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Running a Business…What is Truly Best?

Thomas J. Carnahan, PhD

Continuing discussions on pay equity

During a recent lunch with friends, the topic of my new job came up. One of my friends commented that although he sees the benefits of pay equity and the need to treat people equally, he struggled with the business aspect of it. Basically, if I (as a business owner) knew that a job was worth $120,000 but the person was willing to accept $100,000 per year, then it makes great business sense to pay less because they accepted it and it saves the company money.

Great point.

As a former business professor, I get that. People in business are trained specifically to reduce costs and increase revenue in order maximize profit. But…businesses also love to say things like “we are a family here” and “we take care of each other” and “our values of integrity and diversity push us forward.” These philosophies contradict. You can’t have both. You can’t say that you look at your employees as if they were family and then knowingly take something away from them that they deserve just because they don’t know they deserve it.

Allow me to further explain with mortgage crisis of 2007-2009. Whose fault was it? Personal responsibility of people to know that they couldn’t afford that much house given their income or the institutions who knowingly allowed people to borrow money they couldn’t afford to pay back? That’s a lot simpler. And we all paid for it.

The idea of pay parity isn’t any different. If a supervisor knows gender and racial differences (e.g., negotiation techniques, knowledge of market pay for a position, etc.) create situations that are “good for business” then it is the company’s responsibility to make sure the supervisor doesn’t take advantage of those differences. All organizations should have safeguards in place to ensure when a candidate is low-balled or other related instances occur, that the supervisor should be retrained and the employee impacted by the decision is duly compensated with back pay and interest.

Corporations are people, apparently. So how do you want to be known for how you treat those that you say are in your family?

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