In my last post, we talked about Gettin' on the Bus and being proactive in light of the OFCCP's recent settlement with AstraZeneca. While the settlement amount isn't astronomical ($250K), the key takeaway here is that AstraZeneca will be required to perform a statistical analysis of internal pay equity as part of the settlement decree.
There were a couple of really interesting responses to my suggestion that we get on the proactive bus and look at our data for internal equity before we end up in litigation or regulatory investigation. Paul Weatherhead - a friend of and occasional guest blogger for the Cafe- asked an interesting question:
So lets say hypothetically I'm an employer and have read your article and think that perhaps a proactive statistical review would be justified. But won't my company (that is well-intentioned in developing non-discriminatory personnel practices) be at risk to having such internal studies become discoverable?
We've seen how certain governmental entities who should know better misuse statistics to promote a political agenda. So the last thing my company wants is to have these internal statistics become misused in the media. What strategy would you recommend to keep that internal study from becoming publicly disclosable?
The risk of having your internal studies becoming discoverable or disclosed to the public is very real, but it can be managed.
How do you manage this risk? Put on your seatbelt! I'm not talking about the regular lap belt commonly found on school buses - I'm talking about a 5-Point Racing Harness!
(1) ALWAYS involve legal counsel from the very beginning. Any proactive or potentially self-critical study should be done under the auspices of legal counsel. Having legal counsel involved - in most cases - will allow you to take advantage of attorney-client privilege, which can keep your analyses confidential and non-discoverable. Privilege is a VERY complicated issue, and I'm not qualified to give advice about what is or isn't privileged. Talk to your attorney - they'll be able to advise you on this.
(2) Limit involvement of internal personnel. Only involve those people who absolutely have to be involved. Fewer employees working on the project means fewer potential leaks. If someone isn't directly involved in the project, they don't need to know that the project exists. This may sound a little clandestine, but it's the same kind of thing that happens with a lot of important projects and decisions. If the internal equity project above an employee's pay grade, they don't need to know about it. Also, it's often advisable to limit internal involvement to data collection. Have the actual analyses done by an outside consultant. In some cases, this can add an additional layer of privilege / protection.
(3) Communicate why you are conducting the analyses. The mindset with which you approach the analysis matters. If you're doing the studies to further your efforts at implementing a non-discriminatory workplace, then you should communicate this to those involved. Being open about your intentions behind the proactive analyses will help the key personnel involved understand why you're doing the analyses - to identify any problems that exist, and take corrective action where appropriate. If the positive intention behind the analysis is communicated to those individuals involved, I think the risk of a "Wikileaks" situation developing can be minimized.
(4) Focus on equity in general, not just women, racial minorities, age-protected, etc. I had a conversation with someone about this very issue yesterday in the context of Ricci v. DeStefano (in a nutshell, the City of Hartford took action out of fear of a discrimination lawsuit from African Americans, and ended up being sued for discrimination by a group of whites and Hispanics as a result of that action). When we think about internal pay equity, the first thing that comes to mind is gender pay equity and whether women are paid fairly. Some people are leery of doing any kind of proactive analysis because they may find that women are underpaid relative to their comparators, and if they're underpaid, then adjustments should be made. But if adjustments are made to women's compensation (and only women's compensation), some fear a discrimination claim from men, since technically gender did factor into this pay decision (only women received equity adjustments). That's the Ricci argument within the context of compensation. In my opinion, the way to avoid this is to focus on equity in general. The goal of your analysis shouldn't be to identify women who are underpaid relative to their comparators. The goal should be to identify all employees - regardless of gender, race, etc. - who are underpaid relative to their comparators. Your main concern should be equity for all employees, not just those who happen to be female.
(5) Follow up on what you find. Following up on what you find is probably the most important element. Even if you do everything right (involve legal counsel, limit internal personnel, communicate why you are conducting the analysis, and look for equity in general), if you don't follow up on what you find the whole project can blow up. I think that in the court of public opinion, it's worse to know you have a problem but do nothing about it than to not know you have a problem. There won't be much sympathy if you find pay disparities and then choose to ignore them. Ignoring any disparities can anger those key personnel involved in the project ("we spent all this time and money and effort, and now we're not even going to DO ANYTHING about what we found?!?!?!"). Angry people are more likely to forward an email or two to their Facebook account, the local newspaper, the Department of Labor... Follow up on what you find. Not only can it help you keep your analyses privileged and confidential, it's the right thing to do. After all, if you're not going to do anything about what you learn from the analysis, it really is just wasted time, effort and money.
Stephanie R. Thomas is an economic and statistical consultant specializing in EEO issues and employment litigation risk management. For more than a decade, she's been working with businesses and government agencies providing expert analysis. Stephanie has published several articles on examining compensation systems with respect to internal equity, and has appeared on NPR to discuss the gender wage gap. She is the host of The Proactive Employer Podcast, and is the founder of Thomas Econometrics. Follow her on Twitter at ProactiveStats.
Thank you for the insightful and thorough response, Stephanie!
You've given us a lot of food for thought in these last two Cafe blogs.
Posted by: Paul Weatherhead | 06/24/2011 at 04:51 AM