In public discourse, the worlds of gender equality and human capital are treated quite separately. The recent report by the Equality & Human Rights Commission in the UK (September 2009), indicating wide discrepancies in pay between men and women in financial services, produced predictable reactions1. Campaigners called for compulsory pay audits and more transparency, while employers’ organisations responded defensively. British banks will have been feeling at least a little relieved that their current public representative is a woman – Angela Knight of the British Bankers Association.
Impacts and outcomes
Human capital management, with its tools of statistical analysis and performance measurement, seems like a technical specialism, quite separate from the heavily politicised world of gender equality campaigns. Yet there is an obvious common point: the notion that people should be paid for their contribution, rather than out of prejudice or favour.
The Commission’s report, published in September, cast serious doubt on whether sober meritocracy is the guiding beacon. It revealed that nearly all women taking up new jobs in financial services started on lower average salaries than men, and that women earned an average of £2,875 in annual performance related pay, compared to an average of £14,554 for men – a gender pay gap of 80%.
Can the problem be tackled? Undoubtedly, but it will take more than pay audits and more litigation. It is likely to require a shift of mindset – and not only by employers.
Psychological and cultural factors determining pay levels
The reasons that women are systematically paid less are probably more complex than straightforward discrimination by a cabal of powerful men, though that is probably a factor in many institutions. There are likely to be additional, deep-rooted psychological and cultural factors, which can be illustrated by considering similar phenomena within genders, as well as between them. You do get paid more simply by being a man. In turn, men get paid more if they are tall, good-looking, have a full head of hair and a deep voice. Barack Obama is from a minority background, but can otherwise tick some useful boxes on the ‘how to get paid well’ checklist.
Some employers have begun to work with specialist coaches to assist both the organisation and talented female managers, to assist their promotion. What this work is starting to show is fascinating, and shows the extent of unconscious factors. For example, men are more likely than women to apply for a job for which they do not have all the listed requirements, feeling more confident that they can make that stretch. Seemingly tiny matters, such as intonation of voice in a job interview, can make a female candidate appear less decisive than a man to an un-coached ear, even though more objective tests would indicate she is not. These findings are starting to shed light on a whole range of subtle cultural matters that collectively shape this dynamic. Given that they are rooted in cultural bias, rather than performance, they are correctable through rational analysis.
Pay for what you get
The idea behind human capital management is to introduce more objective measures for the contributions of teams and individuals within organisations; and to identify the specific investments – recruitment methods, training techniques, and so on – that are most likely to produce the behaviour and performance that organisations require. By definition, this is a race, colour and gender-blind process. Such meritocracy is the norm in music and sport, which is why women and people of colour have succeeded more in those sectors.
Collective bargaining
Why, then, do campaigners for greater equality not interest themselves in the science of human capital management? The answer probably lies in their roots in the trade union movement, with its emphasis upon rights, rather than workplace contributions. Trade unions still instinctively offer support to members on the basis of the maximum claims they can secure through legal channels, even if the union representatives feel deep down that the person, say, on long-term sick leave probably could do at least some work.
The trade union approach of ‘let’s get all we can for our members’, treats the shareholder – or the taxpayer in the public sector – as an opponent with deep pockets. This is a different philosophy from the concept of making a contribution, and respecting the rights of other stakeholders, which would form part of a meritocratic approach.
For the problem with meritocracy is that those who don’t merit promotion or job security may not get it. This is probably something that the unions and women’s rights campaigners would have to accept as a quid pro quo for greater equality. To take another dimension of inequality – between the boardroom and the shop floor – there is little doubt that full human capital accountability would have a narrowing effect. The effect might be spectacular in organisations with call centres, where the best customer service people are likely to be far more valuable to the company than their managers would acknowledge.
If unions in, say, banking and insurance, stopped shielding poor performers from proper accountability, and started promoting and supporting measures to identify the best customer-service units, with associated gain-sharing and profit-sharing approaches; and this were part of a cultural transformation that did not tolerate poor performance at managerial level either, the results could be transformational.
Such reform would almost certainly narrow the gap between boardroom pay and that of other employees within the business.
A seismic shift?
The latest findings on inequality in many companies indicate that significant change is required to move to ways of employment and working that are fairer and more effective. Many employers would have to undergo a seismic shift in attitudes and practice. But the cultural change required for trade unions and equality campaigners may be even greater.
In public discourse, the worlds of gender equality and human capital are treated quite separately. The recent report by the Equality & Human Rights Commission in the UK (September 2009), indicating wide discrepancies in pay between men and women in financial services, produced predictable reactions1. Campaigners called for compulsory pay audits and more transparency, while employers’ organisations responded defensively. British banks will have been feeling at least a little relieved that their current public representative is a woman – Angela Knight of the British Bankers Association.
Impacts and outcomes
Human capital management, with its tools of statistical analysis and performance measurement, seems like a technical specialism, quite separate from the heavily politicised world of gender equality campaigns. Yet there is an obvious common point: the notion that people should be paid for their contribution, rather than out of prejudice or favour.
The Commission’s report, published in September, cast serious doubt on whether sober meritocracy is the guiding beacon. It revealed that nearly all women taking up new jobs in financial services started on lower average salaries than men, and that women earned an average of £2,875 in annual performance related pay, compared to an average of £14,554 for men – a gender pay gap of 80%.
Can the problem be tackled? Undoubtedly, but it will take more than pay audits and more litigation. It is likely to require a shift of mindset – and not only by employers.
Psychological and cultural factors determining pay levels
The reasons that women are systematically paid less are probably more complex than straightforward discrimination by a cabal of powerful men, though that is probably a factor in many institutions. There are likely to be additional, deep-rooted psychological and cultural factors, which can be illustrated by considering similar phenomena within genders, as well as between them. You do get paid more simply by being a man. In turn, men get paid more if they are tall, good-looking, have a full head of hair and a deep voice. Barack Obama is from a minority background, but can otherwise tick some useful boxes on the ‘how to get paid well’ checklist.
Some employers have begun to work with specialist coaches to assist both the organisation and talented female managers, to assist their promotion. What this work is starting to show is fascinating, and shows the extent of unconscious factors. For example, men are more likely than women to apply for a job for which they do not have all the listed requirements, feeling more confident that they can make that stretch. Seemingly tiny matters, such as intonation of voice in a job interview, can make a female candidate appear less decisive than a man to an un-coached ear, even though more objective tests would indicate she is not. These findings are starting to shed light on a whole range of subtle cultural matters that collectively shape this dynamic. Given that they are rooted in cultural bias, rather than performance, they are correctable through rational analysis.
Pay for what you get
The idea behind human capital management is to introduce more objective measures for the contributions of teams and individuals within organisations; and to identify the specific investments – recruitment methods, training techniques, and so on – that are most likely to produce the behaviour and performance that organisations require. By definition, this is a race, colour and gender-blind process. Such meritocracy is the norm in music and sport, which is why women and people of colour have succeeded more in those sectors.
Collective bargaining
Why, then, do campaigners for greater equality not interest themselves in the science of human capital management? The answer probably lies in their roots in the trade union movement, with its emphasis upon rights, rather than workplace contributions. Trade unions still instinctively offer support to members on the basis of the maximum claims they can secure through legal channels, even if the union representatives feel deep down that the person, say, on long-term sick leave probably could do at least some work.
The trade union approach of ‘let’s get all we can for our members’, treats the shareholder – or the taxpayer in the public sector – as an opponent with deep pockets. This is a different philosophy from the concept of making a contribution, and respecting the rights of other stakeholders, which would form part of a meritocratic approach.
For the problem with meritocracy is that those who don’t merit promotion or job security may not get it. This is probably something that the unions and women’s rights campaigners would have to accept as a quid pro quo for greater equality. To take another dimension of inequality – between the boardroom and the shop floor – there is little doubt that full human capital accountability would have a narrowing effect. The effect might be spectacular in organisations with call centres, where the best customer service people are likely to be far more valuable to the company than their managers would acknowledge.
If unions in, say, banking and insurance, stopped shielding poor performers from proper accountability, and started promoting and supporting measures to identify the best customer-service units, with associated gain-sharing and profit-sharing approaches; and this were part of a cultural transformation that did not tolerate poor performance at managerial level either, the results could be transformational.
Such reform would almost certainly narrow the gap between boardroom pay and that of other employees within the business.
A seismic shift?
The latest findings on inequality in many companies indicate that significant change is required to move to ways of employment and working that are fairer and more effective. Many employers would have to undergo a seismic shift in attitudes and practice. But the cultural change required for trade unions and equality campaigners may be even greater.