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Men, women, and performance-based pay: The Business Beyond Bias origin story

 

By Gabriela Burlacu, PH. D.

Organizational psychology has brought us many scientific findings that, while interesting, align with what we would expect in terms of factors that drive workforce engagement and productivity. For instance, research has shown that high performance work practices, like having an established new hire onboarding strategy or a performance-based employee rewards program, lead to better business outcomes. And that having a good relationship with one’s manager leads to better engagement and performance. Really interesting and encouraging findings for the field of HRM… but ultimately not that surprising.

And then, once in a while, you come across a research finding so monumental, so shocking in its potential impact, so consequential to how people can and should be managed, that you develop an overwhelming urge to share it with the world. Or maybe, you just start a multi-year, cross-company project designed to address the issues it raises.

For me this study was a feature written by Aparna Joshi (Penn State Smeal College of Business) and colleagues in a 2015 issue of the Academy of Management Journal. This study investigated the gender bias in performance ratings and pay and promotion decisions, determined by combining data from 30 years of studies on these topics. Around this time, performance management was in the media spotlight for failing to create engaged and high performing employees due to its annual, disconnected nature, and companies like Adobe, Accenture, and Microsoft were reporting that they were embracing the tides of change and getting rid of performance ratings for good. These companies were veering toward more continuous, manager-driven approaches to performance management, which CEB has since shown can be very difficult to execute effectively. So when I sat down to read Joshi’s article, I was expecting an interesting read on the state of performance management from a researcher’s perspective. What I got was quite different.

A major finding of Joshi’s analysis was that performance ratings are indeed slightly biased, but this was very slight—men tended to receive minimally higher ratings than women. But when it came to decisions around who should receive bonuses, pay increases, and other forms of recognition, it wasn’t even close. Men were fourteen times more likely to receive these awards across the board, and when the analysis was restricted to more male-dominated organizations and industries and to highly prestigious occupations, this effect was even worse. Essentially these rewards that were supposed to be tied to performance and rewarding the right employee behaviors weren’t acting as intended. They were rewarding gender.

In a world where companies are struggling to close skill gaps, outperform the competition, and develop long-lasting workforce diversity and inclusion, this is a massive problem. In a world where companies are abandoning performance ratings and adopting approaches that allow managers full discretion over how to reward employees, this is a catastrophe. This research demonstrates that gender bias is not something that just happens on an individual basis to some employees. The gender pay gap is not some imagined statistic designed to further the feminist agenda. Gender bias in talent decisions is very, very real, and has widespread impact that can be seen across companies, industries, studies, and events. So now we know it’s real. But what can we do about it?

This was the study that ultimately led to the creation of the SAP SuccessFactors Business Beyond Bias product initiative, where we are continually seeking to identify ways HCM technology can be used to detect, prevent, and eliminate bias across the full range of HR processes impacting the careers of employees. First, the study highlighted how much biased decisions can influence the experiences of employees. Prior to this study there was plenty in the media about industries that tend to be dominated by one gender or another, the explanation for which was largely rooted in societal gender roles and the areas of study that people focus on in school. But this highlighted the ways females can be disadvantaged or overlooked, even once they’ve gained access into organizations. Second, this provided the catalyst for us to start exploring other underrepresented groups and how they experience the fall-out from various talent decisions that are often influenced by bias.

All in all, this study is incredibly eye-opening and serves as a cautionary tale. Organizations seeking to reduce the structure in their performance management processes may find a new and much more significant problem when it comes to engaging and retaining diverse employees.

If you’d like to learn more about how you can use SAP SuccessFactors solutions to eliminate bias in your talent processes, visit Driving Diversity & Inclusion.

    About the author

    Gabriela (Gabby) Burlacu, Ph. D.

    Solution Management Lead, UX and Mobile - Solution Management Team

    Dr. Gabriela (Gabby) Burlacu leads Solution Management for the User Experience and Mobile applications of SAP SuccessFactors technology. She is an SAP thought leader that has conducted extensive research on effective performance management methods, the increasingly diverse workforce, and the aspects of HCM technology that enable transformational change for organizations.