When it comes to bias, chances are that as an organization, you have the best of intentions. Lattice’s newly released 2023 State of People Strategy Report demonstrates that most HR teams do. Based on survey responses from 820 HR and People team professionals across industries and company sizes, our report found that a full 61% of HR leaders have increased their efforts to reduce bias in performance reviews.
That’s good news. It demonstrates equity is a priority and that Human Resources teams understand putting equity in place means removing bias from the tools and processes they use, which can influence hiring, compensation, and career-growth decisions. These efforts to root out bias can permeate throughout an organization, positively impacting performance, employee retention, and talent acquisition.
But over half of People teams surveyed for our recent State of People Strategy Report said they still have considerable room for improvement when it comes to removing bias. So what can HR teams do to work toward more equity?
The Problem of Bias
When unconscious bias goes unchecked, it can cause inequity in the workplace. Take the pay gap, for example. In 2020, the US Bureau of Labor Statistics (BLS) found that women earned just 82 cents for every dollar earned by a white man. Women of color don’t even fare as well as that. An analysis of 2021 US Census Bureau data by the National Partnership for Women & Families shows that even Black women with full-time, year-round employment make 67 cents for every dollar made by a white, non-Hispanic man (a number that doesn’t account for those taking leave for family care, a task that more often than not falls on women).
While there are many factors responsible for the pay gap, unconscious bias in the workplace plays a major role. In fact, when it’s not kept under control, bias can seep into all your HR decision-making. And when managers are left to make quick judgments and assessments based on an individual’s background, race, gender, age, appearance, accent, and the like, some employees can find themselves losing out on promotions, raises, or new opportunities, through no fault of their own.
Research published in the Journal of Applied Psychology found that as much as 62% of variance in performance review ratings is a result of whoever happened to be the reviewer. Up to 25% could be linked to an actual variation in performance.
Putting in the Work
Lattice’s June 2022 Compensation Survey found that employees not only understand the implications and frequency of bias but want employers to do more about it. Some highlights from our research include:
- 51% of US and UK employees still believe bias influences pay decisions
- 31% of US workers believe adequate steps aren’t being made to eliminate bias from the compensation review process
- Over 60% of employees don’t believe (or aren’t aware) that their HR team is leveraging technology to identify and track disparities in pay
- Only 15% of employees said their employers had done a pay equity audit or review in the last six to 12 months
In order to keep employees happy and engaged, these biases need to be addressed and rectified. Yet, our State of People Strategy Report data shows that less than half (43%) of HR teams have programs in place to reduce bias in performance reviews. Of those, 53% have implemented manager training, and 29% have introduced individual contributor training. And of all of the respondents, only 23% use software to identify bias in their performance reviews.
Reducing Decision-Making Bias
Unbiased decisions require unbiased data, as well as objective ways to evaluate that data to come to the most equitable decisions. Accountability and transparency built into your HR processes will also help root out bias. With that in mind, there is even more HR teams can do to reduce bias in their decision-making process. Here are four best practices we recommend:
1. Collect quantitative data.
Quantitative data is more objective than manager reviews. And since 66% of the HR teams we surveyed this year were using quantitative data in equal or greater amounts than qualitative data in their performance reviews (with 6% exclusively using quantitative data), it’s clear some efforts have been made to bring more objectivity to the review process. These results are relatively unchanged since our 2020 State of People Strategy Report, though, showing that progress in this area is slow.
2. Look deeper into past decisions.
If your organization wants to do better, you have to evaluate and address past mistakes. Digging further into your decision-making data will help you better understand where bias could be inadvertently affecting — and undermining — your efforts toward equity. Global PwC survey results from 2021 show that while 48% of organizations gather data on employee demographics, a lot fewer look at data related to discrepancies in compensation (21%), discrepancies in performance (19%), or discrepancies in promotions (18%). Regular pay equity audits can also help identify and correct any wage discrepancies and pay gaps.
3. Use technology to help.
While, according to our report, only about a quarter (27%) of HR teams are using software to root out bias in their performance reviews, technology is a way of adding objectivity to the review process. Diversity, equity, inclusion, and belonging (DEIB) analytics and technology, for example, provide an objective way to identify any biases in your HR decision-making. By revealing where performance programs and processes are inequitable, these types of People analytics can help your organization identify where biases exist, enabling you to put a plan in place to fix any problems.
4. Embrace transparency and accountability.
Finally, unconscious bias gets easier to identify the more transparent and accountable your organization becomes. That’s why a clear pay structure, with transparency at every step, is another way of ensuring equitable decision-making. In our State of People Strategy survey, 85% of respondents said they need to do more about compensation equity, but only 2% are fully transparent with employees about exactly how much everyone in the business is making.
The truth is, everybody has their own biases, whether they realize it or not — and some biases are difficult to identify and correct. Removing bias from your HR decisions starts with welcoming subjectivity, transparency, and accountability into the decision-making process, and choosing the right tools and technology to counteract bias and ensure equity for all employees. Only with that can you begin to introduce an unbiased People strategy.
To see all of the survey results, download the 2023 State of People Strategy Report today.