Business

Ensuring Pay Equity for People of Color

It sometimes gets lost in all the talk about pay parity, particularly as it relates to gender, but pay equity among people of color also needs attention, lest organizations risk reputations, and lawsuits, among other problems.

Recent protests about police brutality and structural racism moved many organizations to commit to work toward improved racial parity and fairness by examining their pay approaches and other policies and practices. Results remain to be seen.

Of course, a single employer can’t solve what is an inveterate societal problem, but it can help – while avoiding potentially damaging organizational problems. Read on for more about ensuring pay equity for people of color.

The Issue

While minorities are projected to become the majority by 2050, white men generally populate the upper end of the pay scale. Further, for each dollar paid to white males, black men make 88 cents and black women get 76 cents. And compared to their white counterparts, even African Americans with an advanced degree experience substantial compensation chasms. 

Over time, such disparities can come to hundreds of thousands of dollars. The good news is there are steps you can take to do well and do good, as the saying goes.

What Causes the Problem?

It’s difficult to pinpoint, but experts have fingered subconscious bias as a top cause of pay disparities. It’s the type of bias and stereotyping people often engage in whenever they encounter people they don’t know. People of color can sense this prejudice, especially when witnessing the good feelings produced by more-familiar people.

Pay inequity is also caused by a lack of opportunity, the difficulty some people of color have in learning whether they’re paid equitably, and the reluctance of some African Americans to charge what their services are worth.

What to Do?

While closing the gap in employee compensation increases loyalty and job satisfaction, it also is important to recruitment and retention.

Here’s what you should do:

  • Get leaders to champion your cause. To get top leaders to buy in, explain pointedly how pay inequity affects the culture and business. Offer a solution and ROI.
  • Perform a pay audit. You’ll need to scour your ranks and conduct an analysis to help you grasp the breadth of the pay disparity and how it falls along race as well as gender, promotions, performance, and attrition.
  • Be efficient. Devote yourself to several strategies simultaneously to fix the issues and earmark around 2 percent of your budget so that you can fund pay hikes at the audit’s conclusion.
  • Cease inquiring about pay history. You’re promulgating race bias if you ask a candidate about their pay history, because they may have been underpaid to begin with. After all, there are many possible reasons for salary histories, including subpar negotiation skills, career path changes, and, yes, pay inequity. What you should do instead is home in on the interviewee’s skills and experience, and how those line up against those in comparable organizational roles.
  • Be transparent. In the U.S., a third of organizations say a chief goal of pay parity programs is organizational trust. The reality, though, is that employers typically share results with managers and senior leaders, but not the workforce at large.
  • Have discussions. Have discussions about racial bias as part of your organization’s culture and employee training. Get to the bottom of the issue.
  • Restrict managerial power. Managers frequently are given a lot of discretion in terms of who gets paid what. But the trend is away from such authority. You can also have your managers be trained in unconscious bias.

Ensuring pay equity for people of color is well worth the effort, on a number of fronts. Don’t get caught on your heels. If you need help, we recommend the leading global HR consultant Mercer.

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