Study Reveals Biases in Pay Decisions

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Many HR professionals fall into HR because they care deeply about making workplaces better. Day in and day out, HR teams focus their time and energy on ways to improve the employee experience. They spend a significant amount of time training managers how to hire candidates, coach employees, and evaluate performance in a manner that removes biases in pay raises and ensures a fair experience to all employees.

Yet, our latest research shows that most organizations still have a long way to go when it comes to eradicating bias in merit evaluations and increases. In Payscale’s latest “Raise Anatomy” report which surveyed workers to understand their history of asking for raises, we found that employees of color who ask for a raise are less likely to receive it as compared to their white male employees.

The Findings

Payscale surveyed over 160,060 workers to find out who asked for a raise, who received it, and why others chose not to ask at all. Additionally, the survey looked at how employee feelings toward their workplaces shifted when they were denied a raise.

We found that only 37 percent of all workers surveyed have asked for a raise from their current employer. We dug deeper to find whether any particular demographic group is more or less likely to ask for raises compared to others.

We know that there are a number of reasons why a worker may not ask for a raise. However, after controlling factors like experience, tenure, job title, job level, industry, education and demographics, we found that there is no statistically significant difference in the rates at which women of color, white women, men of color and white men ask for raises. In other words, no single gender or racial/ethnic group is more likely to have asked for a raise at some point than any other group.

But here’s the kicker: holding all other factors constant, people of color (both male and female) are less likely to receive pay raises when they ask compared to white men. Women of color were 19 percent less likely to have received a raise than a white men, and men of color were 25 percent less likely.

What This Means for HR

Given the large number of people surveyed (over 160,000 workers), this finding indicates that there is a level of bias—whether conscious or not—that impacts organizations’ performance evaluation and salary increase processes. This study underscores the importance of paying attention to implicit biases in your organization’s pay and people practices.

Unconscious bias can cause managers to dismiss great ideas, undermine individual potential, and even create a toxic work environment for their colleagues. So, what can HR leaders do to foster a fair environment for all employees? Here are two tips to start weeding out bias in your compensation practices:

1. Re-Assess Performance Management

A good performance management system should motivate employees and appropriately reward them for driving results. When performance and compensation are clearly and fairly tied together, workers tend to trust the system of checks and balances. But when workers feel like the system is flawed, poorly handled performance evaluations can easily become a departure trigger for workers. If your managers do not assess and report accurate performance data, you can bet that employee engagement is taking a hit as a result.

Make sure that your managers use objective, standardized criteria to evaluate the performance of direct reports. To avoid manager bias, have managers focus on questions that deal directly with their experiences, such as:

  • If [employee] left the company, what would I do?
  • What are the top things [employee] does well?
  • What are the ways in which [employee] can improve?

In addition, ask managers to meet with their reports regularly to provide timely and actionable feedback. Ongoing, positive interactions between managers and employees will help employees gain the trust and confidence to initiate conversations about performance and compensation.

Furthermore, encourage managers to seek out a 360 degree view of the employee’s performance by asking for feedback from others who work with the employee. This helps ensure that promotion decisions aren’t skewed by the opinion of a single manager.

2. Train Employees to Call Out Bias

A few well-known companies including Google and Starbucks are now several years into their “unbiasing” journey. Google’s re:Work features a collection of practices, research, and ideas from Google and others on how to remove unconscious bias from an organization. Unbiasing is a journey that involves education, measurement, accountability and more.

According Google’s experience, unbiasing comes down to taking five actions:

  1. Increase awareness about unconscious bias through employee training.

  2. Create a culture where employees hold each other accountable in instances of biases.

  3. Gather data and measure decisions.

  4. Evaluate subtle messages that may cause groups of people feel included or excluded.  

  5. Use consistent structure and clear criteria when making decisions.
     

Compensation is only one piece of diversity and inclusion. Find more analysis and expert tips in Namely’s Diversity Report 2018.

This post originally appeared on Payscale.

Topics: Payroll

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