- Room for improvement. New research from the American Opportunity Index finds that only 44% of companies in the top 100 for promotion were in the top 100 for parity.
- What are the risks? Organizations that do not address parity in pay and promotions can leave them vulnerable to claims of both illegal and unfair practices.
- Avoid bias. Promotions should be split along the same demographic lines as the underlying workforce.
Companies that do well at moving employees up the ladder do not necessarily move everyone up equally. That’s according to a report from the American Opportunity Index, which analyzes the trajectories of 4.72 million employees across 396 of America’s largest companies.
The American Opportunity research showed that only 44% of companies in the top 100 for promotion were in the top 100 for parity, which could indicate a need for improved promotional processes.
“Achieving equity in advancement requires firms to develop a purposeful approach to the career development of women, as well as Black and Hispanic workers,” the researchers wrote.
Promotion Parity Pitfalls
When it comes to ensuring employees are promoted and paid equitably, it’s no longer good enough if it is only treated as a one-time action, said Lori Wisper, WTW’s managing director of work and rewards.
“Organizations must not only adjust the compensation of those who are victims of pay discrimination but also dig into the root causes of the issues to completely solve the problem,” she wrote in a recent article on the topic of career equity.
If organizations do not address parity in pay and promotions, she said, it can leave them vulnerable to claims of both illegal and unfair practices.
“The risk [of not ensuring promotional equity] is inequitable pay,” she said. “Over time, the compounding effect of being promoted or not being prompted can cause great inequities in how you pay people.”
For example, the most recent research from the Lean In Foundation and McKinsey & Co., Wisper said, uncovered that while great strides have been made in promoting members of protected classes to the top of the org chart, other segments of the talent pipeline are being left behind.
“Organizations take pride in promoting women to either C-suite or vice-president roles,” she said. “But those positions, as we know, are not available to the majority of women. Women at the middle and bottom of the organization are still experiencing barriers to career progression.”
Sometimes the barriers are things that are widely considered to be “good” HR and compensation practices but that often have unintended consequences.
For example, one client Wisper worked with wanted to get more women and people of color into entry-level supervisor roles — an entry point to the company’s management positions — but the language in the job description was “turning candidates off.”
“The job description said candidates must have two to three years of proven leadership capability,” she said. “But if you’ve never been a leader before, then how are you going to get leadership experience?”
When Good Intentions Turn ‘Weird’
Wisper also cited a pay equity study for a client in which they not only looked at compensation amounts but also their pay practices, which uncovered a startling stumbling block to parity.
“We looked at how they administered their salary increases and how they do promotions,” she said, “and we found that this is where even good intentions can turn weird.”
The company was in the midst of a successful campaign to get more women into leadership positions, Wisper said, but they also had a “fairly common” administration rule in place that mandated it can only give a promotion of up to 15% of pay.
“What they were doing was promoting women and following that rule,” she said.
So, when they looked at the client’s employees who were falling below the minimum of their salary range, 80% of them were women because they couldn’t give them enough of an increase to get them over the minimum of the range.
“The company had now created a new pay-equity issue,” she said. “They may not consciously be causing barriers, but in the end they still are.”
Bias on Both Sides
While it can be “challenging” at times to standardize and analyze how a promotion is really defined, improvements in most organizations’ promotion processes are nonetheless needed, said Paul Reiman, founder, managing partner and chief analyst at Novo Insights.
“Most workers want to get ahead — people of all genders, ethnicities and ages value advancement,” he said, “and being able to see themselves rising at their employer creates a magnetism that’s worth investing in.”
The primary challenge with promotion processes, Reiman said, is that they are often done by humans with both conscious and unconscious biases.
There may also be biases from the worker side as well, he added, in that certain demographics may be “correlated with a lower likelihood of expressing a desire for advancement.”
“You’re not looking for 50% of promotions being male and 50% being female,” he said. “You’d want to see the promotions split the same as the underlying workforce. If 70% of your frontline team is female, you’d expect 70% of promotions to be female.”
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