With gender equity a topic of even a Super Bowl LI ad, it’s clearer than ever before that every CEO should be making gender equity a priority this year.
Countless studies have shown the equal economic contribution women make in the workforce, yet companies still struggle to achieve the goal of equity, particularly in the areas that affect women’s upward movement the most: promotions and compensation. In 2015, 90% of new CEOs in the S&P 500 were promoted or hired from line roles — and 100% of these executives were men. Furthermore, the McKinsey and LeanIn.Org study, Women in the Workplace 2016, found that for every 100 women promoted, 130 men are promoted.
When looking at compensation, the 2016 Visier Insights Gender Equity report found that the gender wage gap widens when women are 32 years old, starting with women earning 90% the wages of men, and decreasing to women earning 82% the wages of men by age 40. This widening wage gap, our study showed, is directly related to the increasing underrepresentation of women in manager positions.
Although significant progress has been made in employers proactively pursuing policies of equal pay for equal positions, this alone will not close the gap: gender equity is a complex and systemic issue that requires action especially when it comes to performance management.
Gender equity is a complex and systemic issue that requires action especially when it comes to performance management.
Performance Management’s Effect on Gender Equity
Simply put, strong performers can make the difference between hitting business objectives and missing them. An individual’s contributions to the organization should typically be the primary factors used to determine promotions and salary raises; however, McKinsey found that while 93% of companies report they use clear and consistently applied criteria to evaluate performance, only 57% of employees report managers actually do this in practice.
Visier’s 2016 study of gender equity at large U.S. organizations further calls into question the fairness of performance management practices: findings show that a larger proportion of men hold manager positions than proportion of women, increasing to as much as a 10-point gap, and occurring despite women showing the same overall rate of promotions and higher average performance ratings.
Visier’s 2016 study of gender equity at large U.S. organizations further calls into question the fairness of performance management practices
The Risk For (Unintentional) Gender Bias
As Nobel Prize-winning psychologist Daniel Kahneman writes in Thinking, Fast and Slow, the brain is dominated by two major “characters”: System 1 (fast thinking) is the domain of intuitive responses, and System 2 (slow thinking) is the domain of conscious, effortful thought.
When everything is working well, System 1 — the intuitive response system (defined as a cluster of mental shortcuts) — will call on System 2 — the domain of conscious thought — for help only when needed. System 1 is automatic and can help you efficiently read other people in social situations. It includes innate skills and activities that have become automatic through repeated practice (like driving a car or riding a bike).
However, System 1 also often has biases, which can lead to systematic deviations from logic, probability or rational choice. It cannot be turned off, and causes problems when it is the only mechanism used for high stakes, complex decision-making — usually the kind required in performance management.
Researchers at Stanford University’s Clayman Institute found that managers perceive women to have better team-based skills, while they see men as being more independent. This put women and men on different career paths, with men being more favored for leadership positions.
The researchers also conducted an analysis of the language in hundreds of performance reviews and found that women received 2.5 times the amount of feedback men did about aggressive communication styles, with phrases such as “your speaking style is off-putting.” Women were also described as “supportive,” “collaborative,” and “helpful” nearly twice as often as men, and the women’s reviewes had more than twice the references to team accomplishments, rather than individual achievements.
On the other hand, men’s reviews had twice as many words related to assertiveness, independence, and self-confidence. Men also received three times as much feedback linked to a specific business outcome, and twice the number of references to their technical expertise.
In response to the research, Caroline Simard, director of research at the Clayman Institute, said: “Stereotypes shape our perceptions of competence. We hold women to a higher standard in evaluations, and women also tend to evaluate themselves to a higher bar.”
Such hidden biases could ultimately lead to “cumulative disadvantage over a woman’s career over time, resulting in lower access to key leadership positions and stretch assignments, advancement and pay,” Simard added.
Women and men [are put] on different career paths, with men being more favored for leadership positions.
Overcoming Gender Bias with Data
While you may think that using more System 2 thinking is the way to overcome our biases, the reality (as identified by Kahneman) is that people often use System 2 approaches to reinforce what they already think they know, instead of using evidence-based facts to reach new conclusions.
When consistent performance management processes are combined with accurate data on performance, compensation, and other gender equity metrics, gender bias is removed from the decision-making process and business leaders can be more confident that they’re making decisions that won’t unfairly prevent a woman from making progress within the organization. By adopting a data-driven approach, you not only create a fairer workplace, but a much stronger workforce as well.