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PayScale Study Reveals Biases In How Organizations Give Pay Raises

New research from PayScale found that most orgs still have a ways to go when it comes to evaluating and paying all employees in a consistent and fair manner.

Many HR professionals get into their line of work because they care deeply about making workplaces better. Day in and day out, HR professionals focus their time and energy on ways to improve the employee experience. They spend a significant amount of time each month training managers how to hire, 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 ways to go when it comes to removing biases in pay raises, and evaluating and paying all employees in a consistent and fair manner. In our latest “Raise Anatomy” report which surveyed workers to understand their history of asking for raises, we found that people of color are less likely to receive a pay raise when they ask, compared to white men.

PayScale found that 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.Click To Tweet

The Details On This Study

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In our latest study on pay raises, we surveyed over 160,060 workers to find out who’s asked for a raise from their current employer, who received a raise when they asked for one, and why other people haven’t asked for a raise. Additionally, we looked at how people feel about their workplaces when they were denied a raise.

We found that 37 percent of all workers surveyed have asked for a raise from their current employer.

Next, we sought to understand: is there a particular demographic group that’s more or less likely to ask for raises compared to other groups?

We know that there are a number of reasons why a worker may not ask for a raise. For example, studies have found evidence that women are more reluctant to negotiate their salary than men. So we wondered whether we would see a difference in the rate at which men and women asked for raises.  

The data proved that this was not the case. After controlling for other important factors including 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.

Implicit Bias Affects Salary Increase Decisions

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Given the large number of people we surveyed (over 160,000 workers), this finding indicates that there is a level of bias — whether conscious or not — that is seeping into 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.

Implicit or unconscious biases are the automatic, mental shortcuts we use to process information and make decisions quickly. We all have them. But if left unchecked, they can harm us at the organizational level. 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?

1. Re-assess Your Performance Management Practices

A good performance management system should motivate employees to improve performance and appropriately reward employees based on the results they produce.

When the rules of a pay-for-performance system are clear and applied fairly, workers tend to feel good about their compensation and work. But when workers feel like the rules aren’t fair, or that there’s corruption in the system, they will experience a fight or flight response. Poorly handled performance evaluations can easily become a departure trigger for workers. If your managers cannot assess their direct reports’ performance accurately, or if HR is collecting bad data from managers, you can bet that your performance management process is causing workers grief.  

Make sure that your managers use objective, standardized criteria to evaluate the performance of their direct reports. Instead of asking managers to define abstract terms and apply them to the employee through the lens of their biases, focus on questions that deal directly with the manager’s 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 your managers to meet with their reports frequently to provide employees with timely and actionable feedback. Frequent, positive interactions between managers and employees will let employees gain the trust and confidence they need to have honest conversations about both performance and compensation.

Furthermore, getting a 360 degree view of the employee’s performance by seeking input from multiple perspectives can help ensure that promotion decisions aren’t skewed by the opinion of a single manager.

2. Train Everyone to Call Out Biases When They See It

A few well-known companies including Google and Starbucks are now several years into their unbiasing journey. Google has recently launched a new site called re:Work featuring 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. Raise awareness about unconscious bias. Train all employees.  
  2. Hold everyone accountable: Create a culture where employees hold each other accountable when they see instances of biases.
  3. Gather data and measure decisions.
  4. Evaluate subtle messages that may impact whether certain types of people feel included or excluded.  
  5. Use consistent structure and clear criteria when making decisions (like evaluating employee performance).

You can visit their website re:Work to get more details and specific tools to implement an unbiasing program in your organization.  

Tell us what you think

What practices does your organization deploy to ensure a fair and consistent performance management process? Share your experience with us below.

Be sure to check out the rest of the “Raise Anatomy” report as well. Up next, we will show you how being denied a raise really impact workers’ morale and the outlook they have on their organization.

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