Under pressure from activist investors, the public, and their own employees, many companies are expanding their commitments to corporate social responsibility with an emphasis on equity and justice for disadvantaged communities. Nearly nine in 10 of Fortune 100 companies list equity as one of their corporate values, according to our analysis of value statements of Fortune 100 companies. Mentions of diversity, equity, and inclusion (DEI) on S&P 500 earnings calls have increased 658% just since 2018, according to our analysis of earnings calls transcripts for S&P Global 500 for 1Q18 and 1Q21.
In the last two years, questions of fairness have expanded beyond DEI. For example, is it fair to pay employees who work remotely from a lower cost-of-living location the same as employees who work from a higher cost-of-living location? Is it fair to mandate vaccines for employees?
The reality is that most employees don’t feel like their work environment is fair. Of the 3,500 employees we surveyed worldwide in 2021, only 18% indicated they work in a high-fairness environment. These results can have significant implications for employers — perceptions of a more fair employee experience improves employee performance by up to 26% and employee retention by up to 27%.
Fairness will become even more important in the coming years. During the pandemic, we’ve seen new fault lines emerge: yes, along the lines of gender, race, ethnicity, or age, but also between parents and non-parents, salaried and hourly workers, and those whose jobs can be done remotely versus those who must work on site. In an increasingly hybrid work environment, many of these tensions will endure even after the pandemic ends.
Historically, organizations have tried to create fairness through policies designed to remove unfair advantages around talent decisions. For example, recruiters remove candidates’ names from résumés so hiring managers can’t evaluate them based on presumed gender or ethnicity. Or an organization sets strict pay bands to ensure employees aren’t paid more or less than their colleagues at the same level.
These policies can mitigate inequity, but they are insufficient for creating a high-fairness employee experience. And when we looked more closely at where employees experience unfairness, we found that hiring, promotion, and compensation only account for one-quarter of their perceptions of unfairness. The majority of these experiences happen in day-to-day work.
To address these more pervasive fairness challenges, organizations need new philosophies, not just policies. Instead of removing unfair advantages, they should look for opportunities to minimize disadvantages in ways that benefit most or all of the workforce.
The analogy we use to describe this new approach is the automatic door: Automatic doors may be designed specifically to help people with limited mobility due to age or disability, but they make things easier for everyone. Rather than trying to level the playing field for more and more varied categories of employees, organizations should approach the challenge of fairness by building more automatic doors for all their employees.
Four Elements of a Fair Experience
Our research has identified four key questions that distinguish a high-fairness work environment from a low-fairness one:
1. Are your employees informed?
Does your organization provide people the information they need to succeed at their jobs and advance their careers?
Employees live in a high-information environment. It’s easy for people to access extensive data online about their real estate agent, their dentist, or their child’s teacher — and they expect the same kind of information transparency from their employer.
Despite this growing demand, Gartner’s 2021 survey found only 33% of organizations practice information transparency. This approach leads to situations where information is unevenly shared. For instance, the same Gartner survey found that men are 6% more likely than women to be given preparatory materials in advance of an interview or assessment. This can exacerbate gender gaps in hiring, pay, and career progression.
Some companies are taking innovative steps to improve transparency. For example, P&G has put all of its interview questions online and makes them available to all candidates. Buffer has made its product roadmap public, creating openness around what everyone is working on. Gitlab’s employee handbook lives online, and employees can upvote and downvote specific policies.
More information is only half the answer. Progressive organizations are also providing guidance and tools to employees to understand how to use the information. This guided transparency leads to even better fairness outcomes than transparency alone: More than half of employees whose organizations practice guided transparency report a high-fairness experience.
2. Are your employees supported?
A 2020 Gartner survey revealed 64% of organizations have added or expanded well-being programs in response to the pandemic. But despite these investments, in 2021, only 32% of employees reported they feel supported at work.
We found some striking differences in how likely different segments of employees are to feel supported. For example, 37% of parents felt supported, compared to 27% of employees without children. And 37% of hybrid employees feel supported by their employer, whereas only 23% of in-office workers feel supported. Employees are asking: “Why do they get something, but I don’t?”
But our analysis found that employee experience depends only partly on the investments the organization makes: Nearly two-thirds of the impact comes from how the organization shapes the employee experience. This means framing the support you provide so employees understand how it benefits them, their colleagues, and the organization.
Effectively shaping the employee experience involves three components:
- Tell the story — Be explicit about why you are providing support and how it will help the organization achieve its goals.
- Design for all — Wherever possible, design support to be universal, even if it is primarily intended to benefit a specific segment of the workforce.
- Shape the comparison — Acknowledge that all employees are struggling in different ways and help them understand why different people need different things.
A good example of this shaping approach is from C Space, a global brand consultancy. As they were introducing new flexibility benefits for their employees, they were explicit that the program was not just for parents to spend time with their children. Instead, they offered flexibility to all employees and offered examples of how all employees should spend time in the ways that matter the most for them.
3. Do all employees get a fair chance at internal opportunities?
When employees feel considered for opportunities they’re qualified to pursue, more than one in two report a high-fairness experience. However, only 18% of employees feel they are considered for these opportunities.
Traditionally, organizations have taken two approaches to expanding opportunities to more employees: 1) Managers are asked to consider more people for new assignments, special projects, or internal hires, and 2) Employees are encouraged to raise their own profiles by building their brands and growing their networks. The first approach puts too much burden on managers, while the second approach puts too much on employees, particularly those from underrepresented groups for whom this approach may involve more risk.
To democratize access to opportunities, organizations should utilize peer networks. Most organizations use employee referrals to source external talent, and it’s often one of the most reliable channels for high-quality hires. Employees’ knowledge of the opportunities on their teams and the interests/skills/experiences of their colleagues throughout the organization uniquely positions them to recommend qualified candidates that managers would not otherwise consider.
To include peer referrals in a broader strategy for increasing access to opportunities, employers need to take four key steps:
- Set expectations for employees that pursuing new roles and opportunities within the organization is an important part of their career development.
- Communicate expectations to managers that they need to create equitable assignments for development and career opportunities across the workforce rather than picking the people they know the best.
- Build transparency into the internal labor market around what skills, capabilities, and mindsets are needed for specific roles so employees can make informed choices and strong cases for peer nominations and/or self-nominations.
- Monitor to ensure peer referrals function as intended and don’t inadvertently perpetuate bias or unfairness.
4. Do leaders and managers recognize employees’ contributions?
Only 24% of employees currently feel acknowledged for the contributions they make, and this number has gotten worse over the past two years. The rise of remote work has put distance between employees and managers and made it harder for managers to see and recognize the work their team members are doing.
Data shows employees who work in a remote or hybrid setting perform just as well as those who work in a shared office, if not better. Yet 64% of the nearly 3,000 managers that Gartner surveyed in 2021 said that those who come into the office are higher performers than remote workers, and 72% say on-site workers are more likely to be promoted.
Not only is this bias unfair to remote employees, whose career prospects may suffer, it also exacerbates longstanding inequities in the workplace. For example, women and people of color are more likely to want to work in a remote or hybrid setting, while men have been eager to return to working onsite full-time. If managers’ bias against remote employees persists, there is a real risk of widening gender and racial gaps in pay and promotion at a moment when progress is already vulnerable.
In the transition to hybrid work, we’ve seen companies starting to use technology to monitor the work of remote employees. For instance, online interactions and video calls can be recorded and analyzed to generate new insights into how employees are collaborating and contributing. These technologies have troubling implications if they are misused. However, combining technological insights along with manager and peer inputs into performance evaluations can illuminate and build a fuller picture of employee contributions.
However, organizations must ensure their employees are partners in the process. This means employees should understand how their data will be collected, what it will be used for, and how it relates to their work. Employers must also make sure that their employees are comfortable with, and consulted on, the privacy implications of the technology they are adopting.
Ultimately, organizations should strive to create a fair employee experience because it’s the right thing to do. The societal challenges facing the world today add urgency to this moral imperative, but the changing work environment also underscores the business case for focusing on fairness. Employees want and expect to work for organizations that treat them and their colleagues fairly. When they do, they perform better, have a better experience at work and are more likely to remain with the organization for a long time.