Make sure managers can justify their reasons for different employee performance reviews to comparable employees

We’d all like to think every aspect of our employee performance reviews, including bonuses, is free of bias of any kind. But a new study shows that even with a well documented system of employee performance evaluation, there’s a danger minorities will get short-changed when bonuses are handed out.

MINORITIES GOT LESS

The study, by a professor at MIT’s Sloan School of Management, found that African-American managerial employees received bonuses 2.4% lower than those awarded comparable white men. Meantime, comparable Asian- Americans’ bonuses were 2.9% lower. (Also, comparable women’s bonuses were 2.1% lower.) The study looked at 9,000 exempt and nonexempt managers at a U.S. company whose identity wasn’t disclosed.

TROUBLE AT STAGE TWO

The problem, according to the study’s author, may have been that while employee performance reviews were fair, bias unconsciously crept in at a second stage – when higher management awarded bonuses based on the evaluations. If your organization breaks reviews and compensation decisions into separate pieces – as many compensation experts advise you to do – you may want to selfcheck the back end of your process.

Best bet: Ask managers who award raises and bonuses to document and justify any variances in what they give comparable employees.

Source: http://mitsloan.mit.edu/newsroom/ 2008-castilla.php

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