Pay Transparency

Katie Stukowski  00:15

You are brought up in a culture where you just don't talk about pay or politics or certain topics from that perspective, and managers are employees themselves. You know,

 

Garry Straker  00:26

for many Kevin, it feels like opening a Pandora's box,

 

Katie Stukowski  00:31

I would say that you have to disclose everything.

 

Garry Straker  00:33

Pay transparency may reveal

 

Kevin Plunkett  00:35

the sins of the past. Fear of the unknown may keep some companies from pursuing pay transparency, but others are making strides.

 

Garry Straker  00:44

So you know, when we apply for a job nowadays, no one asks you what your salary history is, or what you're currently being paid. There was a time when that was that was sort of a knockout question.

 

Katie Stukowski  00:53

We're in an unprecedented labor market and unprecedented time that we haven't seen as far as hiring is concerned.

 

Garry Straker  01:00

I think one of the big challenges is sort of managing salary compression in the context of, you know, greater pay transparency,

 

Kevin Plunkett  01:09

no shortage of challenges here. And our guests today have a lot to say on the subject.

 

Katie Stukowski  01:15

Some companies might view these shifts as a hindrance, I think they should also look at them as an outstanding opportunity.

 

Garry Straker  01:22

In my view, talking to your staff about pay should be a core competency.

 

Kevin Plunkett  01:28

Stay tuned as we discuss how to get your organization on a path to pay transparency. Right here on the get pay right podcast. From the salary.com studio in Waltham, Massachusetts. This is get pay, right? The podcast that dives deep into the current compensation topics that matter to you most, so you can get it right. Every time. I'm Kevin Plunkett, and welcome to the get pay right podcast. On today's show. We're going to tackle the very thorny issue of pay transparency. And we've got two very qualified guests to help us out. Gary Stryker, and Katie Stokowski are both with salary comm. Why don't you introduce yourselves and provide some background? Katie, why don't you get us started?

 

Katie Stukowski  02:21

Sure. Thanks, Kevin. Very excited to be here today to talk about pay transparency. I'm Katie Stokowski, I run the solutions consulting practice@salary.com. So I've been in the compensation space for over 12 years, also a certified compensation professional. But more importantly, I work daily with salary dot coms current clients, with organizations looking to partner with companies like salary.com to help them get pay, right. And really help understand what their initiatives are, especially around pay transparency, sort of what they are dealing with on a day to day basis, both from a leadership and employee perspective, and really make sure that they have the right tools and the right information in place that they need to really tackle these types of issues as well.

 

Kevin Plunkett  03:05

Great. That's perfect. Thank you, Katie. Gary.

 

Garry Straker  03:08

Hi, Kevin. Nice to join you today. My name is Gary striker, and I'm a senior compensation consultant here at salary comm. I work with our clients all over the country in order to help them hopefully align their compensation practices with their organizational goals and objectives. I've been doing this work for over 25 years, there has never been a more interesting and challenging time than than the time we're in right now. So it's certainly been an interesting journey. It's been a lot of fun helping organizations deal with some of the challenges that they're faced with right now. And, of course, pay transparency has been a topic that we've been talking about for years. But it certainly has risen to the forefront, I think of a lot of in terms of a lot of organizations thinking about it and trying to understand where they should be along that continuum. And certainly we're helping organizations think that through and hopefully make good, good choices and decisions about the best approach that works for them. Well, that's

 

Kevin Plunkett  04:03

interesting, because I know we did a poll survey recently salary.com And it revealed that employees perceive a lack of pay transparency, and that pay equity within their organizations. Only 23% of employees said their employer is transparent about how people are paid in the organization. And meanwhile, over almost half 46% of employees do not think they are getting paid compared to people in the same same role in other companies. And about a third 37% Do not think they are paid fairly compared to their internal colleagues. So you know, that's very interesting perspective and one that highlights okay, how do you define what pay transparency is? Is this a expectation and perception from the employees perspective? I mean, there are there are some states that have put guidelines together and have passed laws around pay transparency. So is it a compliance issue? Is it a, you know, an employee expectation issue? What is paid transparency? How do you define it?

 

Garry Straker  05:13

Well, let me just kind of jump in on that one. Because I think that transparency is a continuum. And every organization has to reach a comfort level in terms of the level of transparency, they think that they can provide to their organization. And certainly, employee expectations have changed pretty dramatically. And I think that there is an expectation amongst many job candidates and existing employees nowadays that there will be some level of disclosure and at least a common understanding of how pay is administered within their organization. And I think that's from the employers perspective is extremely important to manage expectations. So, you know, I think that there are there are two sides to that coin. And I think finding the right balance is something that a lot of organizations struggle with.

 

Katie Stukowski  06:04

I would agree with Gary, and I think pay transparency is going to mean different things to different companies. I work with some clients that to them pay transparency as they post every salary range in internally in the organization. So every person in that company can see exactly what the range of pay is for every single job. And that's something that they decided to do to increase employee engagement. Sometimes that's something depending on the state that companies are headquartered in is a requirement based off of different laws or legislation. But I think Gary to mentioned, we are in a state where employees demand a greater level of transparency from day one from hiring, all the way through career opportunities to talent, mobility, what their opportunity is within an organization. So even if a company doesn't have some formal process of what they've classified trait, pay transparency, they at least have to be prepared to talk about pay to some level because it is a requirement of what most employees are looking for in an organization, they have to be prepared to have those conversations

 

Kevin Plunkett  07:09

as an HR person, how do you, you know, what's the appropriate level of transparency that's going to work at my organization?

 

Garry Straker  07:15

Yeah, that's an interesting question, Kevin, in some cases, legislation is actually dictating the level of transparency that's required. And if you look at what's been happening, happening recently, we are seeing more and more states, introducing wage range disclosure requirements, typically, an amendment to their existing pay equity laws. And there are some states that have, you know, gone a little bit further than others. Colorado, obviously, is one of those where, in Colorado, all employers have to, in their job postings provide some wage range within their posting New York City as a municipality that introduced the same type of legislation, which becomes effective in May. And, you know, a lot of organizations are still wrestling with that. And to a certain extent, you know, many, many are uncomfortable with it. But the general theme that we're seeing in a lot of legislation around the country is requiring wage range disclosure to job applicants upon request. And so that's maybe a little, you know, step back in terms of the degree of transparency that's needed in certainly different parts of the country. But it'd be interesting to see how this new legislation influences organizational behavior, even in those markets, where new legislation around wage range disclosures hasn't been introduced.

 

Kevin Plunkett  08:45

You know, there are some organizations that think of pay transparency as an absolute, you know, they publish salaries of everyone in the organization, are there unintended consequences, either positive or negative? To everybody, knowing what everybody in the organization makes? Should that be the standard? You

 

Garry Straker  09:03

know, I think people have different thoughts or opinions about that. I think you could talk to some people who think it's a bad idea that having you know, full disclosure of all salaries within an organization would have a negative impact on on morale. Of course, there are organizations out there that do it. And what they've been able to demonstrate is that it eliminates any distractions, full disclosure, and full transparency eliminates any conversation or discussion about the fairness of pay. And I think, you know, trust is an important aspect, I think, for any employer employee relationship, and to the extent that organizations are able to build that trust through a level of transparency that they're comfortable with, I think that that can go a long way to meeting employee expectations and perhaps, you know, potentially be a competitive advantage in the current labor market dynamic.

 

Katie Stukowski  09:54

I look at it from the employee perspective, if the company's not choosing to be transparent, the employees are still talking about pay. That's the thing that companies need to understand. In many states, even laws say employees can openly speak about what they're making within an organization. And whether the law dictates that or not. We're in a, in a labor market where employees are more comfortable speaking about pay. So I think in that sense as well, being the maybe the one running the narrative is going to help increase employees perception of what is this organization doing as far as pay is concerned? And I think most organizations would rather have a reputation, that they are an organization that is transparent, that is either offering, you know, equality around pay today, or is certainly working towards a culture to offer that then to have the reputation be dictated by employees who really feel like there is no transparency within their company as well. So I do think you have to look at it from both sides of the coin.

 

Kevin Plunkett  10:56

Why is pay transparency such, you know, such an intimidating topic?

 

Garry Straker  11:02

You know, for many, Kevin, it feels like opening a Pandora's box. And for a lot of organizations, there may be some concern about the potential negative impact of greater transparency and organization. And I think a lot depends on how comfortable they actually feel with their, the discipline and structure around their compensation practices. And I think for some organizations, they probably recognize that they still have a lot of housekeeping to do, before they get all their ducks in order and feel as though they're at a point where they can share more information and be more transparent about pay. But it is a process. And I think for many, it's a little bit daunting, but I think you've got to maybe take incremental steps to get to maybe where you would like to be or aspire to be at some point down the road.

 

Kevin Plunkett  11:56

Katie, I mean, you've been talking to customers, how often are you hearing about pay transparency coming up with, with customers

 

Katie Stukowski  12:04

daily, whether or not there classifying it, as their need is to have programs in place to help be more transparent at the end of the day? That's that's really what they're looking for, you know, whether it's they're tackling, how do we pay remotely? How do we ensure that we're hiring the right talent? You know, Gary said it so well, that we're in an unprecedented labor market and unprecedented time that we haven't seen as far as hiring is concerned. And a lot of companies who might think their problem is how do I compete and bring in the right talent? At the end of the day, they're still tackling well, how are we transparent enough to bring in the right people around pay? And how are we transparent enough with our current employees to make sure they stay when we have that talent? So it's it's a daily conversation, whether they're classifying it as we need to figure out how to be more transparent and how we're paying today? Or whether they're just talking about it in different terms?

 

Kevin Plunkett  12:57

Are there sectors of the workforce where this is more of a challenge than others? Meaning, either with with hourly jobs or certain sectors of or certain industries or certain regions of the country? Or is it really kind of all across the board? Across the workforce?

 

Garry Straker  13:16

You know, Kevin, my sense is, it's it's an important issue at all levels of an organization and all different types of roles. Having said that, I think one of the areas that I see most, you know, many clients wrestling with is, is those jobs where they have multiple incumbents all doing, you know, the same or similar work. And, you know, to Katie's point, if the organization isn't controlling the narrative and providing information, employees will find a way of developing their own reality, which, you know, may not be based on actual, you know, truth or pay practices. And in some cases, it may be based on perceptions and perceptions, you know, they can be wrong, they can be distorted. And I just think it's important for organizations to be able to provide some level of disclosure so that employees understanding of pay practices is consistent with what is actually going on rather than what they think is going on.

 

Kevin Plunkett  14:13

Why is pay transparency so difficult? As part of that pulse survey, 49% of employees surveyed, have asked their managers how their pay is determined, and of that group half said their managers could not answer the question to their satisfaction, and 17% said their managers couldn't answer it at all. So what is holding companies back from taking the first steps towards pay transparency? Katie, what are you hearing?

 

Katie Stukowski  14:44

So the first step, I think, and even being able to build towards a more transparent culture within an organization is needing leaders to be on board to help the HR and the compensation practitioners put steps in place to move towards being able to compete in pay to the employee base. Talking about pays is difficult pays personal, you know, when an employee is going to speak to a manager about what they're making and what their potential to make more is, or maybe they're concerned, they're not making as much as an employee that is a peer of theirs in the company. I think naturally, that is a very hard conversation for most individuals to navigate, to be able to make sure you're sitting down and talking about pay that really resonates with an employee, you need to have a plan to help train managers and others to actually communicate what that means. Because you can have the best pay philosophy in the world. And if you can't communicate it, you're gonna be in the same situation as these organizations. And with this pretty big statistic that we're seeing of employees not feeling that their managers can really answer the questions that they have in a way that makes them feel confident in what the company is able to provide.

 

Kevin Plunkett  15:52

Gary, you see in the same thing, like there may be cultural norms, or there's maybe potentially a disconnect between the leadership and sort of the line managers and getting information, you

 

Garry Straker  16:03

know, it is a cultural shift that's required. And, you know, I talked to a lot of HR leaders and comp professionals across the country. And, you know, virtually all of them have an aspiration or belief that greater transparency around pay would be helpful for their organization. But cultural shifts cultural transformation, they take time. And I think it does require, you know, buy in from organizational leaders to support that kind of change, and be the impetus for that sort of change. And I think often as HR professionals, and compensation leaders, you know, we need to spend more time helping our organizational leaders understand, you know, the merits and the benefits and building a business case around what pay transparency and pay equity and just generally improving pay practices can do in terms of employee engagement, satisfaction, and retention. And I think a lot of that can come from, you know, looking at turnover rates and developing metrics and conducting things like employee engagement surveys and trying to, you know, gauge the shift in perceptions across the employee base that can hopefully point to the merits and the values of actually moving towards greater transparency and using that, you know, to improve your competitive position.

 

Kevin Plunkett  17:30

So as you're sorry, go ahead, Katie. No, I

 

Katie Stukowski  17:33

was just gonna echo what Gary said, too, I think a big topic of conversation too, is just data. You know, in order to supply or empower people to communicate, pay, you need to have the data or the metrics, as Gary mentioned, or the right information that you can provide, whether that be to leadership to employees. And I think that is something that so many more organizations are looking for, whether it's external salary data, so they can start having better conversations around pay, whether it's how do we analyze our own internal data and start putting some actual practices in place. I think, when it comes to transparency, the first step and the first obstacle is understanding the right data to start identifying all of these different processes, and then the data can help cultivate the right conversations to so I think that's such a great point that Gary brought on,

 

Garry Straker  18:22

maybe I could add just one other thought. And it relates to making sure that PE practices are aligned with diversity, equity inclusion goals, because, you know, as we know, a diversity, equity inclusion is really a strategic priority for organizations at all levels in all industries across the country. And I think quite often, a lot of the work around diversity, equity inclusion has been focused on, you know, dealing with hiring practices, and dealing with things like bias in the workplace. And a lot of work has and continues to be done in those areas. But I think making sure that your PE policies and practices are aligned with your diversity, equity inclusion calls is critically important for organizations. And I think, increasingly, we're seeing those conversations come together to make sure that there is alignment.

 

Katie Stukowski  19:10

We didn't really talk about how, oftentimes when PE is communicated, and talked about, it's usually when somebody gets hired. I think that's the number one time that most often in an organization, they talk about pay when somebody gets hired, they get promoted, or maybe they have an annual performance review or merit review, where they basically have a conversation that says, Oh, we're giving you a 3% pay increase. And I think fundamentally, what happens is kind of if we want to talk about generational gaps, too, I think what often happens is you have employees that have been very loyal, or have worked in a company for maybe several years, that then those conversations become fewer and far between. And those might be employees that also feel like they are lacking communication around their pay. And now we're in this workforce where we We have to talk about pay so much more with new hires, because it's so competitive, that we're leaving a whole subset of employees on the table when it comes to talking about the pay philosophy and the transparency around pay. What does that also mean for those employees that are still there and have been there for quite amount of time? And then how does that impact the actual perception of the culture within an organization? Because I know reputation is history and rumor form, right? So for the longer employees have been there, and if they continuously feel like the culture of the company is to not be transparent, because they aren't brought into those conversations. Even if you're making strides to be more transparent with those people you're bringing in. You're not shifting the cultural norm across the entire company, because I think that's a huge impact on organizations right now. We're so focused on how are we hiring? How are we hiring? How are we hiring? How are we competing for talent? And we're talking about pay there. But like, what about the employees who've been there a long time? Yeah, sometimes we put them on the backburner.

 

Kevin Plunkett  20:57

So I'm hearing that having a pay philosophy is really kind of the backbone to setting yourselves up to be able to have a good DNI program as well as provide pay transparency and equity across the board. For either of you, how often are you seeing organizations struggle with just the basics of having a paid philosophy that that's broad enough? And that covers enough of the issues to make it relevant?

 

Garry Straker  21:22

Yeah, I do see organizations continuing to wrestle with that, even though I think it's, it's an accepted best practice. And I think a lot of that comes from the inability to sort of achieve consensus, with all stakeholders throughout the organization. And again, coming back to what I was saying earlier, you know, you may need to sort of build a business case, to help define and establish your pay philosophy in a way, which is consistent with your organizational values and your culture. But most importantly, one which is sustainable. And I think right now, that's a big question mark, and something that a lot of organizations are struggling with, as they continue to try to compete the current labor market, and, you know, continuing to increase wages for new hires and existing companies, I think there's a big question mark, about whether or not that will be sustainable in the long run. And so I think that, you know, there's a lot of moving parts, there's a lot of considerations, and I think, trying to, you know, pull stakeholders together and build a consensus around that is a difficult thing for a lot of organizations.

 

Kevin Plunkett  22:22

So how do you establish that sustainability? Within a practice? Yeah,

 

Garry Straker  22:26

you know, I think it comes back to making sure that your pay practices and policies are aligned with your overall sort of business, goals and objectives. And I think it comes from having a deeper connection and understanding of what the business strategic priorities are, and making sure that you know, pay levels and your pay rates are, in fact, are affordable, given, you know, the kinds of revenue and business performance that ultimately, you know, will need to be required to support increasing levels of pay? And I think that that's a question that a lot of organizations haven't quite yet figured out. But certainly, you know, from my perspective, we are seeing, you know, more focus and attention on making sure that pay practices are aligned with business performance. That's a good point.

 

Katie Stukowski  23:20

Once you also Gary, I would pose, there might also be a need to make sure you're continuously revisiting your PE practices. I know, for so many years, a lot of organizations who created PE programs and established a PE philosophy that aligned with business goals, with the market, the way it was for about 10 years and being pretty consistent, probably felt there wasn't always a need to go back and relook at their ranges and increases in merit, and what that might look like from an overall organization approach. But as you said, we're in a very unprecedented landscape where companies now are tackling different business objectives. I'm curious, your thoughts on to how, how often, organizations should continually review those pay practices, because that's something I talk to clients about, often it's not something you can just set. And then yes, you're done. You know, it's it's continuously evolving. And in some cases, you have to be agile, you have to be able to make some shifts within those pay practices to make sure they do still align with business goals. And I think that in itself is causing newer challenges for companies that felt very comfortable with the pay philosophy that they instituted within their company. And now, they're just faced with newer challenges, and how do they maintain that without breaking everything apart completely, unnecessarily?

 

Garry Straker  24:38

Point, especially in the environment we're in right now. You know, we don't have a crystal ball that's going to tell us what the labor market is going to look like in six months. And you know, I don't think anybody really knows that now. And so I think it is important for organizations to be able to adapt and be flexible, and respond to you know, the market conditions at the time. And, you know, I think for a lot of organizers They will probably try to ride through, you know, the next, you know, six months, 12 months and see what happens or evolves in the marketplace before making, you know, any significant changes in their overall maybe pay practices. But at the same time, you're the economical reality of having to compete for talent at a time when organizations are struggling to fill many of the key roles within their organizations. And so, you know, there's a certain amount of pressure and reality that exists in the current environment that is maybe having to maybe forcing organizations to, to respond more immediately.

 

Kevin Plunkett  25:39

Yeah, I mean, can can an organization really just sort of sit back and take a wait and see approach organization? What could he approach an organization that isn't ready to really fully addressed, pay transparency and have some practice? What are some things, some practical things that they could do to start to align the organization to start to think about pay transparency? You know,

 

Garry Straker  26:01

I think for a lot of organizations, Kevin, there are incremental steps that they are, you know, can and probably should be taking, you know, a lot of it comes back to basic fundamentals. To the extent that, you know, you haven't looked at or thought about your compensation structures in a long time, you know, that would be a good starting point.

 

Katie Stukowski  26:23

Looking at you have a compensation study, exactly. There's still

 

Garry Straker  26:27

lots of organizations out there who don't even have a compensation structure. So, you know, I think compensation will continue to evolve, it is dynamic. And I think organizations should be always looking at their current practices and trying to identify whether or not they're meeting meeting the current needs.

 

Kevin Plunkett  26:48

What do you need to do to get it right? I mean, obviously, putting together a pay philosophy, communicating the plan and training managers to have those difficult pay discussions. But what is a key first step for an organization to get started?

 

Garry Straker  27:02

Quickly? You know, my view? Kevin, I think developing a greater understanding of how pays administered within an organization is an important first step that I could, I think can can reap a lot of dividends. That's particularly true for managers who have responsibility for hiring employees. And, you know, you pointed out earlier that a lot of cases managers are not able to respond to adequately a basic question about, well, how is my pain determined? And so I think that that's a fairly, you know, simple first step and making sure that you're developing an understanding of PE practices, certainly amongst your managers, but then hopefully, much broadly within your organization. Because you know, a lot of there's a lot of studies and evidence that point to understanding of PE, leads to greater satisfaction with PE. I also

 

Katie Stukowski  27:59

think, fundamentally, one of the first steps is to just as Gary mentioned, look at what your current process around your pay philosophy is, and start to identify that maybe it isn't as perfect as we thought it was. Or if you know, you have issues today, then what are the first steps to take to start to kind of bridge those gaps as well. And sometimes it can be as simple as we need to write down what our philosophy around pay is. So we have a compensation philosophy statement that we can help educate people on sometimes it's identifying, do we need data? Have we always just gone off of what the markets bear in our industry? Do we just feel that we know what these type of roles have been worth? And in today's landscape, that's not the case for any organization anymore? So do you need to bring in additional data to help you relook at what your pay philosophy actually is? Have you reviewed your internal employees pay currently to identify where you might currently have gaps, I think taking those small steps and starting to implement an actual approach to being able to start having a better conversation around pay and create some tools to be able to provide managers and empower them to have better conversations around pay is heading in the right direction. And it will help employees feel that they can have better conversations around pay or start to feel that the culture within the organization is one that's moving to be more transparent and that they have a good understanding of what they're worth within that company as well. So sometimes baby steps can take actually very large strides to moving in the right direction around patrons p&c.

 

Kevin Plunkett  29:42

Katie is there an example of an organization that you know you talk to or actually this is for either Katie or Gary, quite frankly, you know,

 

Katie Stukowski  29:51

you want us to name just say, Do

 

Kevin Plunkett  29:53

I want names? I want emails, I want the whole thing. No, but I mean, You know, are there are there examples where, you know, a client kind of knew they were struggling in this area, and felt really overwhelmed and wasn't sure how to kind of get it started. But just by, you know, doing some of those basic blocking and tackling kinds of maneuvers, like you talked about Katie, like looking at structures, or even just writing down the pay the pay philosophy, I mean, are there other examples with clients that sort of came in thick in the head, eat the whole elephant in one bite, and, you know, realized, they can just kind of chip away

 

Garry Straker  30:34

on it, you know, I have a particularly anecdote to share with with one client happens to be based in a state that doesn't require doesn't have any wage range disclosure provisions. And in this particular case, the client was struggling to compete with Amazon, you know, they were dealing with the Amazon effect on the South side of town, Amazon had built one of their massive warehouses, and was pulling people away from their organization. Within a year, Amazon decided to build a second warehouse on the northern side of town. And so now there were two massive Amazon warehouses that were, you know, basically dominating the current labor market. And one of the challenges that this employer saw was that they were losing people who were moving to Amazon, where they maybe thought the grass was a little bit greener, they might have been tempted by, you know, an increment in their salary. But this organization responded by making sure that in every job posting within their organization, including on their own career page website, they actually posted the wage for that particular position, which is was a little unusual for them, they still have a lot more work to do in terms of, you know, building out compensation philosophies and formalizing structures. But it's an incremental first step, they said, We're going to actually share with our potential job candidates, the wage for the position, but they're also you know, trying to leverage again, their culture, and their, you know, focus on moving towards greater transparency, and hopefully more appropriately, managing expectations for their, for their job candidates in a way that maybe differentiates them from the Amazons of the world.

 

Katie Stukowski  32:17

So Gary, let me ask you, when you're working with companies, and I know this size really closely with some of the pay equity studies, you're doing, too, because now they're looking at where do we have gaps across the entire company? Where do they want to start? I mean, do they look at it by level? Do they look at it by we care more about this group than this group is? I

 

Garry Straker  32:34

see a variety, you see that with someone looking at an organizational chart somewhere looking at it, within segments of their population? Making, you know, one organization I'm working with right now, which is tech company based in Cambridge, Massachusetts, they're focused on those high tech jobs. Because they because they know that that's such a hot market. You know, I would characterize what you're saying is a concern that pay transparency may reveal the sins of the past.

 

Katie Stukowski  33:02

I like that. Yeah, I

 

Garry Straker  33:03

think that that's a big concern for a lot of organizations who are kind of wrestling with what what level of transparency are they going to be comfortable with going forward. And in a lot of cases, I think that there is a big concern that pay practices and policies in the past, you know, may not have been as disciplined and structured and fair as an organization would like to believe that they were, there may be some sins from the past that cannot be, you know, corrected, but may be revealed through a, you know, a greater move towards greater transparency. And, and I think for a lot of organizations who are concerned about that, certainly, it's important to be honest with yourself in terms of where you've come from, and where you currently are. But most importantly, look ahead and look at what you would like to be what do you aspire to be in order to build a workplace culture and environment that resonates with the employees of today? And I think if you get so bogged down and stuck in what we haven't been perfect in the past, well, who has and you can look at almost any aspect of a business operation, and know that you know, those improvements to be made really in all areas of our organization. And by the way, compensation may be one of them. And so I like to think and encourage clients to think about the future, it's hard for us and virtually impossible. Well, maybe not impossible. I think that there are times when you can reveal that some of the sins of the past have created, you know, potential pay disparities, which legitimately and fairly should be addressed in order to move forward with confidence.

 

Kevin Plunkett  34:43

Let me ask this question, pay transparency. Much of it is a generational thing. I mean, for older generations talking about pay was taboo. I mean, the younger folks that are in the workforce now they don't have those same hang ups. Do these different viewpoints create friction In an organization around pain,

 

Garry Straker  35:02

you know, in my perspective, you know, organizations have, I think, you know, we call it the five generations in the workplace, you know, we have a much more diverse many of us have ever seen in the past. And I think, you know, responding to all the needs of all the different demographic segments in your population can be a challenge, and they're certainly some that probably, you know, continue to believe or think that greater transparency is not such a good thing. But I gotta come back to the there's probably a right balance, there's probably a level of transparency, that organizationally, you can get comfortable with, in a way, which again, is aligned with with the values and the culture and where your organization, you know, aspires to be at some point down the road where I think you can get, and I think slowly, you know, even even some of those

 

Katie Stukowski  36:02

I would agree, I think to pay transparency has always been there in certain forms, you know, it certainly, Gary, from day one, when employees go to interview that that company should have an understanding of what the right rate of pay should be for this role, I am actually going to be applying for versus based off of my historical wage that I've received from other companies as well. And I think, although in some ways, some companies might view these shifts as a hindrance, I think they should also look at them as an. And I think, for compensation, and HR practitioners and professionals, who've always sat in that realm of we own the data, we have an understanding of what we want to do when it comes to pay, but maybe didn't have the leadership buy in or didn't have an organization that felt transparency was any form of what they wanted to have in culture, I think this has been somewhat of a relief, because now they can actually transform that data into outcomes that they have always wanted to be able to maybe instill or practices that they've wanted to instill, which certainly takes more work, there's more steps that need to be done to start putting a more transparent culture in place around pay. But I think it can also be seen as a really great opportunity for companies to really embrace what their pay philosophy is, and really be able to, again, create the right communication around that in their organization that they may be either shied away from in the past or didn't have the backing to be able to put those pieces.

 

Kevin Plunkett  37:43

The labor markets seem to be driving some of this patrones parents he right in hiring practices in the like. But what about folks that have been at the organization for a while? You know, with all of this emphasis on the recruitment side with pay transparency? What does that do to folks that have been an organization for 10 or 15 years? And and how does that question?

 

Garry Straker  38:12

You know, Kevin, really important question. You know, we are seeing and recognizing that there is salary compression that's occurring in organizations as a result of the highly competitive labor market environment we are in and for, you know, long serving incumbents to see or maybe hear that they are not being paid as well. Relative to new hires, that can be a real, you know, detriment to I think, their level of, you know, engagement and morale and satisfaction. And I think, you know, there is a there is a reality that organizations are faced with right now. And I think one of the big challenges is sort of managing salary compression, in the context of, you know, greater pay transparency. And I think that that can make a lot of organizations uncomfortable, but it comes back to making sure that you can, hopefully, appropriately manage wage compression in the context of what your, you know, broader organizational goals around fair pay practices. And as Katie said, there's, there's more work, there's more discipline, there's more data, there's more analysis that's needed in order to hopefully find a solution that's workable, but it is a challenge in a reality that I think a lot of organizations are struggling.

 

Katie Stukowski  39:47

But I think it also goes back to are you having conversations with employees around? And I think part of the shift for companies to is moving into board's the opportunity to have communication ongoing throughout the year across the employee base to and identifying for those individuals. So it's also training managers to really work with their direct reports and identify what what's important to them is being able to have a teleworking environment or maybe if the company can provide a more flexible work schedule, is that something that's more important to maybe that more tenured employee?

 

Kevin Plunkett  40:32

Assuming they have all the data they need? How often does a manager's own discomfort with talking about pay? Impact?

 

Garry Straker  40:42

You know, that's a good question, Kevin, in my view, talking to your your staff about pay should be a core competency, right, that should be a skill set that every manager who supervises employees has, you know, in their toolkit, you know, I think it is really important that PE, you know, moves out of the compensation department in HR department, as being, you know, only only their mandate, but I think more so, even with PE and different mine managers, or recruiters, all should have the ability to be able to understand and talk about PE, and hopefully, you know, be comfortable enough and confident enough that, that their understanding and their messaging around PE is consistent across the organization.

 

Katie Stukowski  41:32

I would agree, I think, people in general, it's interesting. It's a very interesting question, because I think it's much easier to talk about pay when you're talking to your peers, you know, because if you're talking about what we're all making in a role, it's much easier to have that conversation because there's sort of a, a known, I think, an underlying, we're in this together, let's talk about PE, and I think as you're the one now responsible for employees reporting to you to have those conversations, you certainly don't want to mess up those conversations, either. So I think in some sense, just naturally, people have a fear of well, what if I say something wrong? What if I get it wrong, so it's easier to not have the conversation in general. But I think Gary poses such a great point that to be able to be in those types of roles, and to be able to be able to manage, it should be a core competency, because that is something that's going to be extremely important to the people that report to you. But it also ties back to the organization have a having a responsibility to provide the tools that managers need to understand where those pay decisions are coming from, to make sure they're having the right conversations.

 

Kevin Plunkett  42:41

So you guys are seeing that managers are having to carry an undue burden, because they're being asked to have these conversations without being given the tools or the data or the training of the information.

 

Garry Straker  42:52

You know, my my sense, Kevin, and working with various organizations and various stakeholders within organizations, including, you know, division heads, unit heads, is that, you know, most respond very positively to learning more about PE practices, and policies, right. And, and understanding, you know, what it is we are doing and what improvements we, you know, can we make, you know, my experience has been in working, you know, for many different compensation projects at many different types of organizations, the most successful outcomes come when you engage key stakeholders in those conversations and discussions, because it's important that they know just just not you know, what you're doing. But they want to know, you know, how did we get to where we got to? And, you know, what are the what are the other types of approaches that we looked at? What are the trade offs that we've identified that we can either live with, or, or not live with, in terms of our pay practices, and I think most most managers, supervisors, department heads, welcome those levels of compensation and that level of detail, because it gives them more confidence to be able to, to communicate with their employees around pay, and I. And I think that that's what they need to Katie's point, you know, we probably have done an insufficient job and engaging them and bringing them in to the conversation. And also, you know, helping them understand and recognize that they can be part of the solution.

 

Kevin Plunkett  44:21

That's great. So let me ask a wrap up question here. What would be the top initiatives that you would suggest to an organization that struggling with pay transparency?

 

Garry Straker  44:31

You know, Kevin, and having those types of conversations with organizations, I always think it's important to have a really good and deep understanding of where you are today. And looking at not only what your policies are, but what are your practices? Because, you know, I think we all know, sometimes practices deviate from policies and overtime that can be a significant, you know, difference there. But I think, you know, understanding where you are today, understanding some of the challenges and limitation and potential issues issues associated with your current pay practices is a good starting point. And then I always like to start with, you know, the end in mind, where would we'd like to be? You know, again, what do we aspire to do in terms of our compensation practices and how, you know, how should they benefit the organization to be aligned with our cultural values and, and our organizational goals. And, you know, once you sort of understand what that longer term vision may be, and have a good thorough understanding, you know, informed by data in terms of where you currently are, you can then begin to map out I think the keeps saying incremental steps to hopefully get you over time. And it may take, it may take, you know, two or three four pay cycles to to get to a better place in terms of your overall compensation practices and levels of patrons baronetcy, but I think that those, those incremental steps can be more manageable. And, you know, likely more doable, rather than trying to go from point A to point B, overnight.

 

Katie Stukowski  46:09

I would echo a lot of what Gary said, I think the first thing I would certainly recommend is to say ask yourself, What are your PE practices and your PE philosophy? If you can't answer that question, or if you have multiple different answers to that question, you certainly need to start there to identify what do you want the philosophy and then tie the correct practices to reflect that policy and put those in place first. Because without that, you don't have any direction to head towards transparency as the end goal, if that's what you're looking for. I also love you know, starting with the end in mind, you have you need to have some understanding of what level of transparency you're looking to achieve within your organization, because that also helps communicate to leadership, what these goals are tied to what the objective is, and certainly to get their support and buy in as well. And as Gary mentioned, you can't tackle everything at one time. And I think that's often where clients I work with certainly are organizations looking to take steps in the right direction get very overwhelmed. Because there are often many steps, there's often a lot of different programs that need to be implemented. And it's almost Where do I begin, and it might seem too big that then they don't take any steps at all. And it's really certainly just starting small. And oftentimes, what I recommend is starting small is one, identify and you have a philosophy and some practices and to you need to look at your data, you need to start to look at how are you paying today, you need to be able to look at where your employees stand today. And then you probably need to look at some form of external market data to to make sure you really are up to speed on what's happening in the market. So you can start to determine where you're going to fall on that spectrum. And then start to put those baby steps into place to get to that end goal that you're looking for. And it will grow over time.

 

Kevin Plunkett  48:11

I want to thank you both for joining us today. And for such a great discussion on pay transparency. So there's a lot to tackle here. But if you align your policies and practices with those of the organizational culture, and take the incremental steps to get there, pay transparency is an achievable goal. So listeners, take one thing you've heard today and see if you can apply it this week. The challenges won't feel so daunting. So that's it for us this week. Stay tuned for our next podcast, we will seek to understand the link between pay equity and culture. Thanks for listening!