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How HR leaders can eliminate workplace inequality

If there’s one lesson we must take away from our current civil rights movement, it’s that we have long been blind to injustice and inequality. As it relates to the workplace, HR leaders play a particularly vital role in addressing pay disparities, removing walls that hinder career advancement, and in fostering greater diversity and inclusion.

We know wage gaps exist in the U.S. between men and women even when we account for experience, industry, education, and job titles and responsibilities.[1] White males also make more money than ethnic minorities, the differently-abled, and LGBTQ+ persons, even between similarly-qualified candidates in the same fields with the same jobs.[2]

While the coronavirus pandemic of 2020 has ravaged the entire job market, women are losing even more ground due to making up a larger percentage of employees in occupations with layoffs and reduction of hours. Women are also more likely to have childcare and eldercare duties fall on their shoulders, forcing them to voluntarily cut back their own working hours in some cases.[3] And we’ve long known that any absence from the workforce for women results in them making even less pay when they return and diminished opportunities for career advancement.[4]

The Gender Pay Gap: Median hourly earnings of U.S. women as a percentage of men’s among…


Note: Estimates are for civilian, non-institutionalized, full- or part-time employed workers with positive earnings.
Self-employed workers are excluded. Source: Pew Research Center analysis of Current Population Survey Data.

 

Workers who are Black, Indigenous, or other people of color (BIPOC) face the same issues – and with racial injustice at the center of our national dialogue on inequality, many of us are now seeing (or acknowledging) even more wage and labor disparities.[5] For instance, small business owners and self-employed workers who are Black, Latinx, or Asian have been out of work at much higher rates than white business owners and workers.

U.S. small business owners and self-employed workers who weren’t working in April 2020, shown as share of February’s total

 

It’s not surprising then, that unemployment rates have been so disproportionate when broken down by race. Since the coronavirus outbreak began in the US, Black Americans and Hispanics have lost their jobs at greater rates than white employees.

Percent of adults by race who have been laid off

Source: April 27-May 4, 2020, Washington Post-Ipsos poll of 8,086 adults with a margin of sampling
error of +/-1 percentage point. Error margins range from 1.5-4.5 points for racial/ethnic subgroups.

 

What we also know is that diverse companies – especially when it comes to leadership – are more innovative and produce more revenue than those that are less diverse.[6] But it’s not just as simple as hiring more BIPOC workers. Employers have to keep them, which means creating an equitable and welcoming culture within the organization at every level.

Our failure to make headway on the pay gap between white men and virtually all other workers, combined with our new economic reality, means that the current pay and career advancement gaps will only increase.

Why would a stellar employee making less in an environment where she saw very few people like her remain loyal to a company? It certainly makes sense that employers who foster diversity and inclusion through things like equal pay see more innovation and profit, and manage to keep the best talent.
Part of this failure lies on the shoulders of human resource professionals who have – often inadvertently – helped perpetuate these gaps. It’s not necessarily individual workers who make biased decisions that result in unequal compensation.  However, the current processes and systems we have in place cause workplace inequality to grow, which results in inefficiencies that impede the entire workforce.[7]

The good news is that HR professionals have more tools – and power – than ever to fix them.[8]

How HR contributes to wage inequality during hiring

Wage gaps occur at the recruiting and hiring phases as well as when negotiating raises and promotions. Ironically, it’s often the very systems meant to even the playing field that often contribute to these gaps.

For example, questions designed to categorize people based on experience and potential can easily overlook and undervalue those with non-traditional backgrounds (such as a delayed college education or previously holding only part-time positions) or those who have had to take a break from the workforce.[9] The gamification of the hiring process and the use of online testing has only served to maintain the status quo.[10]

One good example of bias in recruiting is resume scanning software that can easily misjudge or mis-rank candidates (not to mention allow them to fall through the cracks) by searching for keywords that men more commonly use in resumes.[11] The systems might also search for former job titles and educational backgrounds that white men are more likely to have held. Data scientists Gideon Mann and Cathy O’Neil put it succinctly when they said “Algorithms are, in part, our opinions embedded in code.” [12] The process is not neutral simply because it is computerized (but software companies are happy to sell HR managers that peace of mind).

It’s easy to see how qualified applicants can fall through the cracks because they don’t know what your so-called “data-driven algorithm” is looking for. That’s because it depends on the data you or your manufacturer chooses to add when using applicant tracking systems (ATS). And while some ATS companies have offered an experience “free from bias,” the truth is you can’t build a sorting and ranking algorithm without looking for specific words. And companies with proprietary software might not always be forthcoming about how their algorithms work.[14] Simply cherry-picking what a computer tells you is the “cream of the crop” is already putting underrepresented applicants at a disadvantage. If they are offered positions, they may be lower in rank or offered smaller salaries.

And let’s be honest. Savvy candidates can easily stuff their resumes with commonly searched-for words. That doesn’t make an HR executive’s job any easier.

How HR professionals can help eliminate the wage gap

Make no mistake, management plays a critical role in helping to create a better workplace, but HR professionals hold all of the vital information for rooting out inequalities.

There are multiple actionable items that companies should be discussing with HR departments right now to begin to ameliorate embarrassing and potentially illegal pay gaps:

  • Base salary on company standards, not on previous wages earned by new employees.
  • Don’t bar employees from discussing their wages with one another.
  • Be open with employees about salary ranges and how compensation is decided. Market rate is not always the best indicator of a fair salary, so be prepared to talk about how your company decides its rates.[30]
  • Allow employees to measure themselves against expectations for each pay grade. This means having a clear idea of why individual earners make the salaries they do.
  • Proactively look for inequities within similar ranks and job descriptions and point them out to company leaders.
  • Do a pay audit of employees and do it often since workers come and go.[31]. Compare how men and women as well as white and BIPOC workers are paid for doing similar work. Examine how your company sets pay and if it’s consistent in judging merit and rewarding meaningful qualifications.[32]
  • Be open to correcting the disparities and be an advocate for your fellow employees. Use annual employee reviews as a time to address inequalities. Discuss the appropriate way to rectify wage gaps with your legal department.
  • Make rewardable achievements clear and attainable. Underachieving workers exist in every company and come in every form. Inadequate performers should be given clear reasons as to why they have not earned promotions or raises.
  • Do not use the poor excuse that rectifying wage gaps will reward underperforming workers. If your standards are clear and fair and if you do your job correctly, they will not.
  • Look at your company’s history of promotions and try to understand who got promoted and why as well as who did not.[33]
  • Look beyond wages and examine bonuses, stock awards, and retirement packages by job – you may find disparities there as well.
  • Accept that unconscious bias is likely to have affected salaries and encourage staff to discuss it with management and be open to fixing it.

Stuck in the past

In many ways, biased technology keeps everyone stuck in the past. Algorithms are fed data based solely on candidates’ past experiences and actions. They also judge potential employees based on old, traditional ideas about what makes the best workers. The problem is you can only judge your best workers based on those you’ve already hired. And we already know that women and people of color make up a disproportionately low number of key roles in corporate America. A well-known case that highlights the issue is from 2015 when Amazon found their system taught itself to identify male candidates as preferable since the data they had was from men’s resumes.[15]

Even the satirical site The Onion brought this to the fore in 2015 with one of its classic tongue-in-cheek-but-all-too-real headlines: “Cost-Cutting Measures Force Company To Start Hiring More Female Employees.”
Applicant tracking systems have also continuously been called out for contributing to the wage gap once workers are hired.[16] As just one example, many of these systems (until very recently) required applicants to list former salaries on their applications. Employers then used this data to help determine the type of offer to make to potential employees. Since women and BIPOC workers are already underpaid compared to their white, male counterparts, these candidates continue to receive low offers which further perpetuates the wage gap.

Why would a stellar employee making less in an environment where she saw very few people like her remain loyal to a company? It certainly makes sense that employers who foster diversity and inclusion through things like equal pay see more innovation and profit, and manage to keep the best talent.[17]

Despite all the data we have, companies that market ATS software continue to tout it as the best way to “even the playing field” in the workplace by instituting “blind hiring.” [18] The idea that an algorithm programmed by a human can be objective is laughable – and yet many engineers will defend their systems until the end.[19] Any resume bias that humans have will be evident in their algorithms – and it will be more insidious for having been ever thought of as objective.[20]

But that doesn’t mean these systems don’t have a place in HR. As long as they’re guided by humans, are radically transparent, and are used for education and not decision-making purposes, they can be a useful piece of the hiring toolkit. They can also be modified to audit employees internally to help root out current salary inequities among people in similar positions.

Can a company still choose to hire a young woman of color in a junior position and expect her to earn less based on a slower career trajectory and less continuing education if she eventually takes time off to have a family?[21] Yes, of course. That’s a game that will always be played and a gamble many companies will take to cut costs. The issue is that she might be more talented than a white, male peer who goes on to out-earn and outrank her; and she may ultimately leave the organization because she (a) receives little support and (b) has no mentors like her, which highlights two of the top reasons companies become less diverse.[22] Putting checks and balances into the retention process can help alert HR to these cases, especially if they result in wage gaps and a lack of company diversity.

Even the satirical site The Onion brought this to the fore in 2015 with one of its classic tongue-in-cheek-but-all-too-real headlines: “Cost-Cutting Measures Force Company To Start Hiring More Female Employees.” [23]

Wage gaps continue with raises and promotions

Despite more and more white men reporting that they think minorities are getting an unfair advantage in the workforce, they are still more likely to get a raise when asking for one than their BIPOC colleagues.[24] That’s the case even when the analysis is controlled for factors affecting the likelihood of receiving a raise (such as experience or seniority).

Women of color were 19% less likely to have received a raise than a white man when asking for one, and men of color were 25% less likely (the research suggested that white women were also less likely to receive a raise, but it was not statistically significant).

This could be because people in more senior positions – overwhelmingly held by white men – are more likely to receive a raise when they request one. Managers are 42% more likely to receive a raise, directors 119% more likely, and C-suite executives are 142% more likely to receive a raise when asking.[25]

It goes without saying that when you have fewer chances at career advancement, you earn less money, won’t be able to invest as much, and aren’t able to accrue assets that lead to building more wealth.

Women and BIPOC workers simply don’t have the rank advantage that white men do when asking for raises – so they either don’t get them, or the pay increase is so small that it has no significance on the wage gap.

Transparency – it’s the law

A lack of transparency in compensation and job descriptions can also help obscure and perpetuate wage gaps.[26]

The first step for HR professionals to ameliorate this injustice is to work on eliminating company policies preventing employees from sharing salary information with one another. If there is a discrepancy in pay between two employees, HR should be able to openly explain a substantial difference in duties or other, legal factors that explain the difference so everyone can be sure they are not violating equal pay laws.

Women and BIPOC workers simply don’t have the rank advantage that white men do when asking for raises – so they either don’t get them, or the pay increase is so small that it has no significance on the wage gap.”
HR professionals can be at the mercy of all kinds of forces larger than themselves – and they should not bear the blame for the wage gap alone. But with the Equal Pay Act of 1963Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act of 1967, and Title I of the Americans with Disabilities Act of 1990 all combining to technically prohibit compensation discrimination on the basis of race, color, religion, sex, national origin, and age – at least according to the EEOC – companies have a moral responsibility to reveal pay differences as well as root them out.

And yet, companies are loathe to identify pay gaps.[27] They use the excuse that to do so would potentially open them up to lawsuits by those who have been underpaid.

Technically, employers should not be able to silence employees regarding their pay, but it’s become a grey area that many are unwilling to challenge.[28] That’s partly because we’ve been socially conditioned to think of money and wage information as private. But federal and state labor laws – including The National Labor Relations Act (NLRA) – largely prohibit companies from imposing pay secrecy rules on employees or retaliating against them if they discuss compensation with co-workers.

HR professionals as champions of equality

The goal of eliminating salary gaps in the workplace may seem like a just but unrealistic goal. But this is where HR can play a leadership role in creating a diverse workplace that treats all employees according to merit.

If algorithms can identify potential employees from a huge stack of applicants, they can certainly identify current employees with similar job responsibilities in order to address pay disparities…that’s simply the first step in creating a culture that helps women and BIPOC workers thrive.”
Let’s face it, isn’t it better to get ahead of this problem from within before you see an EEOC complaint filed by an employee? As social justice issues become central in an increasingly competitive job market, do you want your company to be known for being dragged kicking and screaming into a more equal pay system? Or do you want to be known as leaders in paying employees fairly and helping to eliminate pay gaps? Most companies have them or the wage gap statistics wouldn’t reveal the information they do. Isn’t it worth taking a look at your records before a judge subpoenas them during a lawsuit?

This is a point at which technology can be your friend.

If algorithms can identify potential employees from a huge stack of applicants, they can certainly identify current employees with similar job responsibilities in order to address pay disparities. We’ve simply never asked them to.

HR departments both large and small are crunched for time with the long list of responsibilities they bear for recruiting, interviewing, hiring, and onboarding new staff, helping executives with strategic planning, and managing current staff and their eventual terminations and retirements.

But HR is also the only office that holds all the relevant information when it comes to salary. Surely executive and HR leadership can brainstorm ways to pull employee records – either through technology or hiring someone to do it manually, even a consultant – to collate salary information.

Alas, that’s simply the first step in creating a culture that helps women and BIPOC workers thrive. And to put it bluntly – it’s still cheaper than a lawsuit.[29]

But then what?

So you’ve rooted out your pay gaps. You’ve done the right thing, and you have in front of you the data on hiring wages by – at the very least – gender and ethnicity (things like LGBTQI+ wage gaps will be harder to get at since we do not and should not ask people to identify themselves this way at work).

The next steps are daunting but not impossible.

Leveling salaries across the board – even when financially feasible – isn’t necessarily going to solve your problem long-term. That’s the bad news.

If there’s one lesson we must take away from our current civil rights movement, it’s that we have long been blind to injustice and inequality. And now, we are being given the tools to acknowledge it and fix it.”
The good news is that now you can begin to ask questions about where these inequities begin. In recruiting and hiring? During early promotions? When promotions occur? And does company culture play into these inequalities?

These questions all lead to even more questions about who companies tend to retain, support, and promote, whether the way they measure merit is biased, and how HR handles raises for those who ask vs. those who don’t. That’s why inequality is such a deeply-entrenched problem – it occurs everywhere and can seem invisible if you aren’t looking for it.

So you have to look for it.

If there’s one lesson we must take away from our current civil rights movement, it’s that we have long been blind to injustice and inequality. And now, we are being given the tools to acknowledge and fix it.

If HR professionals are going to be leaders within their companies, they need to communicate with management about current disparities and tactics to increase diversity. HR can advocate for workers who may not have had the same professional advantages as others by investigating options that allow women and people of color to succeed, such as flexible hours, work-from-home opportunities, and rewarding output and success.

No one said it would be easy to create a just workplace. But what we do know – and what researchers have proven – is that diversity pays dividends and satisfied employees work harder. In every way, the end result justifies the work ahead.

Visit our workplace diversity hub for further reading relating to current challenges faced by women and people of color, wage gaps, successful inclusion strategies, diversity in corporate and government leadership, effective talent acquisition and diversity programs, and how artificial intelligence affects diversity outcomes.

Sources and further reading:

[1] https://www.payscale.com/data/gender-pay-gap

[2] https://www.diversityjobs.com/2020/03/race-gender-lgbtq-wage-gaps/

[3] https://www.pewresearch.org/fact-tank/2019/03/22/gender-pay-gap-facts/

[4] https://www.nytimes.com/2018/02/05/upshot/even-in-family-friendly-scandinavia-mothers-are-paid-less.html

[5] https://www.washingtonpost.com/business/2020/05/06/layoffs-race-poll-coronavirus/

[6] https://www.bcg.com/en-us/publications/2018/how-diverse-leadership-teams-boost-innovation.aspx

[7] https://journals.aom.org/doi/full/10.5465/annals.2018.0029.summary

[8] https://hbr.org/2014/12/what-hr-can-do-to-fix-the-gender-pay-gap

[9] https://www.americanprogress.org/issues/economy/reports/2019/12/05/478150/african-americans-face-systematic-obstacles-getting-good-jobs/

[10] https://www.diversityjobs.com/2019/10/can-ai-help-us-create-a-more-diverse-workforce/

[11] https://www.theladders.com/career-advice/the-top-10-words-men-use-on-resumes-versus-women-are-shockingly-different

[12] https://hbr.org/2016/12/hiring-algorithms-are-not-neutral

[13] https://www.diversityjobs.com/2019/10/can-ai-help-us-create-a-more-diverse-workforce/

[14] https://www.diversityjobs.com/2019/10/can-ai-help-us-create-a-more-diverse-workforce/

[15] https://www.reuters.com/article/us-amazon-com-jobs-automation-insight/amazon-scraps-secret-ai-recruiting-tool-that-showed-bias-against-women-idUSKCN1MK08G

[16] https://www.hrtechnologist.com/articles/recruitment-onboarding/the-pros-and-cons-of-smart-applicant-tracking-tools/

[17] https://www.bcg.com/en-us/publications/2018/how-diverse-leadership-teams-boost-innovation.aspx

[18] https://www.applicanttrackingsystems.net/dont-let-biases-cloud-judgment-hiring/

[19] https://twitter.com/ylecun/status/1274782757907030016

[20] https://recruitingdaily.com/resume-bias-is-real-closing-gaps-and-advancing-the-screening-process/

[21] https://www.mckinsey.com/featured-insights/gender-equality/women-in-the-workplace-2019#

https://blog.dce.harvard.edu/summer/gender-inequality-women-workplace

[22] https://wiw-report.s3.amazonaws.com/Women_in_the_Workplace_2019.pdf

[23] https://local.theonion.com/cost-cutting-measures-force-company-to-start-hiring-mor-1819577655

[24] https://www.marketwatch.com/story/that-google-engineer-isnt-alone-other-white-men-say-theyre-discriminated-against-2018-01-09

[25] https://www.payscale.com/data/how-to-ask-for-a-raise

[26] https://www.nytimes.com/2019/01/20/smarter-living/pay-wage-gap-salary-secrecy-transparency.html

[27] https://www.eeoc.gov/equal-paycompensation-discrimination#:~:text=Title%20VII%2C%20the%20ADEA%2C%20and,jobs%20must%20be%20substantially%20equal.

[28] https://www.govdocs.com/can-employees-discuss-pay-salaries/

[29] https://www.vox.com/the-highlight/2019/12/3/20948425/equal-pay-lawsuits-pay-gap-glass-ceiling

[30] https://www.shrm.org/hr-today/news/hr-magazine/0516/pages/0516-fair-compensation.aspx

[31] https://hrexecutive.com/follow-these-7-steps-to-an-effective-pay-equity-audit/

[32] https://www.shrm.org/resourcesandtools/hr-topics/employee-relations/pages/pay-disparity-for-same-job.aspx

[33] https://www.shrm.org/resourcesandtools/hr-topics/compensation/pages/gender-pay-gap-closure-requires-career-parity.aspx

Jessica Baron, PhD

Jessica has a Ph.D. in History and Philosophy of Science. She works as a writer for DiversityJobs.com and is a consultant on a wide range of topics, including the ethics of science, technology, and medicine; science and pseudoscience in the wellness industry; national security; and diversity in the workplace.

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