5 Key Takeaways From the Visier Insights: Racial/Ethnic Career Gap Report
Picture this: You are a 41-year-old who has been working full time for more than 18 years. You notice that many people your age are becoming managers. But in spite of your talents and best efforts, you haven’t landed a management position yet—and you are beginning to question whether you ever will.
The kind of opportunity gap described in the above scenario is a reality for many Black employees in the U.S. Within the 40 to 45 age category, the manager ratio (the proportion of people within a specific group who are managers) is 25% for white employees and 11% for Black employees.
This is one of the major findings we revealed in our new Visier Insights Report: Racial/Ethnic Career Gap Reveals Magnitude of Equity Challenge. At the core of Visier Insights reports is Visier’s unique database of anonymized, standardized workforce data, which contains over 12 million employee records from around 8000 companies. For this report, we focused on a subset of 400,000 U.S. employees in the years 2017 to 2020 across 44 enterprise organizations.
In addition to comparing manager ratio and pay data between Black employees and their white counterparts, the report also examines pay and manager ratio discrepancies between white employees and underrepresented groups overall. (For the purposes of this report, the term “underrepresented groups” applies to workers who are Black or African American, Hispanic or Latino, Native Hawaiian or other Pacific Islander, American Indian or Alaska Native, Asian, and two or more races.)
The racial/ethnic Manager Divide matters—here’s why
Our findings support that the racial/ethnic pay gap is more complex than a matter of “equal pay for equal work”—it is driven largely by job type. Managers typically earn higher salaries than individual contributors, and are valued for making important decisions that are key to the execution of the business strategy.
A focus on roles is critical, then, and many organizations are taking action on this front: In the wake of vocal demands to correct social injustices, major companies have made public commitments to place more individuals from underrepresented groups into higher paying positions.
But achieving equity among employees from different racial and ethnic backgrounds won’t be easy. Several other key findings in our report indicate that achieving DEI success is a massive undertaking:
1. The pay gap between underrepresented groups and white employees could take more than 25 years to close
In 2020, underrepresented groups made 85.6 cents for every dollar earned by white employees. This is a slight improvement over 2017, when underrepresented groups made about 83.4 cents for every dollar earned by white employees. At this rate, the pay gap will persist for another generation.
2. Continuing at the same rate of progress, Black employees will not see pay equity for another 78 years
In 2017, Black employees earned 65.5 cents for every dollar earned by white employees. This figure increased to 67 cents in 2019. In 2020, however, this amount fell by nearly half of a cent to 66.7 cents, eroding earlier gains. Pay gap progress appears to be stalling for Black individuals.
3. Underrepresented groups face a significant Manager Divide—a clear sign of unfair access to career opportunities
For the 25 to 30 age category, the manager ratio for underrepresented groups is 3.7%, whereas for white employees it is 7.5%. The gap continues to widen until the age of 55, when there is a very slight convergence.
4. Career progression happens later for underrepresented groups than for their white counterparts
The white group has the highest proportion of managers in the 40 to 45 age group, whereas the underrepresented group has the highest proportion of managers in the 45 to 50 age category.
5. In comparison to their white counterparts, the slope of career progression into manager roles is relatively flat for Black employees
For Black employees, the highest manager ratio occurs at the age of 50 to 55. But even then, there is still a significant gap: for the 50 to 55 age group, the manager ratio is 12% for Black employees and 24% for white employees. Black employees start off on an uneven footing and never get the opportunity to catch up.
4 ways organizations can act now
Clearly, closing a gap of this magnitude is not going to happen overnight. But the size of the racial/ethnic equity challenge does not mean organizations should simply give up—the stakes are just too high. Activist investors, regulators, employees, and customers are demanding that companies become more transparent and stand behind their commitments to DEI.
One place to start is by turning auto-pilot reflexes into conscious decisions that eliminate barriers. Consider employee referrals, for example. This continues to be a common tactic for acquiring talent, but if not executed with care, it can hurt pay equity: Academic research has revealed that white individuals typically find their higher paying jobs through close contacts and inside information.
Examining habits that often unintentionally produce harm is a good approach. But to truly accelerate changes in workforce representation, organizations are also turning to the transparent use of data.
People analytics combines data from HR systems, sales systems, performance systems, and applicant tracking systems—along with real-time market data—to give the best picture of DEI progress and bottlenecks. (For a full overview of Visier’s framework for achieving DEI results, check out this blog post.)
Here are steps you can take with people analytics to spot problems, take action, and move towards a better future for all employees:
Step 1: Face reality
To delve into why there is a representation problem for certain roles within the organization, examine the entire employee lifecycle to see where there are bottlenecks. Be curious about the different dimensions that shape workforce representations, including hiring manager, geography, job level, job type, compensation, tenure, development programs attended, and performance ratings.
Step 2: Take the right action
There may be legitimate reasons for promotion stagnation among underrepresented groups within your organization. Other differences, however, might be the outcome of individual actors, behaviors, or attitudes within the organization.
Data can help you see whether individuals from underrepresented groups actually have the same qualifications and are not being promoted. If this is the case, it’s an indicator of bias. If it’s not the case and there is still a pay gap, then actions designed to address structural problems (such as removing a college degree requirement) could help.
Step 3: Create accountability
It’s important to create a rhythm of data so that stalled progress or a negative trend keeps people motivated to focus on DEI, and when things do change in a positive way, you can celebrate the improvement. There are two distinct rhythms to create: one that mimics your financial reporting and another that happens alongside decisions in the flow of work. Organizations must become accustomed to reporting on their diversity data in the same way they report on their sales data.
Step 4: Correct course
If you have followed step one, you will have a precise view of where your workforce challenges are. This, in turn, will allow you to be very specific about setting targets and goals, which will hold people accountable for making better decisions. This means you can also publicly share your targets with confidence. In the end, having this data on-hand also enables the organization to continually refine its approach and correct course if needed.
Walk the DEI talk with people analytics
Moving the needle on DEI is not an easy feat—but many organizations are already rising to the challenge. Several companies listed in this New York Times article, for example, have quantified their goals for addressing racial inequality. These are encouraging signs that the future will unfold differently.
Addressing DEI challenges requires a specific type of HR leader—one who can face uncomfortable realities within their own organization and forge a path through uncharted territory (Lenora Billings-Harris, noted DEI author and speaker, shares her thoughts on how to do this well in an interview with us). With meaningful data-driven insights, delivered within the right corporate culture, organizations can do more than just talk about good intentions—they can achieve results.
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