Here at DevResults, we gave ourselves a present for Equal Pay Day - a spreadsheet with every employee’s current salary and pay history, from our newest hires to our founder/CEO.
Why salary transparency?
A single data point can’t reveal inconsistencies in compensation, but many can tell a story. Transparency makes it possible for us all to look at the patterns that arise from well-intentioned but biased processes, and make deliberate corrections where they’re needed.
As a company at the intersection of tech and international development, we support salary transparency in both industries. We understand the squeamishness around salary transparency; it takes courage to invite difficult conversations with your staff about fairness, but moving toward pay equality is worth it. To that end, we’d like to share our experience.
Some of us were uncomfortable. That’s ok.
Money talk is hard. Many of us were raised in a culture where money matters were kept private and money talk considered gauche. DevResults has also been around awhile, and some of our teammates were hired not realizing their salaries would someday be shared with their peers. It would have been natural for some balk at what feels like an intrusion.
Ask yourself, as well, whose comfort you are favoring by keeping salaries in the dark. The women and other underrepresented minorities on your team are probably already wondering how their salaries stack up to their peers, and that’s disquieting.
If your compensation packages are fair, your people will quickly get comfortable with the fact that they are also knowable by their colleagues. It’ll become the default culture, as it is in many other workplaces, and that’s good. The discomfort of having one’s salary shared with teammates will be fleeting, but the benefits run long.
If your compensation isn't fair, it’s time to correct that.
We started by sharing salaries, not by adjusting salaries.
The first step to making compensation fair is making compensation transparent. If you worry that people might look at the salaries as listed, feel some surprise or anger, and talk to you about it, that is excellent! That’s exactly what’s supposed to happen.
Waiting until you feel confident that everyone will agree that salaries are fair:
- Prolongs any imbalances in your current compensation system,
- Assumes that decision-makers are unbiased and will produce an unbiased compensation chart,
- Increases emotional investment in your own decisions before hearing from a more diverse representation of your staff.
You might be challenged when your team sees the data. Your job as a leader is to hear those concerns and respond by listening and taking corrective action.
At DevResults, leadership gave the staff some time to process the information, and then made themselves available to hear concerns. They responded to questions raised about fairness by scheduling time to talk about an objective system for awarding compensation. We’re still working through the difficult question of what that might look like (more on that in another post at a later date.) By being open and transparent with the staff, leadership made themselves vulnerable to criticism about something that’s deeply personal, but also made it possible to move forward instead of being paralyzed by decisions made over the course of a decade.
We published the data, not a summary of the data.
DevResults shared a spreadsheet with every employee’s name, along with their salary and bonus for every year since they’ve been hired. The spreadsheet leaves no ambiguity, which is good. You might be tempted to summarize the data in terms of demographics, to offer your employees a schedule of salary ranges corresponding to position and experience, or to publish some details about how you determine salaries. Don’t do that.
Because small salary differences compound over time, publishing only summary data can obscure small inequities that have big impacts. A starting salary band that’s $10,000 wide leaves plenty of space for a meaningful amount of unfairness to hide.
Let’s imagine two employees, Jane starting at $55,000 and John starting at $60,000, salaries that might easily fall into the same salary band. Over the course of a 40 year career, if each of them gets the same 4% raise each year, John would outearn Jane by about $475,000.
Let’s also imagine that the company offers a 401K with a 3% match. In their first year, the difference between Jane and John’s match may seem like a pittance at $150 (3% of $5,000), but the magic of compound interest -- we’ll assume a 5% return, here -- means that over the course of a 40 year career, Jane would lose out on another $400,000 in just the 3% match and the interest it would earn.
A salary band that’s $10,000 or $20,000 wide can disguise millions of dollars of inequity. Publish your actual numbers.
Be at the forefront of pay equality.
If your company has already bias-proofed your pay schedules, congratulations! Participating in salary transparency will demonstrate your commitment to inclusion within your company, and help to push the practice toward becoming the norm everywhere. It’s a clear, concrete step toward reducing pay inequality.
If not, give yourself the chance to hear from your employees about how to align compensation choices with what your company values in its people. The goal of salary transparency is to enable a conversation that couldn’t have happened otherwise and to help you create a company where everyone is paid fairly and knows it. What better way to celebrate Equal Pay Day?