One of the big problems in and out of the tech industry is that minorities and women tend to be paid less than white men. For instance, on average, black women make $.63 for every dollar a white man makes in a similar job. It is widely believed you can’t fix this problem quickly or at all without either losing a significant number of male employees or significantly reducing your profits. The expected adverse results are replacing one problem of inequity with two others, an inability to get and retain top male talent, and a critically damaged bottom line putting the CEO and board at risk.
But often, perceptions aren’t reality. Micron recently showcased that you could fix this problem without the anticipated downsides by prioritizing that fix and shifting your employee mix more aggressively to women and minorities. Much of this recent success has been driven by one woman, Sharawn Connors Tipton, a legend on diversity and inclusion, and the Chief Diversity and Inclusion Officer at Micron Technology. This effort would not have been possible without the full support of Micron’s CEO, Sanjay Mehrotra, who championed this effort before Sharawn’s arrival and who remains a champion of the effort. Together, Connors Tipton and Mehrotra have showcased a path to do the impossible and create true pay equality without putting the company at risk.
Two Problems With Pay Inequity
There are two huge problems with pay inequity that we don’t talk about enough. From Maslow and Hertzberg’s work, we know that while pay increases have almost no impact on productivity, pay decreases or the feeling that you are being underpaid can significantly decrease productivity and employee loyalty. If you want to create a disgruntled employee who is more likely to act out, just let them believe they are underpaid. So pay inequity is having and continues to significantly affect productivity based on Maslow and Hertzberg’s work.
If you want to keep employment expenses flat, the CEO and board are measured on if you raise the pay to one group, you have to lower the payment to another. And that other group, in this case, are white males who have traditionally dominated most senior tech jobs. If you lower their pay, they will become disgruntled, disloyal, and are likely to have significantly reduced productivity.
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How Micron Uniquely Fixed the Problem
As with most salary plans, a fixed salary is augmented by bonuses and stock options tied to performance. Adjusting the fixed salary up isn’t as big a change as increasing the entire compensation package. Given Micron started as predominantly male, their initial mix of women was relatively small. In addition, by aggressively moving to replace departing male employees with minorities at the same compensation level during a period of high growth, they could bring on board a critical mass of women at men’s salary and bonus levels without adversely impacting the bottom line. All of this was done while adjusting the remaining legacy women employees’ salaries to parity with minimal impact on the firm’s bottom line.
They also focused on creating balanced diversity at the top to avoid other tech firms’ problems advancing women to executive levels. Suppose you don’t adjust the top of the company first. In that case, those in power remain white males. They see the minority employees as threats to their positions, effectively creating a glass ceiling that those minorities and women can’t penetrate. But suppose the board and executive ranks are already diverse. In that case, minorities represent no more threat than any other advancing employee and (you’ve removed the threat of diversity-driven displacements), and the glass ceiling evaporates over time.
Finally, suppose you improve employee performance with a mix of tools, enhanced processes, feedback loops, and improved metrics tied to incentives. In that case, your productivity increase should cover the already reduced salary cost increase you’d otherwise have. As they paid the employees more, they also made these employees more valuable to the company. The improvements seem to have also had a positive impact on morale and retention.
Leading By Example
Micron isn’t the only company aggressively demonstrating that not only isn’t correcting the compensation inequity problem impossible but doing so will result in a more prosperous and productive company. This company will also enjoy higher retention (particularly of minorities and women) and far higher job satisfaction and morale.
Connors Tipton and Mehrotra haven’t done the impossible; they’ve shown us all that doing the right thing, creating compensation equity, is not impossible and is immensely beneficial to the company that gets it done. That is a powerful message to the technology industry that desperately wants and needs to fix what has been an embarrassment of inequity for far too long.
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