Session: The State of Pay Equity, 2023

A panel discussion about OpenComp’s annual report results

At OpenComp’s recent “OPEN Summit: The Pay Equity Tipping Point”, we revealed the results of our second annual report on The State of Pay Equity, 2023. It shares the surprising ways in which pay transparency and pay equity unfolded in the past year, and gives you insights into what comes next. 

Today, it’s official: The report is now available in full, and we also encourage you to read the infographic. Both reveal that although 91% of executives say pay equity is a priority, only 30% have adequate resources to operationalize it — and the majority (53%) of CEOs are unaware of that fact.

As a supplement to the report, I summarize our expert panel, which explored the report’s results and implications at OPEN Summit. The panel covered what the report results mean for people leaders in today’s era of HR accountability, and how you can empower your organization to bolster itself over the next 12 months. We thank our incredibly knowledgeable participants:

Moderator: Christie Pitts, Co-founder of VCs for Repro; General Partner, Backstage Capital 
Amie Patel, Partner & CEO, Elevar Equity
Gianna Driver, CHRO, Exabeam
Jamy Conrad, Senior Director of People, TrustRadius

Here’s what they told us about the report’s findings:

Finding #1: Pay equity is a business imperative

There’s an undeniable interest in pay equity right now. What exactly is driving it?

As Amie Patel is well-aware, there’s a noticeable shift in investor interests. She says investors like her are focusing more frequently on environmental, social, and governance (ESG) standards, gender lens perspectives, and transparent company cultures. Understandably, investor interests cascade across the business ecosystem.

“Investors have always done due diligence around a company’s business merits, and now they’re also looking at the company’s operating merits.”
— Amie Patel, Partner & CEO Elevar Equity

The pay equity tipping point is also being driven by a clear relationship between business success, emergent pay equity practices, and recruiting/retention. Gianna Driver observed that companies with pay equity are typically more diverse and inclusive, and as studies from McKinsey have shown, those companies are more productive and innovative, and have higher valuations.

Jamy Conrad pointed out that people leaders can help their executive peers lean into the fact that pay equity is a competitive advantage. Employees want their CEOs to lead the pay equity movement; they want it ingrained in the culture because it’s good for people and the business. When that happens, Jamy says retention goes up, loyalty improves, and turnover costs decrease. People leaders can track those numbers and show business leaders the impact on business outcomes, which can help pique investor interest.

Finding #2: Pay transparency means something different to every employer

Posting pay ranges in job postings is only the beginning. Our panelists had some ideas about where we can take pay transparency from there…

At Exabeam, where Gianna is CHRO, they run educational seminars on pay equity. She says those conversations build trust, even though their pay transparency is still a work in progress. The important part is that the employees see the evolution and iteration of merit and pay practices. As she puts it, “Employees don’t want perfection. They want integrity and authenticity.”

“Employees don’t want perfection. They want integrity and authenticity.”
— Gianna Driver, CHRO Exabeam

At TrustRadius, Jamy’s people teams also empower employees, always starting with the basics: creating and communicating an equal pay policy, a compensation policy, and a compensation philosophy. “We want employees to understand why they earn what they earn,” says Jamy. “If you don’t explain that, employees will make assumptions. If you do explain it, you’ll improve employee satisfaction.”

“We want employees to understand why they earn what they earn.” 
— Jamy Conrad, Sr. Director TrustRadius

From an investor’s perspective, Amie says the new pay transparency laws are already shaping how investors assess companies. “Investors have always done due diligence around a company’s business merits, and now they’re also looking at the company’s operating merits.” She says investors have moved from making sure there’s at least one woman on a company’s board to scrutinizing social policies for employees. According to Amie, “In five years this will be standard practice.”

Finding #3: Many employers still fear transparency

Some leaders still defy the new laws despite the fact that executives, board members, and investors could be personally liable for non-compliance. But as Jamy says, it’s difficult for business leaders to move away from thinking, “How do we negotiate the best deal possible?” She says some leaders will need to see companies get fined before they move toward pay transparency, but that people leaders have to keep trying in the meantime, and demonstrating its ROI.

Gianna has noticed that when investors, VCs, and board members ask CEOs for pay equity audits, you see their interest trickle down very quickly through the executive team. She says it’s time to take things even further and ask management teams what they’re doing to address issues uncovered in audits. In reality, it's the same question the labor commissioners are asking. “It’s okay if they don’t have all the answers,” Gianna says. “Perfection isn’t the goal; it’s visibility.”

Amie affirmed that VCs can — and should — drive pay, transparency, and compliance. VC investors go in early when infrastructure is being built and can take on the responsibility of saying, “You need to think about these concepts from the very beginning. Once you get to a certain number of employees, you should have policies in place. … by the time you get to 100 or 1,000 employees, transparency and equity should be the standard.”

Finding #4: CEOs have their heads in the clouds

This one’s a painful truth. Luckily, there are solid strategies to bring CEOs back down to earth. 

Amie says it can happen in two phases: The first reflects the CEO’s knowledge base on pay equity, their understanding of available resources, and assessing the company’s mindset. Investors can help with all of these. The second phase involves making sure the CEO understands the need to empower the right people in the organization to research, design, and implement pay equity. 

Jamy reaffirmed people leaders’ ability to support CEOs who need to learn about pay equity. She strongly encourages CEOs to have conversations directly with employees, making sure to include demographics that are traditionally affected by pay gaps. If those conversations generate new perspectives for the CEO, they can talk to their CFO and people team to ask for options, audits, and recommendations. CEOs should also be a part of merit cycle training sessions, even if it’s only for the kick off.

Gianna noted that having a clear compensation philosophy is also a great place for CEOs to start. It’s important to create thoughtful pay structures and apply them properly to promotions and merit cycles. “I think that success here is making sure that it’s not just finance and HR who understand how pay transparency and pay equity works. It’s about educating managers and ICs so they understand pay transparency beyond just base pay,” says Gianna. “It's not  bonus pay. It's not stock-based compensation or equity. It's about total compensation.”

Finding #5: Resources still lag in addressing wage gaps

Here’s how Gianna describes the importance of having a compensation philosophy: “It’s the foundation from which you equitably apply compensation for the pay ranges and job families in your organization. It's critical because it drives every other comp decision in the company.” She acknowledges that getting executive and board buy in can be tough because the discussions cover the dispersal of cash, stock, equity, etc. 

So how do you create that leadership buy-in? Elevar leads by example. They’re a female-owned general partnership, where the majority of the leadership and investments teams comprise women. When they invest in companies, says Amie, they promote a governance committee and a comp committee early on, even if there isn’t yet a head of HR. By the time those companies hit their growth-stage, they’re ready for resources that serve hundreds of employees.

Even without the helpful backing of a VC firm like Elevar, people teams can set pay ranges up to support basic pay equity. Jamy has seen some companies slap $10K on each side of a salary benchmark. (No, that’s not the way to do it.) Instead, you need a comp strategy so you avoid one-off exceptions that turn into many exceptions and dilute the meaning in your pay bands. She says the more defined your decision-making process, the better. “Push back, really stand your ground, and be able to articulate the long-term ramifications of one-off decisions,” says Jamy. Empower managers with talking points so they can have transparent conversations starting at the offer phase, and stick to your comp philosophy.

Finding #6: There’s reason for hope

Pay equity audits are illuminating … and for some leaders, terrifying. They equate audits with budgets being thrown out the window. But that’s not how it should work. Even with tight budgets, Gianna believes that companies can adjust pay in a way that’s manageable and affordable. She says that having a tangible plan to make adjustments over several merit cycles or comp cycles gives CFOs and finance teams a measure of comfort that pay equity and business needs are aligned. During the planning process, Gianna recommends having CFOs set a pot aside for adjustments based on the auditing schedule. It takes the anxiety out of the audit process.

Key Takeaways From Each Panelist

We all have a long way to go, says Jamy. The State of Pay Equity 2023 report proves it. Employees put their trust in people leaders to do the right thing — don't take that responsibility for granted. People leaders have an opportunity to make a difference, so keep the conversation going.

Gianna believes we’ll soon see organizations adopt pay transparency practices even in states where it's not mandated. Organizations will become more transparent around variable pay, bonus pay, and eventually stock-based compensation.

On the investor front, Amie predicts that transparency will become the norm and investors will expect it. In five years, performance and capital allocation will go to high-performing companies that have more transparent pay practices.



We’re grateful to Christie for her moderation and to Amie, Gianna, and Jamy, for their thought-provoking discussion!

Did you miss the OPEN Summit? Watch the recording here.

Caitlin Allen is VP Marketing at OpenComp and has served in similar roles at Happy Returns, Lyft, and Andreessen Horowitz. She also writes about topics including marketing, sales compensation, and happiness. Connect with her on LinkedIn here.