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Harvard Case - Nora Lang: Pay Equity at FTS

"Nora Lang: Pay Equity at FTS" Harvard business case study is written by Matthew Sooy, Lauren Iuliani, W. Spencer Ashby. It deals with the challenges in the field of Organizational Behavior. The case study is 5 page(s) long and it was first published on : Aug 6, 2020

At Fern Fort University, we recommend a multi-pronged approach to address the pay equity issue at FTS, focusing on both immediate actions and long-term cultural change. This includes a comprehensive pay equity audit, transparent communication, and a commitment to fostering a culture of inclusion and fairness.

2. Background

Nora Lang, a newly appointed Vice President of Human Resources at FTS, discovers a significant pay gap between male and female employees in the manufacturing division. This disparity is particularly pronounced among engineers and managers. The case highlights the potential for legal repercussions, reputational damage, and employee dissatisfaction due to this inequity. Nora faces the challenge of implementing a solution that addresses the pay gap while navigating complex organizational dynamics, including potential resistance from senior management and employees.

The key protagonists are Nora Lang, the newly appointed Vice President of Human Resources, and the senior management team of FTS, including the CEO and division heads.

3. Analysis of the Case Study

This case study can be analyzed through the lens of Organizational Behavior, Leadership, and Change Management.

Organizational Behavior:

  • Organizational Culture: FTS exhibits a traditional, hierarchical culture with a focus on individual performance. This culture may contribute to unconscious bias and a lack of transparency in compensation practices.
  • Power and Influence: Senior management holds significant power and influence within FTS, potentially hindering Nora's efforts to implement change.
  • Diversity and Inclusion: The lack of pay equity reflects a systemic issue of gender bias within FTS, highlighting the need for a more inclusive organizational culture.
  • Team Dynamics: The case highlights the potential for conflict and resistance from employees and managers who may perceive the pay equity initiative as a threat to their interests.

Leadership:

  • Leadership Styles: Nora's leadership style will be crucial in driving change. She needs to adopt a transformational leadership approach, focusing on inspiring and motivating employees to embrace a more equitable culture.
  • Emotional Intelligence: Nora must demonstrate empathy and understanding towards both employees and senior management while navigating sensitive conversations around pay equity.

Change Management:

  • Resistance to Change: The case highlights the potential for resistance to change from both employees and senior management.
  • Communication Strategy: Clear and transparent communication is essential to ensure buy-in from all stakeholders. Nora needs to effectively communicate the rationale for pay equity and the benefits of a more inclusive culture.

4. Recommendations

  1. Conduct a Comprehensive Pay Equity Audit: Nora should initiate a thorough audit of all employee compensation data, focusing on the manufacturing division. This audit should analyze salary, bonuses, promotions, and other forms of compensation to identify any gender-based disparities.
  2. Implement a Transparent Compensation System: FTS should adopt a transparent compensation system based on objective criteria such as skills, experience, performance, and market rates. This system should be clearly communicated to all employees, fostering trust and understanding.
  3. Develop a Pay Equity Action Plan: Based on the audit findings, Nora should develop a detailed action plan to address the pay gap. This plan should include specific targets, timelines, and accountability measures.
  4. Foster a Culture of Inclusion: FTS should invest in training programs for all employees, including senior management, on unconscious bias, diversity and inclusion, and fair compensation practices.
  5. Establish a Pay Equity Committee: Form a cross-functional committee comprised of representatives from different departments and levels of the organization to oversee the implementation of the pay equity plan and ensure ongoing monitoring and evaluation.
  6. Communicate Openly and Honestly: Nora should communicate the findings of the audit and the pay equity plan to all employees in a clear and transparent manner. She should address concerns and questions openly, fostering dialogue and building trust.
  7. Champion Pay Equity: Nora should actively champion pay equity as a core value within FTS, demonstrating her commitment to creating a more equitable workplace.

5. Basis of Recommendations

These recommendations are based on the following considerations:

  1. Core Competencies and Consistency with Mission: Addressing pay equity aligns with FTS's core values of fairness and equal opportunity, ensuring consistency with its mission and enhancing its reputation as an employer of choice.
  2. External Customers and Internal Clients: A fair and equitable workplace attracts and retains top talent, improving employee engagement and productivity, which ultimately benefits both internal and external clients.
  3. Competitors: In today's competitive job market, companies that prioritize pay equity and diversity are more likely to attract and retain top talent, giving them a competitive advantage.
  4. Attractiveness: Addressing pay equity improves FTS's attractiveness to potential employees, reducing turnover and increasing employee satisfaction. This leads to a more stable and productive workforce.
  5. Assumptions: These recommendations assume that FTS is committed to creating a more equitable workplace and that senior management will support Nora's efforts to implement change.

6. Conclusion

By proactively addressing the pay equity issue, FTS can create a more inclusive and equitable workplace, fostering employee engagement, improving its reputation, and enhancing its long-term competitiveness. This requires a commitment from senior management to support the initiative and a collaborative approach from all stakeholders.

7. Discussion

Alternatives:

  • Ignoring the issue: This would be a short-sighted approach, leading to potential legal repercussions, reputational damage, and employee dissatisfaction.
  • Implementing a 'quick fix' solution: This could create a perception of insincerity and lead to further dissatisfaction among employees.

Risks:

  • Resistance from senior management: Some senior managers may resist change due to concerns about cost or perceived threats to their power.
  • Lack of employee buy-in: Employees may be skeptical of the initiative or feel that it does not address their concerns.

Key Assumptions:

  • FTS is committed to creating a more equitable workplace.
  • Senior management will support the initiative.
  • Employees are willing to engage in the process of change.

8. Next Steps

  1. Immediate Action: Nora should initiate the pay equity audit within the next month.
  2. Timeline: The audit should be completed within three months, followed by the development of the pay equity action plan.
  3. Milestones: The pay equity action plan should be implemented within six months, with regular progress reports and communication to all stakeholders.

By taking these steps, FTS can create a more equitable and inclusive workplace that benefits both employees and the organization as a whole.

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Case Description

In August 2018, a recent Canadian business school graduate was excited about starting her dream job at a global financial consulting firm headquartered in the United Kingdom. However, on her first day, she learned from discussions with co-workers that newly hired women (including herself) were offered lower salaries than men who were newly hired for the same positions. She later learned, in an onboarding session, that the company had a strict policy prohibiting pay discussions among employees. The new employee faced a difficult decision in considering what to do next: What were her responsibilities and options? How could she expect the human resources department to respond? Could her choices possibly put her or her colleagues at risk?

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