question that motivated this study is: Does the relative salary of the affirmative action officer affect racial and gender integration? The answer to that question clearly is yes. The internal salary comparison of the AA officer was positively related to the proportion of both women and minorities. However, the external salary comparison of the AA officer was negatively related to both racial and gender integration (although this effect was significant only for gender integration). These results are consistent with the interpretation that the status of the AA position, as indexed by its position in the salary hierarchy, is positively related to integration.


TABLE 2 RESULTS OF REGRESSIONS EXPLAINING CHANGES IN GENDER AND RACIAL INTEGRATION FROM

1979 TO 1983a (standard errors in parentheses)

Dependent Variables

% Women % Women % Minority % Minority Independent Variables in 1983 in 1983 in 1983 in 1983

Internal Salary Comparison

External Salary Comparison

Institutional Characteristics Female President

Minority President

Public Support

Four-Year College

University

Budget (millions)

Faculty (hundreds)

Staff (hundreds)

Students (thousands)

Percent Turnover

Percent Inside Hires

Percent Women or Minority in 1978

AA Officer Characteristics Tenure in Position

Inside Hire

Minority Incumbent

Female Incumbent

Region Eastern Region

.0963 (.0614)

(.0428) - .0812*

.0812* ( ,0388) .0389

(-0260) -.0211 (.0135) - .0289 (.0167) - ,0088 (.0157) ,0002

- ,0018 (.OO24) - .0003 (.00@5) ,0002

(.0013) ,0380

(.0256)

(.0349)

(.c@w

- ,0162

.6987***

(. 0696)

.ooo3 (.OO16) .0019

(.0097) - .OO44 (.0108)

-.0101 (.0108)

,0226 (.0206)

.2220** (.0761)

(.0539) - ,1239'

.3204* * * (.0388) .0673*

(.0326)

(.0164)

(.0205) -.0547** (.0191) .ow2

(.0003) - ,0009 (.0031) .ooo1

(.OO06) -.0018 (.0017) ,0579

(.0322) - ,0055 (.0441)

- ,0571 * * *

- .0662* * *

-

- ,0002

.0046 (.0123) .0151

(.0134) .0296*

(.0127)

(.0020)

.025 8 (.0261)

,1199 (.0692)

-.0531 (.0488)

- .0460 (.0349)

(.0448) - .0207 (.0148) .ON4

(.0185) .0026

(.0173) .oooo9

.0021 (.OO28) - .mo1

,0003 (.0015)

(.0292) .0084

(.0402) .4862 * * *

.1363**

(.0002)

(.0006)

- ,0477

(.0676)

- .0032 (.0018) .0072

,0052 (.0130) - .OO27 (.0114)

(.0111)

.0173 (.0235)

.1915** (.0783) - ,0937 (.055.5)

- ,0471 (.0399)

(.0336)

(.0169) ,0096

.3802 * * *

- .0258

(.0211) -.0119 (.0196) .0001

.0030 (.OO32) . m 7

(.0003)

(.0006) - .W17 (.0017)

(.0332)

(.0454)

- ,0247

- ,0345

-

-.0049*

.0075 (.0126) .0409**

(.0138)

(.0131)

(.0021)

- .W14

.0162 (.0269)

AA OfJicer Salaries and Managerial Diversity f 85

Table 2 (cont.)

Dependent Variables


Western Region .om1 (.0280)

(.0224)

( ,0209)

(.0230)

Southern Region .0282

Midwestern Region - .0086

Southwestern Region - ,0030

(Omitted Region: Northwest) Intercept .lo64 R2 (adjusted) .71

~~~

,0222 (.0354) ,0376

(.0283) - ,0046 (. 0265) . o m

(.0291)

.1303

.54

~~~~

.0602 (.0323) ,0131

(.0255)

(.0238) .0340

- .OO64

(.0264)

- .0226 .66

.0960** (.0365) .ON3

(.0291) - ,0025 (.0273) ,0567

(.0300)

- .OO87 .55

ahstandardized regression coefficients are reported. *p < .05; ** p < .01; *** p < ,001.

However, there is no evidence of an efficiency wage effect. The negative effect of salary compared to the external market reflects the possibility that individuals who are highly paid relative to the market have much to lose from pushing vigorously for integration and may, in fact, be co-opted by the high pay.

Obviously, since both salary comparison variables have the salary of the AA officer in the numerator, there is a high correlation between the external and internal salary comparisons (r = .71). But, examining just the simple correlations in the appendix indicates that it is unlikely that our results are due to multicolinearity. The internal salary comparison is positively and significantly related to the proportion of women (p < .001) and minorities (p < .01) in 1983. The external salary comparison is negatively related to 1983 gender integration (p = .11) and is nonsignificant for 1983 levels of racial integration (p = .78). The fact that the simple correlation results correspond well to the multiple regression estimates indicates that the regression effects are not statistical artifacts.

Gender integration was positively related both to having a female president of the college or university and to having a minority president. Surpris- ingly, the level of gender integration was smaller in public than in private institutions. Although this result contradicts past findings about the responsiveness to external pressure of public institutions, it may be interpretable as a consequence of the fact that (a) private colleges and universities may be more cost-conscious and budget-constrained than public institutions, and (b) having a higher proportion of female administrators is associated with


lower wages (Pfeffer and Davis-Blake, 1987a). Compared to two-year colleges, there was less integration in four-year colleges and universities. Re- sources, size, turnover, and inside hiring had no effects on the level of gender integration. There were higher levels of gender integration when the AA officer was female, but there were no regional effects.

For the percentage of minorities, the control variables had somewhat different effects than for the percentage of women. Having a minority president was positively related to change in minority integration, while having a female president had no effect on the change in the percentage of minorities. There were no effects of public support, institution type, resources, or institution size. There were also no effects of turnover or inside hiring. Tenure of the AA officer was negatively related to minority integration, while having a minority AA officer had a positive effect on integration. The other AA officer characteristics were not significant. There were higher levels of minority integration in the Western region.

In supplementary analyses not shown here, we examined whether there were any interactions between the salary comparisons and various institutional features. There were no significant interactions between either of the salary comparisons and the turnover rate. There were also no significant interactions of salary comparisons with any measure of institutional size or with public support. These results suggest that there is no evidence that highly compensated (and higher status) AA officers achieve more integration when the level of turnover is high, when the organization is large, or when the organization is publicly supported.

Robustness of the Results. We explored the robustness of the results in several ways. It is possible that, due to the presence of a lagged dependent variable, the parameter estimates may be biased by the presence of autocorrelated error. To examine the potential effects of autocorrelation, we reestimated the equations reported in Table 2 using two-stage least squares. We first estimated an instrumental variable for the percentage of women or minorities and then substituted the instrumental variable for the actual percentage of women or minorities. All effects remained unchanged except that the external salary comparison in the minority equations be- came significant (the sign remained negative). These results suggest that the coefficient estimates are not biased due to autocorrelated error.

We also considered the potential effects of sample selection bias. Only 231 of the colleges and universities with usable data for both years had an affirmative action position and reported its salary. Since AA positions are unlikely to be distributed randomly across institutions, our results may be affected by sample selection bias. We estimated the potential effects of


sample selection bias in two ways. First, we used the method described by Berk (1983); this procedure did not change any of the results reported in Table 2. Second, Table 3 reports the results of four regression equations in which the dependent variable is the level of integration in 1983 and the independent variables are the same as in Table 2 except that the AA salary comparisons have been replaced by a dummy variable indicating whether the institution had an AA officer in 1978. The results in Table 3 are based on all institutions in our sample because we can include institutions even if they did not have an AA officer and report his or her salary.

The signs of the control variable coefficients in Table 3 remained the same as in the smaller sample reported in Table 2. A few coefficients that were close to statistical significance in Table 2 achieved significance in Table 3. Turnover had a positive effect on gender integration, and there were higher levels of gender integration in the South and of minority integration in the West.

Having an affirmative action officer had no effect on the pace of gender integration. However, the effect of having an affirmative action officer on changes in minority integration was negative. This result may reflect the different processes through which women and minorities are likely to be recruited for particular positions. As Konrad and Pfeffer (1991) have noted, in colleges and universities, segregation by race occurs across institutions (e.g., minority administrators are found primarily in institutions that admit minority students), while segregation by gender occurs across positions within institutions (e.g., women are represented in most institutions but are concentrated in a few types of positions, such as directors of student affairs). Their result is consistent with our finding that, while having an AA officer has a negative effect on changes in racial integration, it has no effect on the level of racial integration. The level of minority integration in 1983 is not affected by any institutional feature except the minority status of the president and may be determined by whether the institution has historically enrolled mostly minority students. Thus, changing the gender composition of the administrative component may involve bringing women who are already employed by the institution into new types of positions while changing the ethnic composition of the administrative component may involve searching for administrators in other institutions.

An AA officer whose mandate is to change the gender and ethnic composition of the administrative component may focus on the easiest path to change: moving women into new types of positions within the system. This action may cause minorities who were hopeful that the AA officer would improve their position to leave the institution. This argument is consistent with the negative effect of AA officer tenure on minority integration re-

TABLE 3 THE EFFECT OF HAVING AN AFFIRMATIVE ACTION POSITION ON CHANGES IN GENDER AND

RACIAL INTEGRATION (REGRESSION RESULTS)~ (standard errors in parentheses)

Dependent Variables


Having an Affirmative Action Position

Female President

Minority President

Public Support

Four-Year College

University

Budget (millions)

Faculty (hundreds)

Staff (hundreds)

Students (thousands)

Percent Turnover

Percent Inside Hires

Percent Women or Minority in 1978

Eastern Region

Western Region

Southern Region

Midwestern Region

Southwestern Region

(Omitted Region: Northwest) Intercept R2 (adjusted)

,0010

(.0081) .0764* * *

(.0179) .0344*

(.0172)

(.0088) -.0320***

- ,0167

-.0135

.om2 (.OOo3)

-.0010 (.0024) - .W08 (.OO06) - .00008 (.0013)

(.0160)

(.0190)

(.0095)

(.0100)

.0602***

- ,0229

.6720***

( ,0287) .0258

(.0148) ,0148

(.0194) .0267

(.0152) ,0070

(.0145) .0142

(.0163)

,0842 .73

- ,0035

(.0110) .3381***

.0656** (.0189)

(.023 1)

(.0116)

(.0128) - .0629* * * (.0132) .oO01

(.OOo3) - .0048 (.OO32)

(.OO08)

,0017) .1243* **

(.0213)

(.0257)

-.0730***

-.0379**

- .O03

- ,0006

- .0086

-

.0269

.0390 (.0262) .0432*

(.0205) ,0036

(.0196) .0127

(.0200)

(.0221)

,1801 .51

-.0158**

(.0063) - .W42 (.0110) .1354** *

(.0215) ,0008

(.0067) - ,0006 (.OO74)

-.0031 (.0076) .00007

(.0002) - ,0004 (.0019) - ,00008 (.oow ( .OOlO) .OW8

- ,0070 (.0124) .0261

(.0149) .7244***

(.0284)

(.0116) .0087

(.0153) ,0029

(.0119) - ,0140 (.0114) ,0022

(.0129)

,0153 .80

- ,0016

- . O m

(.OO90)

(.0154) .5655** *

(.0189) ,0109

- ,0043 (.0104) - ,0077 (.0107) .0002

(.0003) - ,0023 (.OO26) ,0002

(.OOO6) .0w5

(.0014) .0055

(.0175) .0298

- . a 6 4

(.0095)

(.0210) -

,0134 (.0163) .0653**

(.0214) ,0311

(.0167)

(.0160) ,0373'

(.0181)

.0208

.60

- ,0003

Wnstandardized regression coefficients are reported *p < .05; ** p < .01; * * * p < ,001.

AA OfjFicer Salaries and Managerial Diversity 1 89

ported in Table 2. If promoting women from within is the dominant strategy of most AA officers, this strategy would emerge only after the AA officer had been in the position for a while, causing minorities to leave after the AA officer had been in place for some time.

The lack of an effect of having an AA position, coupled with the salary results, has interesting implications. The empirical findings are consistent with the view that the creation of an AA position may be the result of many interests and motives, ranging from demonstrating symbolic compliance with institutionalized norms to attempting to increase the diversity of the organization’s administrative component. The mere existence of the position tells us little about which motives are operating. However, salary, particularly relative salary, does provide a good indicator of both the status of the position and the potential constraints on AA officer behavior. Thus, relative salary may be a good indicator of the ultimate course of integration.

We wanted to ensure that the empirical findings were not due to outlier or nonrepresentative organizations. Some colleges and universities, particularly smaller ones, do not have or do not report on many of the positions that could be in the sample. When few positions are reported, the internal salary comparison of the AA officer may not be reliable. There- fore, we excluded organizations that reported on fewer than 20 positions. The regression results for both women and minorities were unchanged.

Although there were not many left by the 1980s, there were still a few predominantly women’s colleges. And there are historically black colleges and universities. We wanted to ensure that our results were not due to including women’s or minority colleges in the sample. We excluded from the sample colleges and universities in which there were more than 60 percent female or minority administrators. Our results for gender integration remained unchanged. The effect of salary comparisons, and all other variables, remained the same even though we narrowed the range of our dependent variable and used a conservative cutoff to eliminate potential minority or female institutions.

The results for minority integration are less robust to the exclusion of female and minority institutions. When these institutions are excluded, the results for both the salary comparisons as well as for a number of other variables disappear. This is not surprising for two reasons. First, over the time period we examine, there is virtually no change in the average proportion of minority administrators in the entire sample. Many of our analyses focus on predicting changes in minority integration, and there is very little change to be explained. Second, other studies (e.g., Konrad and Pfeffer, 1991) have shown that organizational segregation is much greater for minorities than for women. Thus, percentage of minorities may essentially


act as a dummy variable that distinguishes minority institutions from the rest of the sample. When minority institutions are removed from the sample, there is little remaining variation in the percentage of minorities to be explained (all institutions have very few minority administrators).

Our tests for the sensitivity of the results indicate that they are quite robust for gender integration and robust to position reporting, but not to the removal of minority institutions in the case of minority integration. We did not observe any results that contradicted our original findings.

Discussion and Conclusions As we noted in the introduction, there are comparatively few studies of

organizational (as contrasted with occupational or job) gender or race integration. The results of this study add to that small body of empirical literature. We found that leadership apparently matters. There was more gender integration if the president of the college or university was a woman and more racial and gender integration if the president was a minority. These results are consistent with Baron, Mittman, and New- man’s (1991) finding that having a female agency head increased the rate of gender integration (although the magnitude of this effect appeared to depend on which political party controlled the state government).

We also found that the mere existence of an AA position had no effect on gender integration. This may be, in part, because the senior-level positions examined here cannot be easily affected by the AA officer. It also may be, as Edelman (1992) has suggested, that the existence of an A A position can be either a symbolic response to appease internal and external constituents or a serious effort to influence diversity. This finding needs to be examined in other contexts but, if replicated, provides further evidence for the symbolic role of organizational structure. Just as institutional theory suggests (Meyer and Rowan, 1977), organizations may change their structures to signal con- formity with social norms, but there may be loose coupling between the structure and what actually occurs in the organization.

Consistent with Kanter’s (1977) ideas on homosocial reproduction, we found that female and minority A A officers seemed to be successful at attracting others like themselves. Having a female AA officer increased the level of gender integration, while having a minority A A officer increased the proportion of minority administrators. We also observed few effects on integration of the tenure or inside hiring status of the AA officer. One possibility is that these factors don’t matter. Another quite plausible possibility is that they matter a lot but have conflicting effects under different circumstances. Inside succession and long tenure in the job

AA Officer Salaries and Managerial Diversity I 91

almost certainly provide an individual with many rich social ties to other senior administrators. But, social ties and tenure in the organization can also constrain an individual and make him or her more committed to the organization. Whether experience, knowledge, and social ties constrain the AA officer or enable him or her to influence the system depends on other factors that we cannot explore in this study. But which of these effects predominates is an issue worthy of further exploration.

Many of the organizational features emphasized in other studies of integration had small or negligible effects here. We suggest that this is due to the multiple and often conflicting processes that may affect integration. Consider the effect of organizational size. Size was unrelated to integration. On the one hand, large organizations are visible and hence may come under public scrutiny, although that scrutiny may not focus extensively on issues of administrative integration. Also, large organizations have the resources to integrate and the formal procedures in place to ensure objec- tive hiring processes and extensive searches. On the other hand, large organizations are also inertial and may have the status to resist pressures for change from the external environment (Pfeffer and Salancik, 1978). These conflicting forces may, in any particular setting, counteract each other or leave a small net effect in either direction, depending on the relative importance of these factors in the specific setting.

Our finding that high internal salary comparisons increased integration deserves further study. We argued that high pay signals high status and may enable the AA officer to mobilize the resources necessary to achieve integration. However, there are two other possible explanations for the effect of high internal salary comparisons on integration. First, it is possible that AA officer salary indexes AA officer quality and that AA officers with high salaries are more qualified than AA officers with low salaries. However, this cannot explain our entire pattern of results. AA officers with high salaries will have high internal and external salary comparisons. If AA salary comparisons affect integration primarily by affecting the quality of AA officers, then both internal and external comparisons should have positive effects on integration. However, we found that external comparisons had a negative effect on integration. Third, fair wage-effort models suggest that high internal salary comparisons may cause the AA officer to exert greater effort toward achieving gender integration than may low internal salary comparisons (Akerlof and Yellen, 1990). Future research could profitably examine the mechanisms through which internal salary comparisons affect individual performance.

Finally, our results make an important point about empirical tests of theories of the effects of salary. The efficiency wage perspective relies on

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AA Oficer Salaries and Managerial Diversity I 93

external salary comparisons while the status perspective emphasizes the importance of internal salary comparisons. Although internal and external comparisons are likely to be correlated, they are not the same thing. Nor are their effects always the same. It is important to properly specify measures of salary to reflect the fact that, in almost all theories of the effects of salary, it is salary in relation to some comparison that is the critical variable. In this research, we observed that a higher internal salary comparison produced more integration while a higher external salary comparison produced less integration. This latter finding also tells us that, while high pay relative to the external market may motivate an individual, it may also co- opt or capture the individual, making the person less likely to push for change. These effects clearly need to be studied in other contexts, and for other kinds of positions, but the underlying logic is intriguing.

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Documents

AA Officer Salaries and Managerial Diversity: Efficiency Wages or Status?