More transparency and accountability needed to overcome biases
Merit-based rewards and other common performance management practices can actually increase bias and reduce equity in the workplace, according to new research.
The study, Gender, Race, and Meritocracy in Organizational Careers, found women and minorities in the same job and work unit, with the same supervisor, received lower pay increases than white males, even when they were given the same performance evaluation scores.
The research by Emilio Castilla, a professor at MIT's Sloan School of Management in Cambridge, Mass., found that even when employers successfully find fair and unbiased ways of measuring employee merit during the performance-evaluation stage, they can still introduce bias in the way performance evaluations are used to determine employee compensation during the performance-reward stage.
This "performance-reward bias" can be introduced at two points in the appraisal process, said Castilla. First, it can occur when the head of a unit recommends to HR a specific salary increase for an employee using the performance evaluations received from the evaluating managers. Second, bias can also occur when HR makes the decision to approve or reject a given salary increase recommendation.
Such bias can be overcome by increasing accountability and transparency in the organizational process and routines that connect performance evaluations and wage increase decisions, said Castilla.
"We know from the social-psychological literature that accountability motivates decision makers to make fair decisions, which can help reduce judgmental biases," he said. However, timing of accountability is crucial because it appears to be more effective in preventing biases than in reversing them, he added.
The study, Gender, Race, and Meritocracy in Organizational Careers, found women and minorities in the same job and work unit, with the same supervisor, received lower pay increases than white males, even when they were given the same performance evaluation scores.
The research by Emilio Castilla, a professor at MIT's Sloan School of Management in Cambridge, Mass., found that even when employers successfully find fair and unbiased ways of measuring employee merit during the performance-evaluation stage, they can still introduce bias in the way performance evaluations are used to determine employee compensation during the performance-reward stage.
This "performance-reward bias" can be introduced at two points in the appraisal process, said Castilla. First, it can occur when the head of a unit recommends to HR a specific salary increase for an employee using the performance evaluations received from the evaluating managers. Second, bias can also occur when HR makes the decision to approve or reject a given salary increase recommendation.
Such bias can be overcome by increasing accountability and transparency in the organizational process and routines that connect performance evaluations and wage increase decisions, said Castilla.
"We know from the social-psychological literature that accountability motivates decision makers to make fair decisions, which can help reduce judgmental biases," he said. However, timing of accountability is crucial because it appears to be more effective in preventing biases than in reversing them, he added.
