Real Leaders

5 Business Sins of Employee Inequity and What You Can do About it

As a result of toxic business leadership in America, there is a post-pandemic “Great Resignation” trend caused by 5 deadly sins of employee inequity. Business leaders must find better solutions to attract the best talent, increase equity and reduce turnover costs by thinking differently. 

The Washington Post (and many other outlets) recently reported on a disturbing employee resignation trend in the U.S. where millions of people are choosing to leave their current employers en mass seeking greener pastures. According to The Washington Post, about 4 million workers resigned in April. If this trend continues, it could be devastating to company productivity and bottom-line results. And the underlying root cause seems to be a fundamental shift in satisfaction with the status quo of work caused by ego-driven bosses. 

What is Employee Equity?

Not to be confused with that other E word – equality, employee equity means eliminating privilege so everyone can fully participate and capitalize on opportunities. There are a myriad of privileges the higher up one moves in an organization, including authority over hiring, promoting, and firing; creation of processes and procedures that others must follow; deciding how different people should be compensated; choosing who gets rewarded in the company and why; and even receiving legal protections not available to employees downstream should a lawsuit or scandal occur. 

The misuse of the privilege of leadership due to toxic ego-driven bosses causes the five deadly sins of employee inequity:

1. Privileged Hiring 

If you read between the lines of any typical new hire job requisition today, you will see that most people don’t qualify for many opportunities in companies. By stipulating years of experience, education level (with a preference for advanced degrees), and other minimum skills and capabilities, recruiters are really saying that working here is a privilege reserved for only a select few candidates who meet our strict requirements. Headhunters are often tasked with seeking candidates from select previous employers or educational institutes. This is where the perception of scarcity and inequity begins with these more rigid criteria, resulting in a less diverse pool of potential employees (which is exactly the point).

2. Sink or Swim Onboarding

Once a candidate runs the gauntlet of recruitment and becomes a new hire, they are often confronted with an indifference to their initial success. A mechanical onboarding process is the norm and focuses on rules, standards, and ways of working that have little meaning. Very few onboarding processes enhance the initial excitement of starting a new job with a manager equally excited by the newcomer’s presence and dedication to their success.

3. Talent Whitewashing

Since the initial job scope was so narrow and restricted, prospective employees should be alerted that most employers are not looking for new ways of doing things or their unique approaches and talents. Instead, many hiring managers are only seeking a uniform approach to the work that must be done. This is why the longer a role, the more one’s manager focuses on mitigating anything perceived as weakness related to the role or the individual performing it. This approach leads to a scenario where the only way to get promoted is to be a boss pleaser and make them look good – and the more vanilla one becomes – the more success one can attain.

4. Overly Complex, Careless, and Confounding Compensation

New employees soon learn that their compensation is based on a tiered model that is supposedly objectively grounded by external market surveys for those performing similar roles across an industry or sector. The company’s goal is for most employees to sit below the market median. What they don’t know is that within their existing enterprise, the variability in compensation for similar roles varies wildly based on a) tenure, b) whether the employee was developed internally or recruited externally, c) how the company perceives the importance of their role or function, and d) the degree to which the hiring manager goes to bat for the new employee. And for those in variable incentive-based roles – determining which results equal top performance versus average is often so complex that employees can’t even clearly articulate how they get paid.

5. Targeted Termination

Even if an employee successfully navigates their way from new joiner into the management ranks, they never get out of the shadow of the specter of involuntary termination due to company performance, unexpected financial crises, or senior executive whims. And in these scenarios, it is quite common for a last-in, first-out (LIFO) approach to be applied regardless of the rationale for the mass layoffs. Executive leaders rarely live in the shadow of the random workforce reduction ax because they are deemed essential to delivering the target savings for the organization’s good.

Overall, these five business sins combined communicate the inequitable messages that it is a privilege just to be selected to work for many employers, onboarding and personal developments are sink or swim, and employees must adhere strictly to what is valued in this organization. One’s unique perspectives or talents, compensation differences, and gaps will be explained away with market comparison graphs and complicated language about incentive triggers, kickers, and multipliers. And even if one performs admirably by the rules of such a system, termination can still lie around every corner due to no fault of the employee. 

The scary fact is that these five deadly sins exist and persist in nearly every U.S. company and are even justified as necessary evils of doing business. But with employee equity conversations on the rise, now is the time to confront each of these sins and eliminate the unnecessary privileges inherent within them. It begins when managers lean into J.E.D.I. leadership principles of eradicating injustices, eliminating inequities, expanding diversity, and enhancing inclusion. Here are five ways J.E.D.I. leaders overcome these evils of employee inequity:

1. Hire for Behaviors, Not Pedigree

It may be difficult for most people to attend the best universities, achieve advanced degrees in a given field of study, or get hired by the best companies early in their careers. It is far more equitable to hire people based on a set of behavioral competencies such as the W.H.O.M. (work ethic, heart, optimism, and maturity) criteria that I innovated as a General Manager working in Indonesia and Brazil. Hiring based on W.H.O.M. prioritizes work ethic, shared purpose, passion, solution orientation, and maturity over previous experience and educational background. When the privilege of expensive unattainable education and resume-friendly experience is diminished, you can truly see the human you are hiring for the role. This type of hiring also anticipates that no matter what someone has done before joining an organization, they will need an effective onboarding and development program to truly thrive.

2. Go Overboard on Onboarding

There is nothing more crucial for a new employee than spending quality time with their hiring manager to understand the expectations of their role, the support they can expect to receive, the preferred styles of communication between employee and manager, trust builders and trust breakers they have in common or not, their respective talents and how these can be best manifested in the role. As I call it, this process of Interviewing eliminates the privilege of tenure as every employee is appropriately level set and supported on their unique journeys by their J.E.D.I. Leader who is there to guide them to success versus see if they crash or burn.

3. Turn Talent into Strength

Most managers see roles when they look at their employees, but J.E.D.I. leaders see each individual’s potential that they need to untap to accelerate team and organizational success. They revel in the different skills, capabilities, and ways of thinking, feeling, and behaving they have acquired with each new team addition and obsess over how to maximize everyone’s talents and the team’s performance as a whole. Doing so means to lean into what makes each employee unique and special and derive more from their diversity while mitigating any derailing behaviors with targeted feedback. When leaders look at people through the lens of talent, it transforms their perception of the value of diversity and lets them assign leadership responsibility to others.

4. Compensate Consistently

Rather than doing market studies to create artificial compensation bands, J.E.D.I. leaders influence the salary process by insisting on an internal Pay Equity Audit to show the variability in roles due to ethnicity, educational background, tenure, internal vs. external origin, role necessity variances, and manager influence. Any pay gaps identified during such an audit can be immediately addressed by harmonizing compensation internally and then comparing it to market medians as a sense-check. The goal is to remove bias and subjectivity from compensation as much as possible. And incentive-based roles should recognize that there is an inherent privilege in certain high-value territories, tenure once again, and investment in selling skills. Creating simple incentive systems that group compensation attributes (experience, business territory value, etc.) and remove bogus criteria can demonstrate to employees that business leaders want everyone to succeed, regardless of their starting point in the role.  

5. Make Termination the Last Resort

In business, reducing costs can inevitably impact overall performance. As an organization’s people cost is often the biggest financial burden, most management decisions turn to payroll when savings are required. But because this is a clear area of privilege in that senior managers rarely place the ax to their necks first, J.E.D.I. leaders take a contrarian approach to downsizing because they don’t view employees as an expense. Instead, employees are viewed as the productivity and efficiency center of the organization. And the key to unlocking greater productivity is elevating managers’ capabilities to cultivate high-performance teams versus cutting people. So rather than resorting to redundancies for the sake of the bottom line, the best leaders shift investment towards training and development for their front-line managers as a way to enhance employee experience directly. As a result, employees will be happier and produce higher levels of customer satisfaction. 

As someone who has executed more than my fair share of corporate-mandated downsizing, the disruption to customers has rarely been worth the marginal gains in cost savings that flowed to the bottom line. Had we been more patient and invested properly in our people, our accelerated growth would have outstripped these artificial savings.     

The message to businesses is a call-to-action to use the J.E.D.I. leadership approach regarding equity by valuing high-performance behaviors much more than past experience and educational pedigree. 

With this modern leadership approach, a line manager should serve and support employees to succeed by clearly demonstrating expectations and helping them achieve while developing their innate abilities. No matter where they started at the company, employees should have just as much opportunity for success as someone who’s been there twenty years or more. You hired them because of their unique way of thinking, feeling, and behaving. As a manager, your role is to help them apply their special talents productively by teaching them to consistently deliver near-perfect performance in activities they LOVE doing. 

Make it your mission to ensure employees are paid commensurate with everyone else in the same role, regardless of age, ethnicity, gender identity, disability, by removing subjectivity and bias from the compensation system. 

Your goal should be to invest in employee development for the long haul while dealing with the ups and downs of performance together – and in the unfortunate event of necessary downsizing, those who make the most will be the first to be asked to leave.

Is this concept a bit utopian? Well, it depends on your vantage point. But from where I’m sitting, when 4 million people decide to opt-out of the existing system in a single month, all options need to be on the table to fix the situation, and eradicating inequity needs to be at the top of the list to assure employees that they are not wasting their lives working for employers who place no value on their livelihood or wellbeing. 

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