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Merit Pay? Not Exactly

illustration by michael austin

By Jena McGregor

Merit Pay? Not Exactly

Linking pay to performance may not always compute for women and minorities, two studies suggest. Researchers at Britain’s University of Exeter and Tilburg University in the Netherlands studied bonuses paid to 96 pairs of executive-level men and women in Britain with similar experience. Women, they found, were rewarded less for improved results. Indeed, when the worst-performing companies began doing very well, men’s bonuses rose 263% on average, vs. 4% for women. In slumps, the women were punished a bit less, another sign of the “indifference to the women’s performance,” says study co-author Clara Kulich. At MIT, management professor Emilio Castilla studied nearly 9,000 personnel files of nonmanagerial workers at a U.S. info tech company and found unequal merit pay given to employees with identical performance ratings. The gap was quite small—minority workers’ raises were 0.5% lower than those of white males. But “any difference, even if it’s small, is not fair,” says Castilla, noting that his study controlled for job titles, starting pay, and education levels.