Diversity efforts, evaluations and compensation schemas in organizations

(SNF project: 100017_162894, project period: 2016-2018, 268'336 CHF)

with Constantin Schön

In the past years organizations and work groups have become increasingly diverse in terms of gender and ethnicity. Much research describes problems and barriers for women and minorities in their career to the top, but only very few studies examine which programs and organizational structures are really leading to a diverse senior management. The aim of this study is to fill this gap and to identify factors that lower career inequalities for women and other minorities in organizations. We take into account three different strands of research and explain how they are intertwined with each other, in order to evaluate which elements are likely to increase the diversity in the senior level of organizations. First, managing diversity strategies are considered as the basic and most salient approach for the increase of diversity in a company. We introduce the concept and evaluate the efficiency of different strategies that are used in firms by studying the elements and the implementation of diversity policies. Second, the role of evaluation biases is analyzed. Accurate evaluations are relevant to climb up into the senior management. When evaluations are biased regarding a specific group, the advancement of this group is hindered with negative effects on diversity. Evaluations have been found to be biased in respect to prevailing stereotypes, person-job fit and homophily. Third, incentive pay systems may have negative effects on the share of women or minorities. Bonus and incentive based systems are likely to have different motivation and sorting effects on genders and minorities. Two different effects are observed: A motivational effect due to biased evaluations and a sorting effect due to different risk taking preferences. We want to test these arguments by using two different empirical methods. First, it is planned to conduct a large scale and cross-sectional survey including all companies listed on the Swiss Performance Index. However, the underlying mechanisms that can explain differences regarding the efficiency of diversity efforts may remain unclear. To find answers on this question, we plan a field experiment with a consulting partner to acquire deep insights into a single company.

Keywords: Diversity, Gender, Senior Management, Compensations, Payment, Bias