Americans more than other nationalities, embrace the idea of meritocracy – that rewards are distributed based on merit, a combination of ability + effort with success, described by University of London’s Michael Young with Sheri Kunovich of Southern Methodist University, and Ohio State’s Kazimierz M. Slomczynski.

Microsoft’s CEO, Satya Nadella, made headlines when asked his advice for women who are uncomfortable asking for a raise at the 2014 Grace Hopper Celebration of Women in Computing.
He told more than 12,000 women: “It’s not really about asking for a raise, but knowing and having faith that the system will give you the right raise … It’s good karma. It will come back.”

Although his response resulted in widespread criticism, he may have been referring to the social penalty women experience when negotiating for salary increases and promotions.

Harvard’s Hannah Riley Bowles with Linda Babcock and Lei Lai of Carnegie Mellon demonstrated this social penalty when they showed volunteers videos of men and women asking for a raise using identical scripts.
Participants agreed to give both genders a pay increase, but evaluated women as “too aggressive” and not someone they would want to work with.
However, men in these salary negotiation situations were seen as “likable.”

The unequal impact of merit-based compensation on minorities was demonstrated in MIT’s Emilio J. Castilla’s analysis of almost 9,000 employees in support roles at a large service-sector company.
The organization espoused commitment to diversity and had implemented a merit-based compensation system intended to reward high-level performance and equitably reward employees.

Despite these egalitarian goals, women, ethnic minorities, and non-U.S.-born employees received smaller increases in compensation compared with white men, despite holding the same jobs, having the same performance score, working in the same units for the same supervisors.

These results illustrated what he called the performance-reward bias – the need for minority groups “to work harder and obtain higher performance scores in order to receive similar salary increases to white men.”

With his Indiana University colleague, Stephen Benard, Castilla uncovered the “paradox of meritocracy” – organizations that espouse meritocratic values awarded a larger monetary reward to male employees compared with equally performing female employees.

Despite their positive intentions and policies, these organizations perpetuated unequal evaluations and rewards across equally performing employee groups.

In fact, people who think they are the most objective exhibited greatest evaluation bias, found Northwestern’s Eric Luis Uhlmann and Geoffrey L. Cohen of University of Colorado.
They attributed this finding to overconfidence in objectivity, leading to lack of self-scrutiny and self-assessment of potential and implicit bias.

This bias was also demonstrated when volunteers provided significantly more positive evaluations of resumes were attributed to whites and men than identical resumes linked to minority-group members and women, reported by Yale’s Corinne A. Moss-Racusin, John F. Dovidio, Victoria L. Brescoll, Mark J. Graham, and Jo Handelsman.

Since egalitarian aspirations and performance management systems do not result in equitable reward distribution, MIT’s Castilla advocated increased transparency and accountability by creating a performance-reward committee to monitor compensation increases and to share information about pay segmented by gender, race, and nationality.
Five years after these changes were introduced in companies Castilla studied, he found that the demographic pay gap had disappeared.

Another way to reduce bias is to increase empathy, found Universität Bern’s Grit Hein, Jan B. Engelmann of Tinbergen Institute, and University of Zurich’s Philippe N. Tobler, with Marius C. Vollberg of University College London, in their study of 40 young men of Swiss or Balkan descent.

Participants and two research confederates received an electric charge on the back of the hand.
Next, one of the two confederates was attributed a typical Balkan name or a Swiss name, and was designated a “decision maker.”

Volunteers were then told they would receive “painful shocks,” but the “decision maker” could prevent this “by giving up money he would otherwise earn.”
Participants received help from the other person 15 times out of 20 trials, and received a shock five times.

Two new confederates, one with a Swiss name and one with a Balkan name, replaced the first two and the participant watched as one of them received the painful electrical pulses.
A brain scan measured the volunteers’s level of empathy for the person receiving the shock.

When the confederate with the Balkan minority name “helped” the participant avoid a shock by “sacrificing” a payoff, the volunteer’s brain scans demonstrated increased empathy for both the specific helper, and for other Balkan people.

The team interpreted this finding to suggest, “…empathy with an out-group member can be learned, and generalizes to other out-group individuals.”

If this trend can be replicated in the workplace by increasing organizational and managerial empathy for members of minority groups during the appraisal process, organizational rewards may be more equitably distributed.

-*How do you reduce bias in appraisal and reward processes?

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