How Fair Is Your Workplace?

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 out of ten Fortune 100 companies list equity as one of their core values, according to our analysis of their value statements. Mentions of diversity, equity, and inclusion (DEI) on S&P 500 earnings calls have surged 658% since 2018, based on our review of earnings call transcripts for the S&P Global 500 from the first quarters of 2018 and 2021.

In recent years, the scope of fairness issues has broadened beyond DEI. For example, is it fair to pay employees working remotely from lower cost-of-living areas the same as those working in higher cost-of-living areas? Is it fair to mandate vaccines for employees?

Most employees do not perceive their work environment as fair. In our 2021 survey of 3,500 employees worldwide, only 18% reported working in a high-fairness environment. This perception significantly impacts employers: a more fair employee experience can enhance performance by up to 26% and increase retention by up to 27%.

Fairness will become increasingly crucial in the coming years. The pandemic has highlighted new fault lines: not just along gender, race, ethnicity, or age, but also between parents and non-parents, salaried and hourly workers, and remote versus on-site workers. These tensions will persist in the evolving hybrid work environment.

Historically, organizations have attempted to create fairness through policies aimed at eliminating unfair advantages in talent decisions. Examples include removing names from résumés to prevent bias and setting strict pay bands to ensure equitable compensation at the same level.

However, these policies alone are insufficient for fostering a high-fairness employee experience. Our research indicates that hiring, promotion, and compensation account for only one-quarter of employees' perceptions of unfairness. The majority of these perceptions arise from daily work experiences.

To tackle these pervasive fairness challenges, organizations need new philosophies, not just policies. Instead of merely removing unfair advantages, they should seek to minimize disadvantages in ways that benefit the entire workforce.

We use the analogy of the automatic door: designed to aid people with limited mobility, but ultimately beneficial to everyone. Organizations should adopt a similar approach, creating "automatic doors" that enhance fairness for all employees.

Four Elements of a Fair Experience

Our research has identified four key questions that distinguish high-fairness work environments:

1. Are your employees informed? Do employees receive the information they need to succeed and advance? In today's high-information environment, transparency is expected. Yet, only 33% of organizations practice information transparency, according to Gartner's 2021 survey. This leads to unequal information sharing, which can exacerbate gender gaps in hiring, pay, and career progression.
2. Are your employees supported? Despite investments in well-being programs, only 32% of employees felt supported at work in 2021. There are notable differences: 37% of parents felt supported compared to 27% of non-parents, and 37% of hybrid employees felt supported compared to 23% of in-office workers.
3. Do all employees get a fair chance at internal opportunities? When employees feel considered for opportunities, more than half report a high-fairness experience. However, only 18% feel they are considered for these opportunities. Traditional approaches—relying on managers or encouraging employees to build their brands—are insufficient.
4. Do leaders and managers recognize employees’ contributions? Only 24% of employees feel acknowledged for their contributions, a number that has worsened with remote work. Managers often perceive on-site employees as higher performers, which can disadvantage remote workers and exacerbate gender and racial inequities.

Ultimately, creating a fair employee experience is not just a moral imperative but also a business necessity. Employees perform better, enjoy their work more, and are more likely to stay with organizations that treat them fairly.

Note: Those researches were led by Harvard business researchers.