Disparity in organizational research: How should we measure it?

Researchers can use the coefficient of variation (CV), Gini coefficient, standard deviation (SD), Theil index, or relative mean deviation (RMD) to measure organizational disparity. Because these five measures have different properties, however, using them interchangeably may lead to inconsistent findings. Using simulated team pay data, we conducted two simulation studies to examine the similarities and potential differences among these measures. The results showed that CV, Gini, Theil, and RMD were strongly related in most circumstances and that interchanging them had little impact on their relations with outcome variables. Differences were observed, however, when interchanging any of these four measures (CV/Gini/Theil/RMD) with SD, especially when samples were characterized by a seriously skewed distribution, a wide pay gap, and a high sample disparity. Given that SD does not meet some of the properties of disparity, and that it may underestimate correlations between disparity and outcome variables, we suggest that researchers use CV, Gini, Theil, or RMD, rather than SD, to assess organizational disparity.