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What’s the Goal: Pay Equity or Pay Parity?

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Recent research has shown that it is common for an organization to have a significant difference between average male and female pay rates. When that calculation is refined to compare only similarly situated incumbents, the gap often shrinks to a much smaller difference. The cause of the vast difference between the two numbers at the aggregate level and the similar-role level is that often females and males do not work in the same occupations and that they do not occupy similar positions in the organizational hierarchy.

The current debate on what constitutes “pay equity” puts pressure on organizations to demonstrate that pay gaps are not illegal or inequitable. Legal but inequitable rates place the organization on trial, with the employees as the jurors. Statistically significant differences that are not justified by business necessity are generally deemed to constitute illegal pay discrimination. If differences exist, they must be justified and proven not to be discriminatory. It is not illegal to pay directors more than managers or IT specialists more than administrative support personnel. It has been accepted that people requiring higher-level qualifications or who have greater responsibilities for budgets or people should have higher pay levels. That is what is termed “internal equity.”

It is also not inappropriate to pay a male vice president more than a female vice president if the male is in a more responsible/impactful role. And, if average pay rates prevailing in the labor market are higher for one occupation than another, that is also deemed to be a legitimate reason for differences in pay. For example, it is common for a director of engineering to be in a higher pay range than a director of administration and also have a higher market value. And, even when two incumbents have the same job, differences in pay may be justified based on the relative competence of the individuals and/or their performance levels. So, a lack of parity may not constitute a
lack of equity.

Even when two incumbents have the same job, differences in pay may be justified based on the relative competence of the individuals and/or their performance levels.

The question that should be asked is what organizations should do, if anything, to narrow the gender pay gap, even if it is clear that current pay rates are legally defensible.

The Current Realities

The current shortage of specific technical skills in the United States, particularly in STEM fields (science, technology, engineering and mathematics), has predictably resulted in greater pay-level escalation for jobs requiring those skills. And the gender demographics show that people in these fields are more commonly males. The gender mix in STEM roles is attributable to choices made by individuals about what they will prepare themselves for during their formal education. Recent numbers show a greater number of females are now pursuing degrees that will enable them to enter these roles. But changing the mix will take some time, and new entrants to a technical field are generally paid less than those with considerable experience, so even if the gap closes it will lengthen the journey toward parity.

There is also a shortage of skilled trades personnel, another field historically dominated by male incumbents. There does not seem to be a significant change in the gender mix in the skilled trades area. Some roles, particularly those requiring adverse or hazardous work, have not been accessible by women, and this type of arbitrary exclusion should cease. There is also a large difference in the number of males and females in international assignments. Individual choice should drive occupational selection, not the assumption that women will not want to do these jobs or will be incapable of doing them. If a woman has expressed an interest in assuming a role that has typically been a male-dominated role, the decision on allowing access should be based on qualifications and the person’s wishes.

Managerial and executive roles continue to be dominated by males, and the level of one’s job in the organizational hierarchy will influence pay levels. The reasons behind this gender pattern are not evident. There are claims made that if equally qualified males and females compete for promotions, males will be selected more often. We are all subject to bias in favor of those who are more like us, and if males are making selection decisions, it may tilt the field in favor of males. Some symphonies audition candidates while being unaware of their gender, to better equalize the process. This is hardly practical when organizations select people for promotions, but it is possible to develop selection criteria that focus on relevant qualifications and to use processes that are gender blind. Few want to admit they have preferences based on gender, but bias can be subconscious, created by how one was socialized. This is known as “implicit bias.” (See “What Is Implicit Bias?”)

What Is Implicit Bias?

An implicit bias, or implicit stereotype, is the unconscious attribution of particular qualities to a member of a certain social group. Implicit stereotypes are shaped by experience and based on learned associations between particular qualities and social categories, including race, ethnicity, age and/or gender.

Considerable research on expatriate assignments has shown the main reason so few women are selected is that their organization does not believe they want these assignments and/or that because of family responsibilities they would be unable to accept them. That same research shows this is not the case and that the qualified candidate pool is artificially reduced because of a misunderstanding. Some countries give women the option of serving in combat roles in their armed forces. This practice is often met with surprise that women aspire to these roles, and it appalls those who feel it is inappropriate. But if those involved can decide, it seems to be fair.

Organizational Responsibility

Even though there is increasing pressure on organizations to become more socially conscious, is it appropriate for them to influence people to follow specific career paths? It is often possible to provide better information about what effect choices will have on advancement potential and compensation and to define what qualifications are required. Mentor and network support can also enhance understanding and provide support that may influence the career choices made by both current and potential employees. Providing tuition reimbursement for technicians who pursue advanced training that will enable them to compete for STEM roles, particularly those in short supply in the labor market, can help generate more female candidates over time. Outreach initiatives that enable gender to influence how tiebreakers among candidates are resolved may help to remedy imbalances. There will be some who resist quotas or specific preferences. Each organization should adopt a philosophy that fits its culture and values, since it must deal with conflicts created by conscious preferences.

The reporting on the pay equity issue is very often emotionally charged. But accusing organizations of malfeasance when individual choice or other legitimate factors result in gender imbalances accomplishes little, except to make resolution more difficult. Calling someone a sexist generally does not put them in a rational state of mind, and attacks can actually lessen the chance of resolution. Organizations will pay the price in the form of higher pay levels or in dysfunctional vacancies if they inappropriately limit the supply of candidates. In a capitalist economy, an economic penalty tends to get people’s attention. They may also see their brand as an “employer of choice”
negatively impacted by an apparent bias that is not justified by the qualifications of those competing for roles.

Dialing down the emotional accusations and unsupported presumptions of wrongdoing would help to reshape the debate into a dialogue. Most organizations want to be attractive to the talent they require in order to succeed. If past practices have resulted in decisions impacted by gender bias, this should be brought to light and alternative approaches should be considered. If managers have a gender-related bias, this needs to be addressed, either by removal of the person or by corrective action to make selection a bias-free process. The bottom line is that roles should be filled by the best-qualified people, no matter what they look like, where they came from or what they believe. The workforce management policies and programs that make that happen should be agreed upon and steps taken to ensure they are adopted. Organizations that do not achieve this will pay a penalty in some form.

greene-robert

Robert J. Greene, Ph.D., CCP, CBP, GRP, SHRM-SCP, SPHR, GPHR, is the CEO of Reward Systems, Inc. and faculty member for DePaul University in their MSHR and MBA programs.


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