Study: White Guys Get Better Bonuses

Last Updated Oct 11, 2008 9:14 AM EDT

  • White Guys Get Better Bonuses?The Find: Women and minorities receive less merit-based compensation than white men, despite equal scores on performance evaluations, research from MIT's Sloan School of Management claims.
  • The Source: Research by Professor Emilio J. Castilla of MIT's Sloan School of Management entitled "Gender, Race, and Meritocracy in Organizational Careers," published in the most recent issue of the American Journal of Sociology.
The Takeaway: Nothing could sound more fair than merit-based compensation, but one MIT professor claims that by linking rewards to performance companies actually "increase bias and reduce equity in the workplace." Castilla's study examined "the relationship between performance evaluations and wage growth using personnel data from a large service organization in the U.S., which used a two-step process that separates performance evaluations from pay decisions." While the unnamed organization instituted its pay policy to reward merit and combat bias, Castilla found the program in fact had the opposite of its intended effect. The bottom line:
Women and minorities in the same job and work unit, with the same supervisor, and who had the same human capital received lower pay increases than white males, even when they were given the same performance evaluation scores.
The results are discouraging and even more so when one takes into account how widespread merit pay programs are. "Already in 2005, it was estimated that close to 70 percent of organizations offered variable bonuses based on employee performance," Castilla says. "Today even more companies rely on performance-related rewards."

Rather than simply criticizing the current state of affairs, Castilla has some recommendations to increase the fairness of merit-based pay. Specifically, more accountability and more transparency. He comments: "We know from the social-psychological literature that accountability motivates decision makers to make fair decisions, which can help reduce judgmental biases." Also, "the timing of accountability is crucial, because accountability appears to be much more effective in preventing rather than in reversing biases."

For those interested in the deep dive, the full paper is available here.

The Question: Does your organization need to take steps to limit bias in merit-based pay, or to put it more bluntly do white guys get paid more in bonuses at your company?

(Image of couple on sofa by gcoldironjr2003, CC 2.0)

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    Jessica lives in London where she works as a freelance writer with interests in green business and tech, management, and marketing.