Luke Hohmann presented the following scenario the other day on LinkedIn—

If you’re wondering how you think about salary and fair pay, consider the following scenario I gave to my kids at dinner a few nights ago.

A white man and a black woman apply for the same job. They are equally qualified. During the interview process, the you ask the candidates for their salary requirements. The white man provides a number that matches the salary target established by your company. The black woman provides a number that is lower. If you hire the black woman, do you pay her what she requested or the established salary target?

It was fascinating to listen to the debate that ensued. One argument is that the company should maximize profits, so paying the black woman what she requested would be fair. A counter argument is that quite often minorities don’t know what they’re worth, so they often request salaries that are below market rates, and the company should pay the target salary.

Personally, I don’t feel that this is a hard choice. Leaders who have ‘power’ over such things as compensation should use their privilege to compensate people fairly.

I fully agree with Luke’s last point. There needs to be fairness and equity in compensation and there is really no excuse for shying away from it.