As More Employees Reveal Their Salary, Organizations Must Be Prepared to Discuss Compensation
On Friday, Zach Wilson, a data and software engineer, revealed his compensation history on LinkedIn. From his $30,000-a-year internship in 2014 to his current $575,000 annual compensation at Airbnb, Wilson laid out his salary and job description at tech giants including Facebook (Meta) and Netflix. The post went viral. As pay transparency becomes more mainstream, employees are questioning their compensation and employers are scrambling to defend their pay strategies.
Wilson accompanied his salary history by writing, “I think talking about compensation should be less taboo.” Indeed, sharing salary information is becoming less and less taboo. Websites like Glass door and blind share the salary data they have collected anonymously. And a Google employee launched a spreadsheett to collect payment information from other Googlers. With salary information readily available, employees are armed with valuable data they can use to challenge their employers’ compensation practices. According to Maria Colacurcio, CEO of the workplace equity software company, Syndiomany companies are unprepared to address their employees’ pay concerns.
One of the goals of the pay transparency movement is to help level the playing field for minority groups and women. In the United States, women earn only 82 cents for every dollar earned by a man, and black women earn only 63 cents for every dollar earned by a man. Pay transparency lets employees know where they stand against their peers, and they can present data to their employer and demand fair compensation.
Most of the companies are not aware of their problems and therefore they only deal with the conflicts one by one. Colacurcio says that instead of adopting this type of “Whac-A-Mole” strategy, organizations need to anticipate the problem. She says companies need to focus on their inequalities and address them before they become a problem. Syndio’s software and analytics help companies analyze pay equity in the organization (getting equal pay for equal work) and also assess the fairness of opportunities.
Colacurcio describes equity of opportunity as “who is high for these high salaries and who is low for the lowest salaries”. Organizations that focus only on equity within a particular job description or level may fail to locate inequalities of opportunity. If certain groups are selected for promotion more frequently or are integrated at higher levels, inequalities of opportunity add up. Syndio’s software has already helped Nordstrom, Sweetgreen, SalesForce, General Mills, American Airlines and others analyze their pay equity and opportunity equity.
Once companies have identified their issues, employers need to have a compensation philosophy that they can simply explain. Then, they must give managers the means to explain this philosophy. Syndio’s client, Nordstrom, has been role-playing with its people managers to help them better prepare to answer compensation-related questions. They highlighted possible questions managers might have and provided them with relevant talking points. This strategy not only helps managers solve problems, but also helps employees feel they are being paid fairly.
Not only do employees share their salary data, but new salary transparency laws in seven states and several cities require employers to report the salary range for all new job postings. This can create problems if the organization pays its current employees less than the going rate. Colacurcio explains “especially in a labor market, like the one we find ourselves in, if you hire at these exorbitant market prices and you don’t increase the wages of your permanent workforce, you are going to create a huge sanitation problem in the future.” She says managers are unprepared to answer questions about why new hires earn more than employees who have already worked for the company for several years. “I’ve heard, across the board, that leaders just aren’t prepared for these conversations,” Colacurcio says.
When given a pay scale for a particular position, there is research evidence that potential employees will likely believe they deserve to be at the top of that range. Colacurcio suggests this is just one more reason why employers need to have a data-driven approach to compensation, so they can champion their compensation philosophy. Then they can clearly explain to employees what it means to be high-end and what it means to be mid-range.
There are additional benefits for companies that rethink their salary structure and analyze their pay equity. Colacurcio thinks identifying compensation issues could help companies tap into underutilized human resources. She says, “It really allows you to create opportunities for people and to look through your talent pool and understand that something as simple as a travel policy or a flexible hours policy holds a whole population of people from an underrepresented background. And while talent is the number one operational priority for so many companies right now, it’s a very good chance to be able to understand that.