Best Practices

President Satish Tripathi and faculty at the Inclusive Excellence Summit.

Interested in eliminating the racial and gender pay gap in your organization? Here are four important steps:

  1. Audit existing employee pay. In your analysis, look not only at whether racial/ethnic group and gender predict pay (what are known as “main effects”),  but also whether different racial/ethnic groups or women obtain differential “returns” to, for example, level of education, years in the organization, or family status (“interaction effects”). If your pay audit includes the variables of “marital status” and “school-age children” without also examining the effects of each of these variables for each gender and race/ethnicity combination, you may miss out on an important form of bias affecting pay for subgroups of your employees. Similarly, if organizational tenure or educational attainment is valued by your organization, employees who have those characteristics (e.g., more education) should benefit equally; there should not be “returns” to education for White employees which exceed the returns received by identically educated minority employees. And of course, employee compensation should not be affected at all based on irrelevant criteria such as marital and/or family status.
  2. Ensure that no one involved in the hiring process asks for salary history information. Obtaining salary history information disadvantages women, on average, because women (of all races) tend to earn less than White men. Yet, if anyone involved in hiring asks about pay, that irrelevant information is likely to be used in crafting your organization’s offer. Train everyone to understand: It is not relevant to the candidate’s value to your organization and hence, should not be broached.
  3. Do a rigorous analysis of what the job is worth, being wary of using incumbent gender and race/ethnicity as a “guide” and use that value assessment to craft offers, in conjunction with predetermined value of particular training, skill, experience, to any candidate for hire.
  4. Offering a thoughtfully considered, uniform salary to those who occupy the same job has many benefits. Oftentimes, organizations create racial/ethnic and gender salary gaps based on a practice of allowing salaries for the same job to vary quite widely based on candidate negotiation. The problem with that practice is that salary negotiations do not occur on a level playing field. White men have a higher propensity to negotiate, in contrast to women of all race/ethnicities, in part because men are uniquely able to aggressively pursue higher pay without social penalty and get the benefit of making high “asks.” However, the same commonly-prescribed salary negotiation strategies that work for men (e.g., leveraging other offers) are not as effective for women and in fact, can produce unique costs. Moreover, any job candidate who has a friend/acquaintance within a hiring firm is far more likely to learn what is negotiable and how to negotiate for those resources/benefits than a job candidate without such personal ties. Hence, if your organization’s current employees are predominantly White and male, female and minority job candidates are less likely to have social ties to these current employees and therefore, are likely to lack access to critical information which would enable them to negotiate a higher salary or better overall offer. In this case, those female and minority employees, if they accept a salary offer which is subject to a high degree of negotiation, will likely be earning less than a White male employee with whom they work, side-by-side. Research suggests that, unless there are observable performance differences between coworkers or recognized differences in the value of particular skills and experience that some coworkers possess, providing very similar salaries to coworkers doing the same work “pays off” in terms of collaboration, social harmony, and perceived fairness.  It can also bolster retention in that employees who feel fairly treated by their employer—including those who feel fairly paid—are less likely to exit.