This special edition of our High Growth Matters spotlight series details key takeaways from our inaugural OPEN Summit: The Pay Equity Tipping Point. This event garnered registration from over 400 HR innovative company and people leaders, investors, and media personnel who care about eliminating pay inequity and pioneering pay transparency in their own organizations, and featured discussions with industry experts such as Alyssa Milano and Kathi Enderes.
What is the pay equity tipping point?
As new pay legislation and equal pay mandates pass nearly daily, the pressure is on HR leaders to prevent inequity from persisting in (or creeping into) their organizations.
And the stakes have never been higher. Not only can failure to comply be incredibly costly for employers in fines and attrition-related costs, but HR leaders could also be personally liable for not complying with new regulations.
In this post, we share insights from our panel discussions with industry-leading experts and influencers so that you can pioneer pay transparency in your organization. You can watch all recordings here.
The following has been lightly edited for clarity and concision.
Pay equity is now a business imperative, with 9 in 10 executives saying that addressing the issue is important or very important.
OPEN Summit kicked off with a panel discussion on OpenComp’s Second Annual State of Equal Pay Report. A highlight of this discussion was the emphasis placed on the fact that 70% of executives feel they lack the resources necessary to activate pay transparency, which framed the insights and solutions provided by Amie Patel of Elevar, Gianna Driver of Exabeam, and Jamy Conrad of TrustRadius.
“Pay transparency is low hanging fruit,” shared Amie. “It’s the first step for creating equality across your workforce. I think executives haven't been able to properly implement in their organizations due to a lack of compensation data and resources to activate the shift internally. That being said, I think there’s a lot of initiative because there’s now a demand from investors and employees.”
And Amie’s right, as 93% of employers say pay equity influences recruiting and retention – which is a 26% YoY increase. Companies that highlight pay transparency tend to be more diverse, and we know from McKinsey research that more diverse companies are more productive, innovative, and produce higher valuations.
“Organizations that are leaning into pay equity are going to have a lot more success attracting Gen Z talent,” said Gianna. With Gen Z going to soon be the largest generation in the workforce – and the fact that these individuals tend to be very values driven and equity oriented – the organizations that are able to master pay equity are going to be the ones that attract and retain future talent.”
With this in mind, it’s time for people leaders to acknowledge that pay equity is a competitive advantage:
“A recent Harvard Business Review revealed that the majority of CEOs feel that the onus should fall on CHROs and HR teams. But employees feel that CEOs and their executives teams are responsible. Employees want their employers embracing transparency in compensation, and they don’t want them doing it because HR said so,” said Jamy.
Addressing pay transparency is the first step in dealing with a larger issue: pay equity.
Not only does having access to pay ranges give employees insight into whether or not they’re being paid fairly, but it also raises awareness for employers about how they’re paying people and if there’s any unlawful inequities that need to be addressed in compensation.
According to 4x CPO Traunza Adams, there are two sets of challenges when it comes to implementing pay transparency: the psychology and the compensation mechanics behind it.
“For most companies, compensation lives in a black box. When you peel back the curtain and show what’s behind there – that’s scary,” states Traunza. “There’s a lot of complexity, particularly when you involve performance-based or knowledge-based compensation.
“For example, many engineering leaders have told me that the most talented software engineers are 10x more productive than the average engineer. But as we know, most people feel they’re performing above average. If the performance is reflected in the compensation, and people know this, how do you explain to your engineer why they’re not getting paid the same as your super keeper engineer their compensation without demotivating them?”
Most managers aren’t trained to have this kind of conversation. But this is where pay transparency legislation comes in. It’s not just about sharing a range, but also pushing employers to operate outside of their comfort zone. Having a defined compensation philosophy and structure that managers can reference during compensation discussions can help.
When it comes to CA pay data reporting, the quality of your data, job leveling structures, and internal communication matter.
California’s new pay data reporting law requires any employer with over 100 employees (even if just one lives in CA) to report their compensation practices by sex, race, and ethnicity to the state’s Civil Rights Commission.
And when it comes to submitting these reports, Sheri Kelleher, SVP of People at Incorta, highlighted that it’s important for people leaders to understand and communicate your company’s compensation philosophy, how your job leveling framework works, and how you’re going to continue to address any gaps highlighted by the report.
As an HR leader, you can also create an FAQ document for people managers, offering training opportunities, and even hosting some sort of role-play event so that managers can anticipate a few questions.
Noreen Farrell, Executive Director at Equal Rights Advocates, also highlighted the penalties of the legislation: in addition to the civil and monetary penalties, there can be an action taken against HR leaders by the California state agency if you don’t comply.
According to Noreen, “people have done a good job of starting to collect their data, but it’s the analysis of the data where things are falling short. The “how” is where they get confused. This is where I see tools like OpenComp and resources like OPEN Imperative making this a lot easier.
We’re working with 16 other states that are introducing similar legislation. This is happening.”
In the fight for equal pay, we need men as allies.
Alyssa Milano, actor, producer, host, activist, entrepreneur, humanitarian, and NY Times Best-Selling author joined OPEN Imperative Lead and OpenComp’s VP of Social Impact Emily Sweet for a fireside chat.
Since her time as a child actor on Who’s the Boss, Alyssa has always used her platform in really powerful ways to inspire change and social good. While Alyssa doesn’t work a traditional desk job like many of us, she’s seen the issue of inequality play out in Hollywood: “in addition to pay inequity, think of all of the things that are negotiated along with compensation – things like trailers, perks, etc. I think all of this is part of the patriarchy and traditional status quo that we’re trying to dismantle.”
And she’s hopeful about the changes she’s begun seeing in the industry, including things like male actors working with their female counterparts to say, “I’m making this much. What are you making? Let’s go in and negotiate this together.”
Alyssa’s personal belief on pay transparency is that it hamstrings women in the negotiation process, adding, “we’re so conditioned to take and be given less, and to being shut out of corporate wealth and power. We undervalue ourselves. So I feel that transparency is one of the critical tools that enable us to earn what we’re worth, to consider jobs that pay us what we’re worth, and to keep corporations and people from making backroom deals that are hurtful to a working environment.”
And as far as what else Alyssa is doing to celebrate Women’s History Month? Focusing on the Equal Rights Amendment, of course: “I want my daughter to grow up knowing that she has the same basic equality as my son, and my son to grow up knowing that my daughter has that same equality that he has as well.”
While most companies agree that addressing pay equity is important, few know what actions to take.
Kathi Enderes, SVP Research and Global Industry Analyst at The Josh Bersin Company, presented a new study from her company on what’s working and what’s missing when it comes to pay equity. After surveying 500 companies, they found that while most companies agree that addressing pay equity is important, few knew what actions to take.
To get started, Kathi believes businesses must set a foundation by empowering leadership and managers to talk about it. When people understand why they’re paid what they’re paid, how it compares to the market, and how it’s equitable, they can give their best work and are more engaged.
In fact, high-performing companies are 24x more likely to equip managers to communicate pay equity adjustments to their team members and 34x more likely to conduct pay equity analysis on various demographics beyond gender.
On the flip-side, the least effective companies (and vast majority of companies) see pay equity as a compliance-driven initiative that only needs to be addressed on an annual basis.
Companies with the right pay equity practices don’t just reap the benefits of employee engagement and retention, but they also have a much higher likelihood of exceeding financial targets, delighting their customers, and innovating effectively.
Pay transparency activation requires more than a solid compensation philosophy and pay ranges in job postings.
OPEN Summit concluded with a live recording of OpenComp’s podcast, High Growth Matters. This episode featured a conversation between the show’s hosts, Caitlin Allen and Nancy Connery, and Antoine Andrews, Chief Diversity & Social Impact Officer at Momentive, and focused on ways that people and business leaders can architect systems that promote fairness and scalability.
When Antoine entered the workforce, he remembers compensation being a taboo subject. Now, when people talk about pay transparency, they aren’t referring to what their actual salary is – they’re talking about their company’s compensation philosophy, how the company communicates compensation adjustments, and more. The willingness to share is critical.
The administration of these compensation philosophies and policies by people managers is when we tend to see knowledge gaps. This is why manager education is extremely important – you can have a top-notch compensation philosophy, but if your managers aren’t able to communicate it, it has very little value.
The most impactful pay equity effort Antoine has seen in practice? Educating the team on their compensation philosophy, how they look at the market, and how they benchmark roles. This empowers employees to become more knowledgeable and ask better questions, and the overall team to be held accountable.
About OPEN Imperative:
OPEN Imperative (Organizations for Pay Equity Now) is a coalition of high-growth founders, CEOs and investors who are committed to end gender pay disparity in their organizations.
Lexie Sirak is a Senior Campaigns Coordinator at OpenComp and previously worked at JPMorgan Chase & Co. She pens the monthly High Growth Matters Spotlights. Connect with her on LinkedIn here.