Is Equity or Selection more Important? IT Depends
Intro: Compensation experts are losing the melody when trying to sing the word Equity. We are singing off key. We are flat, sharp, and basically all over the place with our ill use of Equity’s wrong application in the world of Compensation. Equality in the chances of excellence? Yes. This is right. This is good. But Equity in paying everyone the same regardless of differentiated ability? No. This is not good. Not good at all.
In order to address the topic of Equity versus Selection in the world of compensation, let’s imagine a make belief world. It will help. I promise.
So again, let’s imagine a make belief world. We have three 3rd characters. IT #1, IT #2, and IT #3. They are speaking like this:
IT #1 (standing up): “We need to have equity in compensation. Everyone in the same grade should be paid the same. All ITs, of Personhood X, of Race X, of Sexual Preference X, of Nationality X, must, if in the same grade, be paid the same. It is the new law. Equity. Our rule of caring. Please read the communication.”
IT #2 (raising its hand): “Oh… my… well… umm… what of selection? You know, the Darwinian kind of stuff that is the main stay of all evolutionary progress. The stuff we were taught. This is no longer true? Should IT not be based on ability and performance? Of natural selection, based on abilities?”
IT #3: “What do you mean selection? Do you not know that selection is a preferential bias and a threat to equity?”
IT #1 is now nodding to the garrison standing by. The garrison is moving towards IT #2.
IT #1: “Yes, What do you mean by selection?”
IT #2 looks panicked. Contrite. IT #1 raises its hand telling the garrison to stand down, for now.
IT #2: “Well (answering in a twitchy tone)… yes… well… performance is the… well… umm… err… required Darwinian criteria for needed survival. Equity should be only relevant to the point of human care, to the assurance of a human being paid fairly for the value created. But equity, to the exclusion of differentiated performance is, well...”
The garrison is getting closer to IT #2.
IT #1: “Is what?”
IT #2: “… well… it falls on itself like a deck of cards. It’s suicide.”
All other ITs are also leaning forward. IT #3 is still raising its hand to ask IT #2 another question.
IT #2: “Yes… it's suicide. If we have an IT placed in an important job, a critical role that impacts us all, and if such an IT has only been chosen on the basis of equity and if such an IT is not the best IT for the job… and this IT makes a mistake, a big mistake… Well… we are finished.”
IT #1 has given the permissive signal to the garrison. IT #2 is being disposed in front of all of the other ITS. IT #2 is no more.
IT #3 puts down its raised hand. There is silence.
IT #1: Again, read the communication. It is the new law.
All ITs are nodding.
It is a ludicrous and ridiculous scenario burning with the smell of George Orwell’s 1984.
So, how many CEOs are there in your company? One. Yes, of course one.
Really? Is that fair? After all, shouldn’t all ITs be allowed to be a CEO? Why should a specific ‘IT’ be selected? Will not the other ITs be unfairly eliminated in the gruelling selection process of validated ability? What about Equity. IF one IT is chosen to be 'CEO'' there can be no equity. Where is the equity of one?
Are such questions absurd? Yes. Of course. We would hope they are, because, if not, they turn a world of accepted selection based on worth and value on its head. But in in light of recent developments, the story of IT is becoming, in the world of Star Trek, ‘energized.’
A recent article from the Wall Street Journal, Mediocrity is now Mandatory, states how the selection criteria of the Standard Aptitude Test (SATs) in the United States is under scrutiny. SATs are the current means to select qualified students from less qualified students, for admission. The SAT score gives coveted universities the objective ability to choose, to make a selection. But, many such universities, under the guise of equity, are eliminating selection exams. No selection is allowed. Nope.
“We need Equity,” they say.
The article states:
“Many schools, like Hampshire College, Antioch University and Reed College, don’t even bother with meaningful grades – feelings might get hurt… Has an era of American mediocrity begun… In January the College Board announced it would eliminate the essay portion of the SAT, as well as all of the separate SAT subject tests.”
On a different side, Shelby Steele, a black, seventy six year old academic scholar residing at the Hoover institute of Stanford University, is not a fan of the word ‘equity’. In the WSJ article How Equality Lost to ‘Equity’, Steele is quoted saying:
“This equity is a term that has no meaning… We can throw it around at any time, and wherever it lands, it carries this stigma that somebody’s a bigot… Its message is that there’s inequality that needs to be addressed, to be paid off… So, if you hear me using the word ‘equity’, I will shake you down.”
Steele grew up in the ghettos of Chicago and faced desperate inequality. And yet, he warns of the danger of the word equity towards his fellow black Americans. He writes how equity will eliminate the pursuit of excellence and the criterion under which excellence is differentiated. He distinguishes the critical difference of equity versus equality. Equal opportunity he is a preacher of and believes huge advancements, while being made, can still be made. Equity in contrast is the evasive and manipulative word that makes this seventy-six-year-old scholar want to ‘shake you down’.
So, what does this have to do with compensation?
Everything. Equity in the world of compensation, is making all social / political ideologies the sole job of the Compensation Managers to manage. Wrongly so. The inappropriate use of the word equity is stripping Compensation Managers of the needed tools to empower a company to prosper and grow through the selection of the right people in the right job with the right differentiated pay base on the value they create.
The Human Being is hard wired to the word 'fair'.
Fair means that if you perform twice as well as someone else you deserve the consideration of being paid more. Even if you are in the same grade.
Sport agents know it. Kids know it. New business owners who hire and pay people for ability know it. Their economic survival depends on it. Compensation Managers are supposed to know it, and are supposed to teach their leaders, who themselves, hopefully, reached their lofty positions based on its principles to allow others to know it as well.
Equal opportunity, allowing for appropriate selection, is the job at hand. Not equity.
We at BDA, under the NEW HR, teach, debate and persuade leaders to remember to know it. Because if you do not know it or intend to forget to know it, IT #2 will show you a stack of cards.
1. Andy Kessler, Mediocrity is Now Mandatory, Wall Street Journal, Feb 7, 20121, 1:56 pm ET (online version).
2. Tunku Vardarajan, How Equality Lost to 'Equity', Wall Street Journal, Feb 12, 2021 1:52 pm ET (online version).
Michael is a senior Total Rewards leader with 26+ years in the field. He comes to us from Nestlé, where over the course of his career he held leadership roles on both the compensation and benefits side in their global Total Rewards organization in Switzerland, China and the USA.
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