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Workplace Equity: Challenges And Solutions

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Workplace Equity: Challenges And Solutions

Ensuring equity in the workplace is not an easy task because each person has their own perceptions of what is fair in various situations and circumstances. However, it is one of the primary factors correlated with job satisfaction and employee motivation.

Broadly, we describe something as equitable when we perceive it as fair, as just.

Equity in the workplace refers to the fair and just distribution of opportunities, resources, rewards, and responsibilities among all employees, regardless of their background, characteristics, or identities. It focuses on creating an environment where everyone has an equal chance to succeed, thrive, and contribute based on their skills, abilities, and performance, without facing discrimination or bias.

When employees perceive that they are treated fairly and have equal opportunities, they are more likely to be satisfied with their jobs and motivated to perform at their best.

Equity Theory

This theory provides valuable insights into workplace dynamics, as it helps us understand how employees evaluate their own contributions in comparison to what they receive in return.

According to Equity Theory, people compare the inputs they think they invested in a job and the outputs they receive with other people’s inputs and outputs. 

Inputs refer to what individuals bring to a situation or relationship, such as their skills, effort, time, and dedication. Outcomes, on the other hand, encompass what individuals receive in return, which can include pay, recognition, promotions, and other rewards.

Individuals seek a sense of equity, which means they want the ratio of their inputs to outcomes to be equal to that of their reference group (typically colleagues or peers). When they perceive this balance, they believe they are being treated fairly. The employees can compare themselves with colleagues with similar jobs from the company they work for or with people with similar jobs from other companies.

Inequity arises when individuals perceive an imbalance between their inputs and outcomes in comparison to their reference group. There are two forms of inequity:

    • Under-reward Inequity: This occurs when individuals feel they are giving more (greater inputs) than they are receiving (lesser outcomes) compared to their reference group.
    • Over-reward Inequity: Conversely, over-reward inequity happens when individuals believe they are receiving more (greater outcomes) for their inputs than their reference group.

Inequity Generates Tensions

Inequities generate tensions. To resolve this tensions, we may take various actions to restore equity. According to Stacey Adams, one of the first who developed Equity Theory, individuals can engage in various behaviours, including:

  • Adjusting their perceptions of inputs and outcomes – reappraising their situation.
  • Changing their inputs – reducing effort or contribution if they perceive over-reward inequity.
  • Altering their outcomes – seeking promotions or asking for pay raises.
  • Leaving the situation or organization – resigning or seeking alternative employment.

Equity Is Subject To Individual Interpretation

Although employees often make these types of comparisons, there are differences between what they compare and to whom they compare.

For instance, one employee may compare the development opportunities that he has in a company with those of his peers, and disregard aspects like travel opportunities or differences in technical equipment.

Traveling opportunities may be appealing for some employees and at the same time may be avoided by others who don’t want their daily routine to be disrupted, or they have family duties that don’t allow them to travel. Or, one employee may be dissatisfied that he/she wasn’t included in a training program for leadership skills, but be all right with not participating in a training for using a specific software.

Another example, an employee may compare his or her salary with other colleagues’ salaries of the same gender, and disregard the salaries of the employees with similar jobs from the opposite gender. 

So, each employee decides what he/she compares and with whom. Their personal needs, goals, aspirations, values, and expectations play an important role in these types of selections. The outcomes they want vary.

For employers it is important to know what their employees compare and to whom, in order to be aware of their perceptions of fairness or unfairness related to their experiences in their companies. 

For instance, if an employee considers that inequity comes from the retribution the employer can’t reduce the feeling of inequity assigning more interesting tasks. The employer has to address the retribution issue.

Equity Meaning Can Be Influenced Culturally

The concept of equity can be influenced by cultural perspectives. What is considered equitable in one culture may differ significantly from another, shaped by historical, societal, and cultural norms. Understanding these cultural nuances is essential in understanding equity at an individual level, especially when a company has employees with different cultural backgrounds.

For example, in Japanese culture, equity in the workplace may often emphasize group cohesion, with salary structures and promotions designed to maintain harmony among colleagues. In the American Culture, equity might be closely tied to individual achievement, where promotions and salary increases are often based on personal performance and merit. Nordic Culture, in countries like Sweden and Denmark, may prioritize equity in terms of work-life balance, with generous parental leave policies and flexible work arrangements to support personal well-being.

How A Company Can Reduce The Employees' Perceptions Of Inequity

Establish Clear Criteria And Processes

Whether it is a decision that you have to make about a promotion, a salary raise, which employees to include in a training program, or other types of decisions that impact your employees, you need to set clear criteria for these.

This will simplify the decision-making process by providing guidance points and will ensure consistency in how decisions are made. 

Transparent Decisions

Communicate clearly the criteria for different decisions related to employees.

Transparent decision-making plays a pivotal role in reducing perceptions of inequity among employees. When leaders and organizations are open and clear about the criteria and processes behind their decisions, it sustains a sense of fairness and trust within the team members. They feel valued and respected when they understand how and why specific decisions are made, whether it’s related to promotions, compensation, or resource allocation.

This transparency not only mitigates feelings of inequity but also encourages a culture of accountability. It demonstrates a commitment to treating employees fairly, leading to higher job satisfaction, increased motivation, and reduces the likelihood of workplace conflicts.

Consistency in Applying the Decision Criteria And Processes

Consistently applying the established criteria and processes will provide employees with a sense of certainty about how things are done in the company, eliminating surprises.

When these criteria, rules, and processes are applied inconsistently or selectively, it can lead to uncertainty, a lack of trust, and dissatisfaction. This is particularly true for those who perceive disadvantages and injustice.

Accurate Information

Using accurate information in decisions, including eliminating cognitive biases, will lead to more objective and equitable decisions for the employees. 

For instance, a company can conduct pay analyses to ensure that salaries and compensation packages are aligned with objective factors such as job role, experience, and performance. 

Or, accurate performance data and employee assessments can be used to identify high-performing team members. This data-driven approach can guide promotion and advancement decisions, ensuring that employees are rewarded based on merit and achievements rather than favouritism or bias.

You can read more about how to eliminate biases in the workplace in my previous blog post HERE.

On the other hand, the employer can help the employees to have more accurate perceptions by providing them with accurate information.

When they make assumptions or don’t take into account information that can transform their perceptions, they can have limited or distorted perspectives.

They can make incorrect assumptions about how a decision was made, how resources are allocated, or why one person earns more than another. This is why transparent decision and processes are so important to eliminate or, at least diminish, these kinds of perceptions.

Also, employees may have incomplete data about outside reference people. For instance, an employee who is thinking about leaving their current company for another one that offers higher pay may not realize that employees in similar positions at the new company have much more demanding targets and spend more time at work. Or, there can be cases when similar jobs are payed more, but other factors like time spent commuting, the work environment and company culture, and growth opportunities might make a person reconsider their perception of that job.

Employee Feedback

Knowing what the employees think about the internal processes and the decisions that are made is the first thing that will help a company to handle perceptions of unfairness and have equity in this regard.

You can implement different mechanisms to ask for feedback. For example, you can give them a written questionnaire, you can have one-to-one discussions, or you could designate a person to whom they can go to give their feedback whenever they consider that something is not fair or should be improved. 

This is also an opportunity to discuss their concerns or complaints and resolve them. Maybe they don’t have the whole picture and now they get more data that will make them see things differently, maybe they saw something that those who took the decisions or created the processes didn’t realize, maybe they have great suggestions that will help the company.

Continuous Improvement

Achieving workplace equity is an ongoing process. Organizations should regularly assess their policies, practices, and outcomes to identify and address any inequities that may arise.

Encourage the employees to come with improvement suggestions.

Situations In Which Inequities In Payment Can Occur

When New People Are Hired

Inequities in payment for similar jobs can occur when new hires are made. Sometimes the candidates wanted for a job come with high salary expectations and they might be hired for higher salaries than the current employees with similar jobs. Reasons like the difficulty to find a suitable person for the job, the costs of searching new candidates, the time spent on the hiring process can contribute to such a decision.

As long as the salaries of the employees with similar jobs and level of skills and competencies, and contributions, are adjusted to this higher salary, the equity is maintained. 

But otherwise, it is very likely that the old employees will be dissatisfied by this. Even if the salaries are confidential, they can still find out or figure out how much money their colleagues earn. Or they may make wrong assumptions that also don’t help them have an accurate perception on this aspect.

It can also be the situation in which a candidate that you want to hire asks for a lower salary or have lower salary expectations than you are currently offering to employees with similar responsibilities and level of competencies. Even if you can hire this person for a lower salary, it is not recommended to do this. Sooner or later he or she will realize that his/her salary is lower.

When The Employees Salaries Packages Are Below The Market Levels

Employees can not only compare their salaries between them, but also with the salaries of people who work in other companies. 

When they know that other people with similar jobs and competencies earn more, they may be dissatisfied. I said ”may” because it depends on the person who makes the comparison. Some people will be unhappy with this situation, while others will take into consideration other aspects like location or work environment and conclude that these are more important for them that the difference that exist between their salaries and those of other people. 

When Salary Raises or Benefits Are Granted Based on an Employee's Negotiation Skills, Without Adjusting Salaries of Peers With Similar Responsibilities and Competencies

Sometimes, an employee can receive a salary raise or certain benefits due to his/her negotiation skills. This is great and can contribute to his/her motivation and engagement. 

At a company level, if the salaries of the other employees with similar jobs and level of contributions are not adjusted accordingly, this will generate unfair payment among employees. 

The differences in payments have to have objective and transparent reasons to be able to describe the compensation system as equitable.

When Biases Appears

Biases like those related to gender, race, age, physical appearance can influence how compensations are given in a company. You can learn more about the biases that can manifest in the workplace in my last blog post HERE. 

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Research About Equity In The Workplace

According to a Gallup research conducted in 2022 :

  • Only 33% of employees believe they have the same opportunity for advancement as everyone in the organization
  • Just 30% of employees strongly agree they are treated fairly at their company
  • Only 44% of employees said they feel respected, and 90% of these 44% say they have experienced some form of discrimination of work
  • Only 35% of employees say they are confident that the company will do the ethical thing

These results show that there is a strong need to work on increasing the perception of equity in the workplace and the need to pay more attention to fair processes and decisions.

According to a recent made by Pew Research Center, the number of U.S. employees who are   highly satisfied with the following work aspects are only:

  • 51% – with their day-to-day tasks at work
  • 49% – with the amount of feedback they receive and the benefits the employer provides
  • 44% – with the opportunities for developing new skills
  • 34% – with how much they are paid
  • 33% – with opportunities for promotions

To be able to remediate these percentages, employers need to go further and find out the reasons for which employees are not satisfied with what they are paid, with the opportunities for promotions and so on. 

Conclusions

Equity isn’t an abstract notion; it’s a practical blueprint for building workplaces where every employee feels respected and valued.

It’s clear that creating an environment where every employee is treated fairly and respectfully has far-reaching benefits. Not only does it promote inclusivity, diversity, but it also influence job satisfaction, employee motivation and their performances. It’s a blueprint for creating a workplace where individuals thrive, collaborate, and contribute their best.

The path to equity may present challenges, but with unwavering commitment, transparency, and ongoing education, employers can do it.

Key Points:

  1. Why workplace equity is important: how it affects the workplace
  2. Equity Theory – employees’ inputs and outputs, when equity and inequity is perceived, how employees resolve tensions produces by inequities
  3. How a company can reduce the employees’ perceptions of inequity
  4. Situations in which inequities in payment can occur
  5. Research about equity in the workplace

Let me know what are your thoughts about this blog post. If you have questions I’ll be happy to answer them at: daniela.tancau@improvework.ro

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