Five reasons “Equal pay” is unfair

Before anyone gets the wrong idea, I am not about to defend pay differentials based on gender, physical appearance, religion, disability, fashion sense, favorite vegetable, or any other arbitrary criterion. However, I am suggesting that the debate over equal pay and the way organizations think about pay and remuneration needs to be completely reframed.

Here are just a few of the reasons why “equal pay”, which I’m defining as equal remuneration for two people performing the same job, regardless of the value delivered, needs to be changed.

• It focuses on the wrong thing: By focusing on the ‘equal’ rather than the ‘pay’ side of the equation, the argument in favor of ‘equal pay’ is based on three fundamentally flawed assumptions:

1. that two jobs which are ostensibly similar are actually the same and/or of equal value
2. that the people performing the work in question deliver equal benefit to the organization
3. that the successful completion of specific tasks or working hours is the only relevant measure of value.

• It ignores reality: In his thoroughly absorbing book, “Sapiens: A Brief History of Humankind”, Yuval Noah Harari makes it clear that equality as we discuss it today is a new idea that was irrelevant for the vast majority of human history. Moreover, he makes it clear that that the idea of human equality is by definition, absurd. People are demonstrably not equal in any objective way. Similar perhaps, but not equal. And from a work perspective, the value that people want or are able to deliver usually isn’t equal either. Should people be given an equal opportunity to deliver as much value as they can at work and in life? Absolutely! But the idea that they should automatically be compensated at exactly the same rate as someone else based on their job title, no matter how they perform, is obviously unfair.

• It blames and punishes the wrong people: A recent equal pay row at the BBC in the UK ended up with men who were being paid more than their female colleagues (through no fault of their own!) having their pay reduced to matching levels. Not only is that an insult to the women involved, it ensures that everyone loses! The men take a pay cut, the women don’t get a pay rise, and the organization’s management looks incompetent. All thanks to an illogical obsession with ‘equality’, rather on the true value that people are contributing. And of course, it’s the employees, rather than the executives who created the imbalance in the first place, that are in the firing line. You can’t make this stuff up.

• It is too narrow: Even in the unlikely event that two jobs are similar enough to deserve precisely equal pay, remuneration is almost always calculated according to a limited number of metrics that define value in a very narrow way. Softer factors that may be harder to measure but may still be highly valuable are not taken into account. Let’s take two seemingly identical roles on a factory production line as an example.

Both employees complete the same tasks to the same standard in the same amount of time and meet the documented requirements of their roles to the letter. Yet one is an objectionable individual who is widely disliked by his colleagues. He creates a bad atmosphere and contributes no additional value to the organization. The other is the life and soul of the shop floor. She makes everyone smile when she arrives, organizes social events, and regularly submits new ideas on how to improve efficiency to her line manager. Surely the second employee deserves to be paid significantly more than her colleague, even though her job is ‘the same’? Moreover, under the “equal pay” doctrine, her miserable colleague has zero incentive to change his behavior and deliver more value if it won’t be reflected in his remuneration: The only winner here is mediocrity.

• It doesn’t get implemented anyway: The final nail in the coffin of the equal pay ideal should be this – it doesn’t really exist. It never has, and it never will in anything other than a communist style economy. And we all know how ‘equal’ they have turned out to be.

In a future ThoughtShake, I’m going to propose an alternative remuneration methodology that a) broadens the definition of the value delivered by employees and b) proposes a simple way of incorporating it into remuneration packages.

In the meantime, think about this:

Who in your organization is contributing a lot of additional value without being rewarded for it? Who is just going through the motions or worse, having an actively negative effect on daily operations without consequence? And what can you do, within legal and ethical boundaries, to focus every employee on delivering value, rather than on whether they are paid ‘the same’ as their peers?

Have a value-filled end to the week!

Hamish