Sigh, I Don’t Think He Got This One Right
I just read where the President has signed a bill proposing that all companies with more than 100 employees will be required as part of their equal employment opportunity filing to report compensation by gender, ethnicity, and other factors.
My concern is that while this may lead to “transparency” it will not necessarily lead to pay equity.
I am old enough to remember when affirmative action planning actually had teeth to it. The idea was to identify inequities in employment and address them. Not surprisingly white men tended to have much higher representation in the higher level ranks than women or people of color. I will take heat for saying this, but some of it was deliberate some of it was a function of unintended consequences of less than optimal practices.
Promotion to higher level positions in part is a function of experience and training and hiring and selection. Most of us have heard of the “halo effect”, this is our tendency to hire and promote people we are comfortable with, i.e. people like us. Although we have been aware of it for over fifty years I still see it happen frequently. Most organizations quite bluntly do a generally poor job of hiring across the board.
What we found with EEO reporting that in many cases women and minorities weren’t “qualified” for senior roles because they didn’t have the experience necessary to move up. That is where the Affirmative Action part comes in. Every level has “feeder” groups from which the next generation candidates come from. The idea is by changing the composition of the feeder group you can change the candidate pool. Although this playing the long game several organizations I worked with embraced it recognizing that the demographics of the workforce was changing and it was not just a legal requirement it is good business. These days we refer to it as encouraging diversity. While we are certainly in no position to declare victory I think that organizations who sincerely embrace this process see much better representation of the workforce.
I also call it good business. Succession planning at every level is a fundamental component of good business planning. Scrambling to find talent when someone dies, retires or quits is a sucker bet. High performing organizations don’t operate that way.
So now let’s talk about how this applies to pay.
Properly executed good compensation planning takes into account the qualifications, experience, and performance of employees including the context of market conditions. Compensation planning is art as much as science.
Looking at job titles and compensation by themselves without consideration for factors like experience, qualifications, training and performance leaves out some critical data.
While I recognize that some people might be surprised by this I consider myself almost a feminist and a huge advocate of equal opportunity. When experience, qualifications, and performance are equal there should be no disparity in compensation.
As I said before however, compensation is not an exact science. I have shared the lament of many an executive who paid a premium for an outside superstar based on market conditions and performance somewhere else who feels disappointed with what they got. Just look at the musical chairs being played at the C level in organizations every day.
I a perfect world we pay for performance and I am going to go out on a limb and say that government at every level rarely provides a great example of that concept.
Mandating equity rarely works.
I am probably one of the few people I know who doesn’t think Obamacare is an abject failure. It is flawed as I pointed out in my eBook Plan B- An Alternative to Obamacare, (I will even be smug and point out I published it before it became law.
Access to care is appropriate and necessary for the long term. The problem is that the model is strictly compliance based and doesn’t address some of the underlying issues like the lack of personal responsibility and education to encourage individuals to participate in managing their own health. It also doesn’t provide navigation through a very complex health care delivery system that is byzantine to the average person.
Compensation inequity purely based on gender, national origin, or other factors unrelated to performance and market isn’t just wrong it’s dumb!
Less than 30% of the American workforce consider themselves to be engaged or highly engaged at work. As many as 17% are actively disengaged.
We don’t just have a pay equity issue, our whole approach to managing people is screwed up.
There are ways to fix it. Comprehensive and systemic approaches that look at whole people and integrated solutions, not patches.
So Mr. President while I applaud and support your intent this one isn’t a solution I can get behind…
As always I would be very interested in hearing opposing viewpoints…



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