The Quest for Gender Pay Equity at Elemental Systems

by: Christopher I. Rider, Elizabeth Choi, Yena Kim

Publication Date: October 30, 2023
Length: 8 pages
Product ID#: 5-154-986

Core Disciplines: Diversity, Equity, & Inclusion, Information - Technology & Management, Social Impact, Strategy & Management

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Teaching Note

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Third Place Winner; 2023 DEI Global Case Writing Competition

Elemental Systems is a fictional enterprise software company that employs 5,000 people across four divisions. Dani Perez is a consultant hired by Elemental Systems to conduct an organization-wide pay equity analysis. Elemental’s 2022 Binary Gender Pay Report implies that Elemental does not have an unadjusted pay gap (i.e., the difference in average pay for all men employees is not significantly different from the average pay for all women employees). However, this observation is inconsistent with employee observations shared with Perez. Students must, therefore, adjust the pay gap estimates to reconcile employee perceptions with the pay data.

Students are provided with a cross-sectional pay data file generated for Elemental’s Binary Gender Pay Report. (It is a supplemental Excel file included with the case and teaching note). Informed by employee quotes provided in the case, students perform equity analytics to estimate Elemental’s binary gender pay gap. The analyses start with an unadjusted pay gap estimate and then proceed through a series of adjustments. These analyses reveal that although there is no unadjusted gender pay gap across Elemental’s four divisions there are distinct pay disparities within individual divisions. A key insight of the case is that aggregating unit pay data at the organization level can mask substantial pay disparities among an organization’s constituent units.

Students will attribute estimated pay differences to differential treatment of men and women employees (i.e., different behaviors produce different pay) or to disparate impacts of organizational practices (i.e., equivalent treatment produces different pay). More specifically, the instructor can use the equity analytics framework (detailed in the teaching note) to demonstrate which of Elemental’s divisions exhibit one of the pay disparities featured in the equity analytics 2 x 2 framework: (1) differential allocations, (2) differential valuations, (3) disparate allocations, or (4) disparate valuations. Each of the four disparity-generating processes necessitates a different approach to closing the pay gap.

Teaching Objectives

After reading and discussing the material, students should:

  • Conduct an organizational pay equity analysis by calculating an organization’s unadjusted gender pay gap and then adjusting that estimate.
  • Use the equity analytics framework to distinguish differential treatment and disparate impact in organizational allocations and/or valuations as causes of pay disparities.
  • Recognize that organization-level pay data can mask disparities within the organization’s constituent units.
  • Formulate pay equity interventions to consider implementing.
  • Appreciate the necessity of self-identification and adequate identity choices for conducting a gender pay equity analysis.