case report

Propter, Inc. Case Study

Executive Summary

In this report we analyzed whether or not minority employees are paid less salary as compared to white colleagues within Propter, Inc. Minority employees complained about the salary discrimination, which prompted Larry Greer, President of Propter, to call a meeting with the minority employees. He explained to them that salary is formulated upon loyalty and performance to the company. Nonetheless, he vowed to investigate the claim and come up with an amicable solution to the issue.

When examining the claim, it was evident that the claim was based on the average salary of whites versus minorities alone. It was correct as whites make a notable amount more than minority workers. However, the average salary alone was not enough to draw a conclusion in this case since many of the minority employees were hired within the last two years due to the affirmative action policy.

Once the data was split up across pay grades, there was no inconsistency between salaries across race. Factors such as average pay grade, tenure, and performance scores contributed to a discrepancy between average salaries across races as whites. The disparity was because most minority employees were hired within the last two years due to the affirmative action policy. Pay raises and position advancements are based on annual performance reviews and the amount of time an employee has been at the company.

Introduction

Within Propter Inc, there have been several complaints by minority employees, such as Mr. Johnson, about notable salary differences compared to their white colleagues after viewing a salary memo. To further investigate these concerns, Larry Greer, President of Propter Inc, decided to hire a task force.

When examining Mr. Johnson’s claim, it is understandable that Mr. Johnson has approached the head of the company over discrimiation concerns. Mr. Johnson brought forward this claim based on the average salary of whites vs minorities alone, and he is correct in that whites on average make a notable amount more than than minority workers. However, average salary alone is not enough to draw a conclusion in this case since many of the minority employees were hired within the last two years due to the affirmative action policy. Factors such as pay grade, tenure, and performance scores were examined and statistically analyzed to give further insight as to what could be causing this pay gap. Propter, Inc states that pay raises and position advancements are based on annual performance reviews and the amount of time an employee has been at the company. It is essential to investigate whether or not the company’s claimed stance on advancement is accurate.

Investigating Pay Histories

To understand Mr.Johnson's claims regarding the salary differences between minorities versus non-minorities, it is important to first calculate the average salary between each group. Through creating a Pivot table to understand the averages of the categorical data, we found that minority individuals make an average of 2820$ whereas non-minorities make an average of 3351$. Therefore, the difference between the average salary between whites and minorities at Propter, Inc is $530 monthly, with whites making an average of the higher salary. To further investigate this disparity, we decided to check the differences between the salaries of minorities and non-minorities within different pay grades. Illustrated in Table 1, are the comparisons of average net salaries between minorities and non-minorities within three pay grades; Assistant Service Rep (Grade 1), Service Rep (Grade 2), and Senior Service Rep (Grade 3). Once the data is split across pay grades, there no longer seems to be an inconsistency between average salary across race within each pay grade. It is noteworthy to mention that the average salary of the minorities within pay grades 1 and 3 are surpassing the non-minorities with 2380$ versus 2286$ in pay grade 1 and 4140$ and 4106$ in pay grade 3 (Table 1).

Examining pay grade in Depth

The finding of average salary across pay grades is helpful, but it leads to another question: if the salaries are comparable between minorities and non-minorities among pay grades, why are they not equivalent overall? To investigate further, we looked at how many employees that identified as a minority or non-minority belonged to each pay grade. According to Table 2, 67% in pay grade 1, 37% in pay grade 2, and 22% pay grade 3 identified as a minority. Furthermore, the data displays that there is a striking increase of white employees as the pay grade increases whereas many of the minority employees tend to reside within the lower pay grades (Table 2). This explains why the average salary across pay grade is more consistent between races than the overall average salaries. However, new concerns emerge. Why are there fewer minorities in higher positions? Could this be a result of discrimination?

In order to understand the length of time employees have been employed by Propter inc on average, we developed a pivot table that outlined the average tenure across race per pay grade. As per Table 3, the average tenure of whites at the company is 3.37 years, whereas the average tenure for minorities is 2.43 years. Moreover, based on the data it appears the minority employees have spent an average of less time in each pay grade which indicates that minorities are being promoted sooner than the non-minority counterparts (Table 3). Additionally, this information displays that whites have been employed by the company for an average longer amount of time than minorities.

Comparing this data to the proportion of non-minority versus minority individuals in each pay grade, the lack of minority representation within the higher pay grades may be due to the affirmative action hiring program which was only established about two years ago.

Evaluating Employee Ratings

To further understand the correlation of employee performance compared to net salary, we established a pivot table as well as a scatter plot. After creating a pivot table that compares the average ratings of employees within each pay grade, the correlation between rating and net salary was found to be an average of .845 (Table 4). Furthermore, through establishing a scatter plot between employee rating and net salary, we are able to see whether or not there is a positive or negative correlation between these two variables. After analyzing the data, there appears to be a high positive correlation which suggests that the higher an employee’s rating, the higher the net salary is (Graph 1).

Results

According to the data discussed, it is concluded that there is no discrimination of net salary between racial groups. Although there is a difference between overall average salaries, when broken down by pay grade there was no noteworthy difference. Furthermore, there are more whites in higher positions and minorities in lower positions, but when looking at the tenure data, minorities have been at the company for less time than whites. The company’s policy states that it will take a couple of years to be promoted, which would explain why whites are currently in higher positions. In addition, Propter Inc has implemented the affirmative action hiring program just over two years ago. This could explain why more minorities were hired in recent years, so would currently be in lower pay grades, as opposed to this being due to discrimination.

The high positive correlation between rating and salary indicates that Propter Inc bases decisions regarding promotions and salary raise on performance. However, this should be reassessed in a couple of years and see if minority employees continue to be promoted at a similar rate as white employees. It would also be helpful to have data on whether or not minority employees leave the company or are fired at a similar rate as the white employees. If minority employees are fired more frequently before being able to be promoted, it would skew the data to look like the minorities were being favored for promotion (Table 3).

Despite the fac we found that Propter, Inc is not currently discriminating against their minority employees, it will be interesting to see the data such as pay grade proportions be evaluated in the future to better understand whether discrimination does exist in the workplace. Additionally, having data such as employee turnover rates between minorities and non-minorities may be the key to establishing a concrete conclusion.

Conclusion

In conclusion, the data did not provide strong evidence to prove that Propter Inc has discriminated against race. Any employee with a higher rating indicated more salary, but we found out that white employees reside in higher pay grades than minorities. However, this result may be due to the affirmative action policy which has led to Propter Inc hiring more minorities within the last two years. In return, data such as tenure and rating may have been skewed. Nevertheless, it is important to evaluate the data again in the future which may provide us with further accuracy.

Appendix

Table 1

Table 2

Table 3

Table 4

Graph 1