Chapter 8: Reviews, Retention and Promotion | The Diversity Playbook

Reach for parity.

“I always say that talent and capability are everywhere, all it needs is opportunity.”

Kathrine Switzer

Once you have built a diverse team, the last thing you want is to lose them. Unfortunately, this happens at many companies. The “leaky pipeline” is a challenge across all industries. Multiple research studies have shown starkly higher attrition rates among underrepresented groups, especially as you progress up the hierarchy. It is also the primary cause of the many pay gaps that persist. If we cannot secure our most talented, diverse talent into senior executive positions,  with the highest compensation packages, then we will never close the gaps. Part of the solution is to ensure frequent, objective and transparent review practices. In addition, equal access to information and resources, with a recognition of the full range of employee contributions supports higher retention. The combination means glass ceilings can be broken and leaky pipelines can be fixed.

Shatter the Ceiling 

‘The glass ceiling is a term most frequently applied to women unable to achieve promotions and fair pay because of a biased occupational system. In reality, a ceiling exists whenever someone is unfairly kept from advancement and fair pay because of sex, race,  age, religion, or sexual orientation. The glass ceiling is a reality faced by millions of professionals every day: qualified people who, for arbitrary reasons, do not gain the pay and promotions they deserve.

Pay inequities occur on many different fronts: from unequal pay for equal work; to opportunity gaps preventing people from attaining leadership roles; and unequal wage growth widening pay gaps at higher age groups and job levels. Throughout all of these metrics,  white, well-educated, able-bodied, heterosexual men maintain an edge over other groups. According to a study conducted by the  Kapor Center for Social Impact in 2017, women of colour face the starkest pay disparities, with professional women of colour earning nearly half of the salary of White and Asian males.⁶⁴ Factors  including a lack of transparency; individual biases; and lack of  preventative laws and policies, contribute to the persistent pay gap

Acknowledge the Ambition 

One pernicious myth that continues to exist in the business world is that there is a lack of diversity at the top due to a lack of ambition to be there. However, when you look at the underlying evidence, there is no shortage of career ambition among underrepresented groups.  Women, ethnic minorities, and LGBTQ+ employees all share a deep drive to reach the top of organisations.  

According to a study by Equality Group, 59 per cent of ethnic minority professionals in the UK aspire to senior management and board level positions in the future. This is significantly higher than the  14 per cent of white professionals with a similar ambition. In the US,  a study by SurveyMonkey in 2020 showed that 89 per cent of women are ambitious to succeed in their careers, with only ten per cent stating they were “not so ambitious” or “not ambitious at all”.

This challenges the thesis of Facebook COO Sheryl Sandberg who wrote the book: Lean In Women, Work, and the Will to Lead.  A key concept in the book is the Women’s Leadership Ambition  Gap, which is the inner obstacles women must overcome to reach higher levels of executive management. From Sandberg’s perspective,  this is what accounts for the poor representation of women in top leadership positions. She explains that; “when jobs are described as powerful, challenging and involving high levels of responsibility,  they appeal to more men than women”.⁶⁷ However, as we have seen in Chapter 3, inclusive language is critical to attracting diverse talent. In 2021, why do we need to describe senior leadership roles as powerful and challenging? Why couldn’t we describe them as collaborative and enabling?  

With the growing need for inclusive leadership across industries,  what we need to be seeking in our leaders is greater empathy,  courage, humility and collaboration. If they were the qualities that are valued, rewarded and achieve promotions in companies, then maybe women wouldn’t need to do as much of the inner work as previously thought. If companies can do their inner work, then they will save individual minorities from having to do it for them. 

Fix the System 

Despite the focus on the inner work of success, the outer work of the system is arguably more important. Great progress has been made in documenting how the review and promotion of best practices can improve workplace equality. In performance reviews, an increase in transparency and visibility has shown several benefits. A  longitudinal study looked at performance-based reward decisions before and after a firm introduced accountability and transparency procedures.⁶⁸ Before the procedures were introduced there was a  significantly different gap in merit-based pay by gender, race and foreign nationality compared with white men receiving the same performance evaluation. After the policy, once managers realised that their decisions would be compared to other divisions, there was a reduction in this pay gap. Transparency in reporting can make disparities easier to spot and correct. The use of data and auditing can also encourage managers themselves, to review how they allocate resources within the team and encourage self-correction.

Consider the Biases 

As with the hiring process, several biases operate throughout traditional review and promotion practices. Iris Bohnet at Harvard has shown that there is a strong bias towards overestimating men’s future potential and underestimating women’s future potential. Women and minorities are often assessed on historic performance and are underestimated for future potential.  This is especially true in male-dominated industries, such as financial services.  

Emilio Castilla at MIT has studied performance reward bias for many years. His research shows that even when employees achieve the same evaluation score, white men will be paid more than women or other minority groups. When giving feedback, individuals tend to focus more on the personality and attitudes of women. Contrarily,  they focus more on the behaviours and accomplishments of men. Janice Fanning Maden at Wharton has built on this point to show that men are often staffed on higher-value accounts and projects than women, which contributes to a widening gender pay gap.⁶⁹ This exacerbates gender bias, promotion opportunities, as well as the pay gap. 

One of the most unfortunate biases that come into effect during reviews is the Idiosyncratic Rater Effect. A 1998 study in Personnel  Psychology found that more than 60 per cent of a manager’s rating was a reflection of the individual manager, not the employee being rated.⁷⁰ In addition, they found that more than half of the variance associated with ratings had more to do with the quirks of the person giving the rating than the person being rated. Rater bias was the biggest predictor. It held more weight than actual performance,  the performance dimension being rated, the rater’s perspective, and even measurement error. This suggests that a review tells us more about the reviewer than the person being reviewed. A further study in the Journal of Applied Psychology in 2000 demonstrated that managers rate people higher in skills where they are not as proficient themselves.⁷¹ Conversely, they rate other people lower in activities they have excelled at. In other words, managers weigh their performance evaluations toward personal eccentricities, rather than objective measures.

“Idiosyncratic rater effect: a review tells us more about the reviewer  than the person being reviewed.”