If you are a woman or a person of color, the chances are high that you are paid less and are less likely to be promoted than your male or white counterparts. 

 

This isn’t exactly news. 

 

When it comes to race and gender there are persistent, systemic disparities in both pay and chances of promotion. When unexplained, such disparities pose significant risks to employers, so organizations usually work to eradicate them.

 

But what about when disparities are explained — and just accepted as part of the status quo?

 

Often it is the disparities sitting in plain sight that are the biggest impediment to equity in the workplace. In fact, explained differences in promotion and pay create some of the most pervasive, systemic, and significant barriers for people of color and women.

 

What is an explained disparity? Typically, they are differences in individual or situational factors related to experience, education, job family, role, career level, location, or performance that influence outcomes like pay and promotion, and are seen as “legitimate” from a business and legal standpoint.  

Our recently released white paper, An Employer’s Guide to Achieving and Sustaining Pay and Career Equity at Work, outlines known explained disparities affecting pay and chances of promotion. These include:

 

1. Performance ratings. Women are more likely to receive high ratings, but people of color, especially Black employees, face significant negative disparities.  Since performance ratings drive virtually all other outcomes — including promotion, pay increases, bonuses, employee tenure, and even future ratings — unexplained ratings disparities can have a devastating effect on the ability of Black employees to stay and thrive at work.

 

2. Being in pivotal “accelerator roles.” Accelerator roles, like supervisor or customer-facing positions, are more likely to fast-track opportunities for advancement and higher pay, as well as increase retention likelihood. Women and people of color are less likely to be in these roles than their male and white colleagues respectively.

 

3. “Flexible working.” Part-time status, remote working, and family leaves tend to undermine career advancement and pay and often retention as well — though organizations increasingly view them as important ways to secure talent.  Women are significantly more likely to be part-timers and take leaves — with negative consequences for their careers and pay.

 

4. Internal mobility. Frequent lateral moves across business units or geographies is often a key part of leadership development programs. However, women tend to be less mobile at certain points in their careers. They are therefore systemically disadvantaged in career development and advancement in many organizations.

 

5. Reporting to higher-level or high-performing supervisors. Reporting to a manager with more “clout” is generally beneficial for advancement and associated with receiving higher ratings. Women and people of color are often less likely to report to the “right” managers as compared to their male and white colleagues respectively.  

The extent and pervasiveness of ratings and promotion disparities can be seen in modeling results from each of 20 large organizations for whom we undertook such statistical analyses (Table 1)*:  

 

Table 1. Promotion and ratings probabilities: Percent of companies in each category, by demographic group**

Type of investor attendees chart

 

*Results from multi-variate statistical models of the probability of being promoted, after accounting for multiple other individual, organizational and location factors that also influence those outcomes

** Of 20 companies reviewed, non-whites were broken out in the modeling as a distinct category in six and in two of the companies, specific categories of non-whites were not identified, reducing the population of companies for which specific race/ethnicity effects could be estimated to 18.

***Rows may not add up to 100% due to rounding.

Here are some of our observations:

 

• Women often receive high ratings, but not promotions. In 16 of the 20 organizations examined, women were more likely to receive high ratings. Nonetheless, they experience unexplained negative disparities in promotion probability. In 11 of the 20 companies, women are less likely to be promoted, all else being equal; the disparity in promotion probability is commonly greater than 10%, often in the 20% to 30% range. In only three companies is their promotion likelihood greater than that of comparable men. Part of the explanation may have to do with differences in the nature and quality of roles women perform in organizations. In Mercer’s Let’s Get Real About Equality study, 79% of organizations reported that women have access to the roles that are more likely to lead to advancement into leadership. However, only 52% of organizations reported women equally represented in people-manager roles. And less than half (44%) have equal representation of women in P&L roles.

 

• Black employees are less likely to be highly rated and promoted. Black employees are almost universally less likely to receive high ratings than comparable white employees — with differentials of 20%, 40%, or even 50% or more, and in 12 companies, Black or nonwhites employees are less likely to be promoted. And yet, Mercer's Stepping Up for Equity study found that only 29% of responding companies actually "routinely review" ratings by race or ethnicity. This is surely a lost opportunity which, if corrected, could accelerate progress towards achieving real pay and career equity for Black and employees and people of color, generally.

 

• People of color are almost never advantaged in either ratings or promotion. In only two of the companies, a tech firm and food services firm, is any non-white racial group more likely to be highly rated, and in only the former are Black employees in the advantaged group. The situation is even more stark with respect to promotion. In only two of the companies, both tech firms, is any non-white group more likely to be promoted. Blacks are never favored when it comes to promotion. It seems the best that people of color can do in the battle against disparity is to achieve "statistical insignificance" and even that is relatively rare.

 

These negative patterns cascade through the system, affecting all other outcomes and ultimately creating an intractable blockade to the advancement of people of color, especially Black employees. Mercer’s Stepping Up for Equity study found that among the 22 US companies that provided workforce data, only 3% of executives and 2% of senior executives were Black compared to 8% of these employers’ total workforces. Given, the extremely low representation of Blacks and, more generally, people of color in senior levels and the observed tendency of many organizations to build their workforce from within, one has to wonder how the current reality can ever be substantially improved without major changes in talent management practices. 

To have a successful diversity, equity and inclusion (DEI) strategy, organizations must be as aware of and responsive to explained disparities as they are to unexplained ones. We recommend that organizations consider three important steps to addressing this:

 

1. Leadership commitment to DEI: Leaders must commit to equity not as the outcome of a numbers game of quotas and targets but by dealing with root causes, and eliminating systemic barriers to the success of diverse talent.

 

2. A deeper look at the data: Looking at data is key. As we found in our Stepping Up for Equity report, 38% of companies are not even tracking perceptions of fairness of the performance management process. Use data and advanced analytics to model the drivers of success in your organization — such as promotion, performance, retention and pay. The unexplained disparities may be indicative of bias, discrimination, or unfairness in management practices. Uncovering the explained differences can provide a unique roadmap for upending systemic barriers to the progress of women and people of color

 

3. A thorough review of the performance management process: Audit year-end performance reviews, examining the process; the extent, quality and sources of feedback; how goals are established and measured; and the language and tone of supervisor commentary.  Talent and drive matter. But some employees are simply better positioned by their employers to succeed. Unfortunately, too often women, Black employees and people of color are far less likely to be in their ranks. By looking at explained disparities along with unexplained disparities, employers can better position all talented employees in their organizations to succeed.

 

Talent and drive matter. But some employees are simply better positioned by their employers to succeed. Unfortunately, too often women, Black employees and people of color are far less likely to be in their ranks. By looking at explained disparities along with unexplained disparities, employers can better position all talented employees in their organizations to succeed.

 

Haig R. Nalbantian
Haig R. Nalbantian

Senior Partner, Co-Leader of Mercer’s Workforce Sciences Institute

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