Tag Archives: Harvard Business Review

Failing the Fairness Test

We were raised in a generation of sexual prejudice, where it was common to hear that “a woman’s place is in the home”. Business was for men; the home and PTA were for women.

But in the United States today, we have become enlightened. Women now run major corporations and have joined the ranks of self-made millionaires. True to a certain extent, but that’s not the whole truth.

Just beneath the surface of our “modern” society, lie reminders that sexual inequality is still alive.

The Masters, Augusta National & IBM’s CEO

The Masters’ Golf tournament returns to the Augusta National Golf Club this week and with it, a blatant reminder that Augusta National does not admit women as members.

Opened in 1932, Augusta’s most famous golf club has among its members, some of the powerful men from industry and finance, including Bill Gates and Warren Buffett. Women are allowed to play the course if invited by a member but cannot themselves, become members . The club only admitted its first black member in 1990. (Tiger Woods first won The Masters at Augusta just 7 years later.)

Augusta National is a private, obviously conservative club that we hear about just once a year, when The Masters rolls into town. Ms. Virginia “Ginni” Rometty is the new chief executive officer of IBM, one of the tournament’s longtime sponsors. The past four IBM CEOs had been granted membership to Augusta National, but Ms. Rometty has not been. Is that really such a big deal?

In my honest opinion, the Augusta National Golf Club is making a statement to the rest of the country (my translation of their actions into words):

Men are the leaders of business and finance with certain rights and privileges, but we are good and generous men. We invite some women to play at our golf club … on occasion.

I could be misinterpreting their actions, but I think Augusta’s actions are a sign that discrimination against women in the workplace not only continues today, but it is openly accepted as a reality. It is saying that men and women are not equal.

Women’s vs. Men’s Merit Compensation

The April 2012 issue of the Harvard Business Review includes an article entitled, “Why His Merit Raise Is Bigger Than Hers“. In it, Stephen Benard, a co-director of the original 2010 research study, describes how merit raise assignments reflect inequalities between male and female worker compensation.

Merit rate pay systems (Meritocracies) are based on the framework that larger annual raises and bonuses should go to superior performers instead of average performing workers. Merit pay system advocates stress that everyone has an equal chance to advance and obtain rewards based on their individual merits and efforts, regardless of their gender, race, or class. According to other researchers, most Americans believe that meritocracy is not only the way the system should work, but it is also the way the system does work.

The research performed by Stephen Benard and his collaborator, Emilio J. Castilla of MIT’s Sloan School instead showed that

… managers in explicit meritocracies may be less likely than others to award pay fairly and more apt to act on their biases instead. One result: They consistently give women smaller amounts. The phenomenon may help account for the persistence of gender-associated pay disparities—and race-associated disparities, for that matter.

This, in itself, might not be much of a surprise as we all are subject to some level of bias or preconception. What was striking was that the 445 test “managers” weren’t rating the performance of the workers in the research tests. They were just assigning the merit amounts based on the reviews that they read. They were doing “supposedly” subjective assignments of compensation.

The research results:

when an organization is explicitly presented as meritocratic, individuals in managerial positions favor a male employee over an equally qualified female employee by awarding him a larger monetary reward.

The larger monetary reward (about 12% more on average) was consistently assigned by both male and female managers. The test managers thought that they were treating men and women the same, but in reality, they were exhibiting a consistent bias toward men.

An Unconscious Bias Against Women

The researchers suggested that because the managers’ corporate organizational structures reinforced the pay-for-performance system as being fundamentally  unbiased, the managers

relax[ed] their vigilance and allow[ed] their biases greater sway. Those biases need not be consciously held: A large body of research shows that widespread stereotypes—for example, the notion that women are less productive than men—often shape behavior unconsciously, even in people who disagree with them.

Similar results have been reported by other researchers in 2006 & 2008. (See the 2010 Benard – Castilla research paper for more information.) To offset this unconscious gender bias, the researchers recommend that managers increase the transparency and accountability of their compensation/merit review processes.

“Just Say No” to Augusta National

In my opinion, the researchers clearly stated that we (male and female managers) are not as unbiased and are not as fair as we thought we were. Is the decision to allow/not allow Ms. Rometty to join the Augusta National Golf Club bigger than the incident itself?

I contend that it is. When one is harmed by discrimination or bias, we are all harmed. Discrimination or bias existing in one area reinforces its existence and expression in another.

It may be a small statement, but I won’t be watching The Masters this year. I just cannot support the (in)actions of the Augusta National Golf Club and their treatment of women. I’m sure that neither the PGA nor its TV sponsors will miss me, but I will feel a little better. I will also feel stronger the next time I am asked to rate a female coworker or direct report.

It’s long past the time when we should have been standing up for what’s right and what’s fair for women in the workplace, but we still need to do it!

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Why His Merit Raise Is Bigger Than Hers, by Stephen Benard, Harvard Business Review – April 2012, http://hbr.org/2012/04/why-his-merit-raise-is-bigger-than-hers/ar/1

The Paradox of Meritocracy in Organizations, by Emilio J. Castilla and Stephen Benard, Published in the Administrative Science Quarterly 2010 55: 543, http://asq.sagepub.com/content/55/4/543

Why Worry about Staff Contentment?

In a healthy job market, there is a natural staff turnover. People leave to seek other opportunities or leave a work situation that they don’t like. New staff members are hired and often bring fresh energy/new ideas into the team. With a bad job market, employees tend to stay in their jobs. They are hesitant to leave because they don’t have another place to go to or are uncertain about a potential employer.

This workforce “stability” may be seen as a positive to an organization … a reduction in business overhead (recruitment & training) … but what about those employees that should have left? What impact do they have on a business?

It is a rare individual who will continue to present a 110% attitude when they are unhappy with their job or their life situation. In the Winter 2011 MIT/Sloan Business Review, Stephanie Pane Haden & Jack Cooke, both of Texas A&M University, noted,

“While turnover associated with low morale may not be as likely during uncertain economic times, productivity and performance issues should command executives’ attention. There is still debate over whether a happy worker is always a productive worker, but researchers and businesspeople alike are likely to agree that low morale will not help boost productivity or improve performance. … Low morale stifles “going-the-extra-mile” behavior … Over time, a decline in organizational citizenship behavior can translate into an unhealthy cultural shift that erodes the business’s overall competitiveness.”

What should an employer do? No one wants to offer poor performers monetary incentives to do the job they were hired to do originally.

Two professors, Gretchen Spreitzer (University of Michigan) and Christine Porath (Georgetown University), writing in the Jan/Feb 2012 Harvard Business Review, (HBR) suggest that employers should look toward the concept of “thriving” to re-energize their workforce. A “thriving” workforce is

“one in which employees are not just satisfied and productive but also engaged in creating the future—the company’s and their own. Thriving employees have a bit of an edge—they are highly energized—but they know how to avoid burnout.

Across industries and job types, we found that people who fit our description of thriving demonstrated 16% better overall performance (as reported by their managers) and 125% less burnout (self-reported) than their peers. They were 32% more committed to the organization and 46% more satisfied with their jobs. They also missed much less work and reported significantly fewer doctor visits, which meant health care savings and less lost time for the company.”

Thriving, as used by these authors, is comprised of two components, vitality and learning. “Vitality” is the “sense of being alive, passionate, and excited. … Companies generate vitality by giving people the sense that what they do on a daily basis makes a difference.” The other component is “Learning”. Learning builds confidence and status. Learning also feeds a cycle of growth potential and more learning.

Individually, these components can be effective motivators short term, but unsupported by passion, learning can lead to burnout and job dissatisfaction. Similarly, passion/vitality, without the opportunity to grow or to make a difference, can quickly disappear.

These two components, vitality and learning, together build employees who deliver results and find ways to grow. The research cited in the HBR article included a cross-industry population of more than 1200 white- and blue-collar workers. It showed that

“people who were high energy and high learning were 21% more effective as leaders than those who were only high energy. The outcomes on one measure in particular — health — were even more extreme. Those who were high energy and low learning were 54% worse when it came to health than those who were high in both.”

How can employers help their teams thrive? The HBR authors suggest:

  • Provide Decision-Making Discretion
  • Sharing Information
  • Minimizing Incivility
  • Offering Performance Feedback

“The four mechanisms that help employees thrive don’t require enormous efforts or investments. What they do require is leaders who are open to empowering employees and who set the tone. As we noted earlier, each mechanism provides a different angle necessary for thriving. You can’t choose one or two from the menu; the mechanisms reinforce one another.”

Thriving is a valuable characteristic for organizations to encourage, but it is also something important to individuals. How can individuals improve their own “thriving” at work?

  • Take a break [from work in your work day]
  • Craft your own work to be more meaningful
  • Look for opportunities to innovate and learn
  • Invest in relationships that energize you
  • Recognize that thriving can spill over outside the office

To learn more about the concept of “thriving”, read the the Spreitzer /Porath article in the January/February issue of the Harvard Business Review or their research paper found in the October 2011 issue of the Journal of Organizational Behavior

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Is Morale Irrelevant?” Stephanie Pane Haden and Jack Cooke, MIT Sloan ReviewDecember 21, 2011

http://sloanreview.mit.edu/the-magazine/2012-winter/53217/is-morale-irrelevant/

“Creating Sustainable Performance” by Gretchen Spreitzer and Christine Porath, Harvard Business Review – Jan/Feb 2012

http://hbr.org/2012/01/creating-sustainable-performance/ar/pr

Thriving at Work: Toward its Measurement, Construct Validation, and Theoretical Refinement” Christine L. Porath, & Gretchen M. Spreitzer, Cristina B. Gibson, & Flannery G. Garnett. (2011) . Journal of Organizational Behavior. In press, 10/2011

http://onlinelibrary.wiley.com/doi/10.1002/job.756/abstract