In 2021, Latina women were paid 54 cents for every dollar paid to White men, and Black women 64 cents, Native American women just 51 cents, White women 73 cents, and Asian American, Native Hawaiian, and Pacific Islander women 75 cents.
Over a 40-year career, Black women earn almost a million dollars less than White men doing the same job. Black men earn 87 cents for every dollar paid to a White man doing the same job; Native American men 91 cents.
A 2019 report on wage inequality in tech from Hired magazine shows that “63% of the time, men were offered higher salaries than women for the same role at the same company. Companies were offering women between 4% and a whopping 45% less starting pay for the same job.” And that only looks at salary.
In some industries, a huge part of compensation is equity, where the data is more opaque. Unless you believe that White men are superior to others and that’s why they’re paid more, it’s impossible to believe that bias is not a factor. And if you do believe that, then prejudice is the factor.
The good news is that there are things you can do to make sure your compensation system is equitable.
Design a Principled Comp System
It’s absolutely crucial not to give managers unilateral authority over salaries, bonuses, stock grants, or other forms of pay. Instead, develop a fair, transparent compensation system that everyone understands and stick to it.
This is an important check on the power that individual managers have that will help prevent their biases or prejudices from translating into pay discrimination.
Someone in your organization — the compensation group in HR at a big company, the head of HR at a medium-size company, or you, if you’re leading a small company and don’t yet have an HR lead — should come up with salaries or salary ranges for particular jobs and functions. Do the research so you know what the market rate is and explain your rationale.
There are many firms that offer this data. Make some conscious decisions. For example, do you want to pay at market, above market, below market? People doing the same job should get job offers with the same salary and stock (if relevant) packages.
Any exceptions should require an explanation and sign-offs from at least three different executives at the same level. Doing this will do three things.
- One, it will mean that pay will be fairer, less subject to the bias of individual managers or the demands of employees who feel entitled to make them.
- Two, it will reduce your stress. You approach compensation in a consistent, structured way, rather than engaging in ad hoc haggling with each new employee.
- Three, employee engagement and productivity are improved; more people feel they are being paid fairly when pay is transparent.
Address Disparity with Transparency
More and more companies are finding that the simplest way to address pay disparity is transparency. No negotiation. No secrets. Just like prices at the grocery store. Imagine if you had to haggle with the checkout clerk every time you wanted to buy bread.
Why should hiring involve so much negotiation, which often winds up with someone feeling cheated? Put a page on your website that outlines different salaries and compensation for different roles. That solution will save you and all your candidates a lot of time and emotional energy.
Radical Respect is a weekly newsletter I am publishing on LinkedIn to highlight some of the things that get in the way of creating a collaborative, respectful working environment. A healthy organization is not merely an absence of unpleasant symptoms. Creating a just working environment is about eliminating bad behavior and reinforcing collaborative, respectful behavior. Each week I’ll offer tips on how to do that so you can create a workplace where everyone feels supported and respected. Learn more in my new book Radical Respect, available wherever books are sold! You can also follow Radical Candor® and the Radical Candor Podcast more tips about building better relationships at work.
