A Case For Unequal Pay [That Even Women Will Support]

April 23, 2015

One of the most persistent societal issues of the 21st-century is equal pay, i.e. the fact that certain groups make less than others for the same work. For example, females are still earning 77 cents for every $1 a male makes in America, a disparity that is much larger in other parts of the world.

However, to make things fair, the answer isn’t necessarily paying people the same amount of money just because they have the same title. What’s really fair is to pay people based off their performance, regardless of their experience. That means a high-performing minority female would make much more than a low-performing white male, even if they share the same job title.

“Fairness in pay does not mean everyone at the same job level is paid the same or within 20 percent of one another,” Google’s head of people operations, Laszlo Bock, wrote in his new book, Work Rules!.Fairness is when pay is commensurate with contribution. As a result, there ought to be tremendous variance in pay for individuals.”

The case for unequal pay

A few statistics from the Harvard Business Review:

  • The best developer at Apple is over nine-times more productive than the average software engineer at other technology companies.
  • The best sales associate at Nordstrom brings in over eight-times more revenue than an average sales associate.
  • The best transplant surgeon at a top medical clinic has a success rate that’s six-times better than one of an average transplant surgeon.

If you have one of the exceptional people listed above, does it make any sense to pay them the same as an average employee, even if they have the same amount of experience?

Of course not. They deserve more, because they are doing more for the company. And frankly, if you don’t, you might lose them to someone else.

How Google pays its employees

For a real-life example, look no further than Google. The search engine giant pays great employees up to five-times more than middling employees in the same role.

It achieves those disparities with a data-rich, three-tiered approach to measure its employees, upon which their salaries are based. The three tiers are:

1. Individual performance: Each employee is given goals to hit, and they are then measured off how they succeeded at achieving those goals. Also, employees are measured by “procedural justice,” i.e. that they are doing their job the right way (an example: documenting everything in Salesforce) to avoid rewarding corner-cutting and lucky breaks.

What it incentivizes: For employees to strive to be as effective as possible, the one aspect an individual has the most control over.

2. How they get along with their colleagues: This information is ascertained via anonymous surveys from an employee’s manager, co-workers, the people who report to them and other people in other departments who interact with them. The key here is to garner a wide range of opinions, so no one voice has too much power.

What it incentivizes: For people to be collaborative and avoid a cutthroat, live-or-let-die culture.

3. Overall company performance: Each employee at Google has access to stock options and, obviously, the performance of the company will always have a factor in the amount people are paid.

What it incentives: For people to care about the entire company, not just what they are doing each day.

Takeaway

Google’s compensation plan is a strong one, but it certainly isn’t the only way to do it. The key is to have a program where you are measuring people objectively and then rewarding the best performers, which works as an incentive for everyone.

If an organization has a truly strong plan, they should be able to pay people very different amounts, publish those salaries like Buffer did and be able to easily explain why one person made three-times more than another. Such a plan would eliminate bias, and instead put an employee’s focus on just doing what they do, better.

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*Image by Kat R.

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