Salary & Benefits

How to Mitigate Perceptions of Compensation Bias

In a previous post, we discussed that 31% of U.S. employees—in a recent Beqom survey—feel they are not being paid fairly based on age or race, while 48% believe women are underpaid relative to men.

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We also noted that these results don’t show actual payment bias but, rather, reflect employee perception of bias. And such perceptions, even if untrue, could cause employees to leave to find work at another organization. So, how can you show your employees they are being compensated fairly? Here are some suggestions.

Do the Analysis

The results of the Beqom survey may not reflect the feelings within your own company. It may be the case that your employees don’t feel at all like there is bias inherent in their compensation.

Whether or not you decide you want to conduct such a survey of your own employees—there’s always a risk that simply asking the question could trigger such beliefs—you can go through the exercise of actually determining whether there are any such disparities.

Your HR department should have the information available to determine whether there are any age, race, or gender disparities. If there are, these should be addressed before trying to assure employees they don’t exist.

Equal Pay Policies

Legally, companies can’t discriminate based on age, race, or gender, so incorporating a statement in your company policies that says you don’t discriminate is an easy, and important, step. Again, though, such statements are likely to do little to assure employees that disparities don’t exist if the perception proliferates—however inaccurate it may be.

Established Salary Ranges

Many companies have established salary ranges for given job titles or seniority levels. These typically include a minimum and maximum pay within the range for those roles and may also include sub-ranges or thresholds based on other performance metrics.

It may be important to maintain some flexibility for individual circumstances, but an objective compensation formula applicable to everyone—if properly and consistently followed—is a good defense against claims of bias.

Pay Transparency

While this is certainly not for every organization, some companies have actually experimented with varying degrees of pay transparency, meaning that employees within the organization can see what their peers or even supervisors and others are earning. Obviously, there are potential downsides to this practice, and it may not work in every setting, but it is an important consideration to contemplate as a key way to assuage concerns over inequities.

Of course, regardless of how fair and equitable your compensation policies are, there is always the potential for some employees to feel unjustly treated. This can negatively impact their performance as well as their long-term future with the organization. Being able to demonstrate fair policies is extremely important in avoiding such a situation.