Inequality, equity and HR. Market Failure in South Africa
Are South African Human Resource Management trends contributing to equality or inequality? Income inequality trends point to the latter. Is your organisation falling into the same leadership failure trap?
Business Policy, Power and Inequality
There’s evidence of firms using social media to try normalise an abuse of power, particularly evident during recruitment. Applicants are forced to disclose privileged wage information to the detriment of their economic rights.
Firms consistently criticised for unfair practices provide easy opportunity for competitors to disrupt their markets.
Screenshot of the Competition Commission of South Africa’s application form requiring rival firm pay details:
Firms are open to questioning when they make unfair demands that connect to instituting inequality:
Inequality isn’t an abstract
There are particular points of the employment value chain where prejudice enters.
This is made possible because the prejudice reinforces and conforms to (unequal) perceptions of power. In other words, when business says it doesn’t have to disclose, most of us simply accept that it’s the way it is.
Recruitment adverts omitting salary ranges is an example of an abuse of power.
Most people fail to grasp why it’s wrong to withhold salary information till you force them to explain why it’s right. They then realise it’s only right if you agree to give away your right to disagree.
Unethical firms want the public to believe they are entitled to withhold information. They rely on applicants to willingly submit, if they don’t, these candidates are removed from the selection process.
The omission of pay ranges is based on the employers assumption that it provides greater leverage during wage negotiations and that applicants wont address the ethical problem of employer non-disclosure if they want to avoid compromising their position as job applicants.
Decisions to be unfair are purposeful, they’re not ‘human error.’ I believe a rationale for unfair power can be deeply embedded in organisational culture, seeping into everything.
Inequality, discrimination, prejudice and exploitation is ever present in the labour market because the field of HR in South Africa fails to challenge or correct these disempowering constructs. (Even the South African Board of People Practices (SABPP) can’t articulate a response to this challenge.)
It follows that business leaders serious about equality and ethics must review HR systems to strengthen corporate policy. If policy is key to business behavior, ethical businesses should publish their policies to show they conform to a democratic society and foster transparency.
Ask yourself: If industry operates in a way that is anti-society, should we allow it?
Does this question seem ludicrous to you? Was your first reaction that it’s stupid to suggest society trumps business?
Unfair Information Advantages
Information (knowledge) creates market failure when the imbalance of knowledge between the job applicant and recruiter leads to exploitation of the one who has the least knowledge.
- Employers may discover applicants did not disclose vital information during a job interview.
- A job applicant may accept a job offer only to discover that they failed to correctly price their talent during the interview and have been taken advantage of.
Decisions are made to identify talented applicants who will settle for low wages
Economics and Evidence
Economic patterns are based on human behaviors. The field of economics is where you go to get a summary of human behaviors.
Income inequality is an economic pattern showing how people are paid differently and illustrates who is paid high and low. The ‘who gets paid what’ is not just shown in terms of jobs, but who the people are in terms of:
- geographic location etc
- Black people
There is a wealth of evidence proving that prejudice exists in the employment value chain, fostering income inequality and growing the working poor.
HR policy decisions must be robustly scrutinised and brought in line with the Constitution.
Companies have access to volumes of information regarding organisational ethics, income inequality and human rights – time to tap in!
‘Equity’ and BEE
BEE is an effort to reduce discrimination and accelerate black mobility within the labour force.
Solutions to discrimination are both horizontal and vertical:
- Horizontal Equity – all are equal, the Constitution upholds this but makes allowances for BEE
- Vertical Equity – laws (e.g. BEE) promoting preferential treatment for certain groups with the objective of undoing discrimination
Contact Leonie if it’s time for change or challenge!