Today, business leaders are setting more ambitious goals for their diversity, equity, and inclusion (DEI) programs, and there are countless discussions around strategic choices organizations can make to achieve those objectives. But, things get a bit hazy when it comes to pay equity.
Most hiring leaders recognize pay transparency is essential to fostering a diverse workforce. But while many companies are exploring pay transparency in hiring practices, it’s challenging to find real, concrete advice on how to establish pay equity.
As a part of our Equal Pay Summit, we brought in a panel of experts to discuss how they’re addressing pay transparency and pay equity, and share words of wisdom to help other hiring leaders set their programs up for success.
Here are a few of the highlights.
Q&A With the Panelists
Q: We talk about compensation as the result, but “fixing” this alone is just fixing a symptom. How do we solve for opportunity as it relates to equitable pay?
“If I am constantly entering at a lower level, then I'm constantly going to be behind. And so [The Mom Project program] Rise is meant to provide certifications — Google certifications, project management, Salesforce administration, just to name a few. These jobs are highly competitive and will allow women of color who have been out of work due to the ‘pregnancy pause’ or taking time to care for their family, to ensure their entry back to work lifts up kind of their pay.”
— Rocki Howard, Chief People and Equity Officer at The Mom Project
“We often look at one piece of the puzzle and say, ‘let's just try to fix this,’ whether it be inclusive job descriptions or including the salary in the job description. But that's just one small piece of a bigger puzzle. I would encourage everyone to look at the entire associated lifecycle as it interacts with your organization. And keep in mind that the associated lifecycle doesn't start with the recruiting process; it starts with those who aren't even applying to your company. What you should be really analyzing is, ‘why aren't these people applying to my company?’ and try to fix some of those barriers.”
— Rajiv Desai, Founder and CEO of Chrysalis DEI
Q: Amidst the Great Resignation and Great Return, many organizations are struggling with remaining fair and equitable with current employees while also chasing new talent and keeping up with a rapidly moving market. What are your thoughts on the marketplace and its influence on pay equity?
“We decided as a company that we are going to move to a national base, more equitable pay structure. And that meant leveling needed to be done internally. At the end of the year, right before the holidays, we did a comp analysis, and we said, ‘here are our current market rates, here's everyone in the organization who needs it level.’”
— Carrie Dolan, Chief People Officer at Moov Financial
“Companies holding to the pay equity they worked hard to achieve are saying, ‘Okay, if we need to go get this candidate and they're outside of the range, then here's the real cost: We have to bring everybody else in that role up to that point.’ So now you're saying there's a premium for this person, but we're not going to pay a premium and mess up our pay equity. We're going to bring everybody up, but are we ready for that cost?”
— Kyle Holm, VP of Total Rewards Advisory at Sequoia
Q: What best practices can you share for more successful pay transparency?
“How frustrating is it when you walk into a shop and you don't see the price of the item you're trying to buy? Or the price is decided based on what you're wearing or your accent? We've all traveled to international markets where we think we've haggled a good price but were laughed at because we've actually paid triple the amount. Clear pricing is such an important part of society and how we get paid for the work that we do. To me, it's basic human decency. But at some point, we've forgotten that as organizations, and we're starting to hide behind negotiations and confidential letters and pay. Well, guess what? Younger generations are talking about it very openly.”
— Rajiv Desai
“We've spent the last year putting together compensation bands, testing those bands, and now engaging in a comp model to make sure that those work. And our goal is to provide complete pay transparency so we can say to our org, ‘Here's the band, here's where your role hits here, here's where you're paid, and I can promise you that everyone at this level is in this band.’”
— Rocki Howard
Q: Adjusting base salary and getting that right is one thing, but stock is also important to overall compensation. How do you factor this into your efforts to achieve equity?
“We're not at a point yet where we can pay hefty bonus incentive structures, so we try to stay really competitive with our base pay. And every single employee gets ownership in the company. The target is 50% for their role.”
— Carrie Dolan
“There's a long-term impact that equity has on wealth creation and true participation in the value created. As we think about adjusting base salary and getting that right, sharing in the value creation in an equitable way is where we really need to get to.”
— Kyle Holm
“When you're talking about individuals coming into your company, and it’s the first time they've worked in a white collar job, the first time they've been offered equity, and they haven't had those conversations at home. Sometimes [equity] feels like paper money that's so far out there that they don't even understand what it means… I think we need to think about who we're educating and how we're educating them.”
— Rocki Howard
Q: How do you encourage management styles that create pay equity and make pay equity a core part of management DNA?
“One of the things that we hear a lot is manager reluctance to what they perceive to be a punishment for the people who are not getting the increase. So it's, ‘I'm going to give this person an increase because we found the pay inequity, but this person didn't budge, so I still need to give them an increase.’ In this case, we don't actually solve the pay inequity. So there has to be a broader context of the discussion for things to truly be equitable.”
— Kyle Holm
“When it comes to more nuanced issues — like pay equity, diversity, equity, inclusion, and belonging — I can empathize with our middle managers who are saying, ‘You've also given me all of these big goals to be accomplished, to be a good performer to hit my bonus target. And that's what I'm trying to do.’ It's our responsibility to help build a world and a culture where they understand how [pay equity] enhances their ability to do it right and do it consistently.”
— Rocki Howard
Watch the 2022 Equal Pay Summit on-demand to hear more from these experts on overcoming challenges to pay equity in organizations of all sizes.