“Should we list pay ranges in our job postings?”
“How do we talk about our company’s compensation practices during the interview process?”
“Are our hiring managers equipped to handle salary conversations with their team members?”
As daunting as these questions may sound, they’re ones companies must answer if they want to retain their top performers by building a culture of trust and pay transparency within their organizations.
These are also the questions two values-driven leaders discussed during a recent Equity Matters Chat, a monthly discussion about all things pay equity. The chat brought together members of OPEN Imperative (Organizations for Pay Equity Now), a coalition of founders, CEOs, and investors of growth stage businesses committed to ending gender pay disparities in their organizations. Hosted by Capital Connect by JP Morgan and OpenComp, the event featured Sheri Kelleher, SVP of People and Places at Incorta, and Aaron Painter, CEO at Nametag.
To end gender pay disparity in your organization, join OPEN Imperative.
Kelleher, Painter, and other OPEN Imperative members discussed how trust and pay transparency are essential building blocks to an organizations’ pay equity efforts, and emphasized that progress cannot be achieved without them.
Read on to find out how these cultural hallmarks inspire pay parity, and overall organizational health and growth.
Pay Transparency: The foundation for change
Trust and pay transparency are key to a healthy company culture, but they don’t come easy.
When employees trust their company’s DE&I commitments, their engagement level can increase up to 20%, and the likelihood they will leave their organization decreases by 87%.
But how can companies build trust? Being open, honest, and transparent about compensation is one of the most effective ways.
“People want to trust you with pay equity,” Kelleher remarked during the chat. “You need to be able to talk about it and say what you know and what you don't know. You need to be vulnerable.”
Earn trust to power progress
Trust doesn’t occur naturally without action. “Trust is built through repeated behaviors,” Kelleher said. “Doing what you say you’re going to do and putting it into practice is the differentiator.”
Some leaders may have to do some course-correcting to build trust in matters of pay equity. OpenComp’s first-annual report on gender pay parity in the pre-IPO landscape revealed a disconnect between startup leaders and pay equity action. While the majority (74%) of executives said pay equity is important, most of their teams (61%) said they lack adequate resources to address pay equity.
Leaders can build trust in their organizations by re-dedicating themselves to pay equity efforts and addressing issues that may have eroded worker confidence in the past. Painter experienced the power of such efforts when he took over a UK-based company acquired by a private equity firm. “All the employees were, naturally, distrustful — who’s this new unknown CEO they brought in?” Painter recalled. “I inherited a massive HR challenge.”
The company needed to develop a compensation philosophy, pay ranges, promotion plans, bonus structures, and reward mechanisms. “We had so much work to do to get basic infrastructure in place, partly as a way to earn back trust,” Painter said. “That really exposed me to how important it was to get those basics right from the start. I was also very fortunate to have a gifted HR leader who took this challenge head on as a true partner to me and the business functions”
Vulnerability and respect became a winning combo as he navigated cross-cultural leadership. “By sitting and listening and really seeking what was on the minds of people in these different markets, they felt respected,” Painter said. “Ultimately, that led us on a journey of building trust.”
Reap the rewards of pay transparency
While the term “pay transparency” can make leaders nervous, it's important to recognize that pay transparency doesn’t have to mean publishing everyone’s individual salaries. It’s a data-driven approach to compensation that lets candidates and employees see the science behind how their total rewards are determined.
Painter and Kelleher both emphasized the far-reaching benefits of a transparent approach to pay. It sets the tone for the broader culture, and it enhances retention by enticing employees to stay. “It just makes a world of difference for the lifespan of an employee,” Painter said.
Advance progress on pay equity
Understanding how trust and pay transparency pave the way for pay equity is a critical first step in your organization’s journey to pay parity.
It is equally important to understand how bias can creep into the hiring and promotion process, and to be intentional about changing practices that can contribute to pay inequities.
We know that pay gaps have real world implications not just on companies but on the employees themselves, with women and people of color being disproportionately impacted. The average female professional earns $0.83 to every $1 earned by white, non-Hispanic men, LGBTQ+ workers earn $0.90 to the same $1 versus working hispanic and black women who earn $0.57 and $0.64, respectively. These gaps represent the loss of hundreds of thousands of dollars over the course of someone’s career.
To change this reality, leaders can take action by adopting the following strategies to find, fix, and prevent discriminatory pay gaps - even during times of economic uncertainty:
- Develop and deploy pay ranges.
- Conduct pay audits.
- Budget to fix revealed discrepancies.
- Throw out salary history considerations.
- Invite candidates and current employees to ask questions about their pay.
To learn more about these and other steps you can take to incorporate more equitable practices, join OPEN Imperative. Our monthly chats, exclusive to members, will connect you with thought leaders and peers and help propel your pay equity efforts.
Emily Sweet is VP of Social Impact and OPEN Imperative Lead at OpenComp. She writes about topics including pay equity and diversity, equity & inclusion (DEI). A board member of the National Council of Jewish Women, Emily is a veteran philanthropic leader and policy advisor with more than 20 years experience advancing bold solutions to big problems that drive impact and inspire collective action. Connect with her on LinkedIn here.