Empathy Leads to Equity

Equity is a term that has become a keystone in the world of compensation. We use it in a wide-ranging list of topics including stock-based compensation, pay transparency, gender and race. I recently did a presentation about the topic titled “Three Buzzwords and One Truth. The buzzwords being fairness, transparency, and internal equity, the truth is the continued growth in variable (differentiated) pay.

I found the following great image being used on many sites that focused on equity in a far less specific sense.

While doing the presentation I realized that something was missing. All of the examples are drawn from the perspective of someone even more disadvantaged. Of course, a person behind these kids can see the problem they are having. They are experiencing the same problem themselves. The key to fixing things is the people inside the stadium understanding the issue. Imagine something like the following.

It is clear that none of these kids are truly getting the best experience. This is where empathy can lead to equity.

Here’s how Merriam-Webster defines empathy.

The action of understanding, being aware of, being sensitive to, and vicariously experiencing the feelings, thoughts, and experience of another of either the past or present without having the feelings, thoughts, and experience fully communicated in an objectively explicit manner.

Equity compensation plans originated with leaders who had recently not been leaders. They understood the imbalance that traditional pay programs created and knew that a sense of ownership could be augmented by a pay program that delivered value to everyone as if they were owners. The best equity plans today keep this ethos. The worst have lost any empathy and look at the plans as just another tool.

Pay equity is similar. Finding the mathematical discrepancies is fairly simple. Determining the best path to correcting those issues requires more than math. The math is simply the “what” of the issue. Empathy provides an understanding of the why and helps define the how. Companies that only fix the math will see the problem arise again. Companies that improve the issue in a more empathic way may fix the immediate issue and find a long-term path to eliminating it altogether.

Understanding the participants' perspective is absolutely essential to the success of any incentive plan. Some refer to this as WIIFM. What’s In It For Me. It sounds a bit crass, but is actually another way of reminding us to look at things from the employee's perspective.

When performed expertly, a company can also use this concept to build a sense of empathy in its employees for each other and for the company. This is when pay programs really hum. This is when culture, strategy, and a sense of ownership combine into an equitable workplace.

Dan Walter is a CECP and CEP and works as Managing Consultant for FutureSense. He is passionately committed to aligning pay with company strategy and culture and is considered a leading expert on equity compensation issues. Dan has written several industry resources including an issue brief on Performance-Based Equity Compensation than Dan refers to as informative written Ambien. He has co-authored ”Everything You Do In Compensation is Communication”, , “Equity Alternatives” and other books. Connect with Dan on LinkedIn. Or, follow him on Twitter at @DanFutureSense.

Posted by DanFutureSense on 10/30/2018 at 07:57 AM in Compensation Philosophy, Gender Equity, Incentives/Bonuses, Stock/Equity Compensation, Total Rewards | Permalink | Comments