Impact of Compensation on Inclusive Organizations

Abstract

Discrimination in compensation for minority groups and individuals with regard to gender, physical disability, religion, and culture affects inclusion in an organization. This study is a combination of two studies and endeavors to verify our initial inference that compensation gaps are significantly related to inclusion. A mixed method approach has been adopted; in first part of the study, compensation data obtained from 32 organizations (608 observations) have been analyzed quantitatively. The study finds significant correlation between components of compensation gaps and inclusion. Gender as basis of discrimination was found insignificantly correlated to compensation, while pay for performance was found negatively related to inclusion. We have proposed a model to predict feeling of inclusion if components of compensation and discriminatory factors are known. In second part of the study, based on 25 in-depth interviews, cognitive basis of compensation gaps has been divulged, and we conclude that implementation of compensation equity and removal of cognitive bases of discrimination seem mandatory actions for inclusion.