Home Home | About Us | Sitemap | Contact  
  • Info For
  • Professionals
  • Students
  • Educators
  • Media
  • Search
    Powered By Google

Not Paid for Performance


by Kendra Clark, for SIOP

Study shows racial differences in pay based on organization’s diversity climate

In some organizations that pay for performance, performance might not be the only factor affecting an employee’s paycheck.

Specifically, a new study shows pay for performance relationships might differ depending on employees’ race-ethnicity and organizations’ diversity climate.

A recent study conducted by SIOP member Yan Chen and her colleagues Ingrid Fulmer, Patrick McKay, and Derek Avery looked at the differences in the relationship between pay and performance for U.S. employees of different races. The study also considered whether employees felt their place of employment was a “supportive diverse climate,” meaning employees perceived their employers as fair and inclusive.

They found that in less supportive diversity climates, the sales performance–pay relationship was stronger for White than for Black and Hispanic employees. In more supportive diversity climates, the relationship was stronger for Black and Hispanic employees—they received higher pay than White employees when sales performance was high. However, in supportive diversity climates, White employees were paid more than Black or Hispanic employees when sales performance was low.

This research will be presented at the 30th Annual SIOP Conference, which takes place April 23-25, 2015 in Philadelphia, Pennsylvania.

In their study, Chen and her colleagues used survey data from 14,185 sales associates from more than 750 different retail stores across the United States. The majority of the sample was White and female. They asked associates to identify whether employees felt their stores were supportive of diversity. They also used the annual base pay of each associate.

“We think the reason for differential sales performance–pay relationships in less supportive diversity climates is that employers may have different attributions of performance for Whites and minorities,” Chen explained. “They tend to attribute White personnel’s performance to internal factors, such as their skills and abilities but may discount minorities’ performance to external factors, such as good luck or help from others.”

In supportive diversity climates, employees may expect organizations to exhibit more fairness, she said, and thus, managers are less likely to discount minorities’ performance.

Chen speculates that racial stereotypes and employer’s expectations may explain why White employees were paid more than their Black and Hispanic colleagues when sales were low but less when sales were high in supportive diverse climates.  When White employees perform poorly, they may receive the “benefit of doubt.”

“The organization may not expect African Americans or Hispanics to do well,” she said. “So when they have high overall sales, it was better than expected so the organization compensates and rewards them more when they perform very well.”

Chen also pointed out that these results could mean stores with supportive diversity climates are leveling the playing field for their employees, meaning that they overcompensate for when Black and Hispanic employees do well.

The pay for performance relationship for Asian employees was discovered to be very similar to the one for White employees in the study, Chen said.

“We think it’s because there are different dimensions of stereotypes, such as competence and warmth, and Asians tend to be perceived as high competence with low warmth. So they are expected to do well and the organization attributes its expectation to internal ability.” she said.