Compensation Analysis of 3 Advanced Data Modeling

Transcription

1 Compensation Analysis of 3 Advanced Data Modeling Presenters: Daniel Kuang, Ph.D. John Piatt Overview of Biddle Consulting Group, Inc. Affirmative Action Plan (AAP) Consulting and Fulfillment HR Assessments Thousands of AAPs developed each year Audit and compliance assistance AutoAAP Enterprise software AutoGOJA online job analysis system TVAP test validation & analysis program CritiCall pre-employment testing for 911 operators OPAC pre-employment testing for admin professionals Video Situational Assessments (General and Nursing) EEO Litigation Consulting /Expert Witness Services Compensation Analysis Publications/Books BCG Institute for Workforce Development Nation-Wide Speaking and Training Over 200+ cases in EEO/AA (both plaintiff and defense) Focus on disparate impact/validation cases Proactive and litigation/enforcement pay equity studies COMPare compensation analysis software EEO Insight : Leading EEO Compliance Journal Adverse Impact (3 rd ed.) / Compensation (1 st ed.) 4,000+ members Free webinars, EEO resources/tools Regular speakers on the national speaking circuit Biddle Consulting Group Institute for Workforce Development (BCGi) BCGi Standard Membership (free) Online community Monthly webinars on EEO compliance topics EEO Insight Journal (e-copy) BCGi Platinum Membership Fully interactive online community Includes validation/compensation analysis books EEO Tools including validation surveys and AI calculator EEO Insight Journal (e-copy and hardcopy) Members only webinars, training and much more

2 Daniel Kuang, Ph.D. Vice President of Legal and Audit Support Services Biddle Consult Group ext. 145 John Piatt Director of EEO/AA Operations & Customer Services Biddle Consult Group ext Compensation Series Overview Part 1: Compensation 101 Understanding Context of Compensation Analysis Basics statistical models Compensation Strategies Part 2: Multiple Regression Data Modeling: Multiple Linear Regression Part 3: Advanced Analysis Methods Advanced Data Modeling Post OFCCP Directive 307 Analyses 5 Presentation Overview Recap of Statistical Models (2) Statistical Model: t-test Statistical Model: Regression Advanced Data Modeling Concepts 6

3 Statistical Models Analysis Logic Q: What are we looking for in a comp analysis? A: We are looking for difference in pay. Examples: Is there difference in pay between men v. women? Is there difference in pay between whites v. minorities? Is there difference in pay between individual race groups (e.g. whites v. Asian) 8 t-test The t-test is a powerful and simple method to test for differences in pay between any two (2) groups The t-test on tests for simple differences. It does not take into account explanatory factors that may impact compensation (e.g., tenure, performance, education). Multiple Regression is a more advanced and generalized model of t-test. Multiple Regression tests for between group differences after controlling for explanatory factors 9

4 t-test Example 1: t-test perspective Group Salary($) Male 35,000 Male 35,000 Male 35,000 Male 40,000 Male 40,000 Male 40,000 Female 40,000 Female 40,000 Female 40,000 Female 55,000 Female 55,000 Female 55,000 Average Salary Male=$37,500 Female=$47,500 Simple Mean Group Difference=$10,000 t=2.83, p= Multiple Regression Multiple Regression is a more advanced and generalized model of t-test. Multiple Regression tests for between group differences after controlling for explanatory factors 11 Multiple Regression Example 1: Regression perspective Group Salary($) Tenure Male 35,000 1 Male 35,000 1 Male 35,000 1 Male 40,000 2 Male 40,000 2 Male 40,000 2 Female 40,000 2 Female 40,000 2 Female 40,000 2 Female 55,000 3 Female 55,000 3 Female 55,000 3 Adjust Mean Group Difference=$0.00 p=

5 Pre/Post 307 Comparisons 13 Pre/Post 307 Comparison Pre 307, OFCCP s hands were bound and cannot win!!! Problems/Issues Pre Post Small sample size/not analyzable Small statistical power Post 307, OFCCP has the necessary tools to win!!! 14 Pre Directive 307 Simple Regression Job Title Location SSEG Admin 1 Houston 1 Tampa 2 Admin 2 Phoenix 3 Tampa 4 Manager 1 Dallas 5 Houston 6 Phoenix 7 Tampa 8 15

6 Post Directive 307 PAG Job Title Location SSEG PAG Admin 1 Houston 1 1 Tampa 2 1 Admin 2 Phoenix 3 2 Tampa 4 2 Manager 1 Dallas 5 3 Houston 6 3 Phoenix 7 3 Tampa Advanced Data Modeling 17 Categorical factors Qualitatively unique and different categories Example: Location, Job Title, Division, etc. Statistically Control for Categorical Factors Aggregate/Pool pay differences at each SSEG across categorical factors Powerful Tool for OFCCP Game Changer Old tricks (divide & hide/slice & dice) cannot hide true pay disparity 18

7 Old Tricks??? Example Please 19 What s the new tool? Pay Analysis Groups (PAG) How do you Control for categorical factors? Dummy Coding What are dummy codes? Coding scheme of 0 s and 1 s to unique identify levels/categories of a factors. Create k-1 dummy codes o k=number of levels/categories of a factor 20 Dummy Code??? Example Please 21

8 Warning: Invalid Model Specif. It is EASY to misspecify your model. Understand what you are rolling up Overly broad PAGs are most likely incorrect One-size fits all models for large and broad organizations do not reflect reality o e.g., is TIC, TIJ, Perf, etc. and salary same for all jobs? To establish a claim of pay discrimination, the charging party must present evidence to support a valid model. 22 Warning: Invalid Model Specif. One-size DOES NOT fit all Job Title Location TIC TIJ Perf. Admin 1 Houston Tampa Admin 2 Phoenix Tampa Manager 1 Dallas Houston Phoenix Tampa 23 Warning: Invalid Model Specif. One-size DOES fit all Job Title Location TIC TIJ Perf. Retail Associate Atlanta Dallas Houston Los Angeles New York Phoenix Seattle Tampa 24

9 Warning: Invalid Model Specif. To establish a claim of pay discrimination, the charging party must present evidence to support a valid model. We experience many misspecified models from claimants expert statisticians. 25? 26 Daniel Kuang, Ph.D. DKuang@biddle.com John Piatt JPiatt@biddle.com Biddle Consulting Group's Institute for Workforce Development (BCGi) 27