#2: How do I improve compensation fairness at my company ?

#2: How do I improve compensation fairness at my company ?

Welcome to Dear Ally Skills Teacher! For my first few columns, I will be answering questions I frequently get in Ally Skills Workshops, summarized by me in letter form. Future columns will be answers to questions sent in by readers, which you can send by filling out this form.

Dear Ally (Skills Teacher),

I am a man of European descent in a line manager position at my Berlin-based company, which has about 100 people. Now that I have access to the compensation data for my coworkers, I’m noticing a LOT of inequality. Some of my coworkers are making about 60% as much other people who are doing the same work, and there’s a clear pattern of women and non-binary people making less than men and people of European descent making more than people who aren’t. I can directly advocate for increases for the people who report to me, but is there a way I can change the overall compensation system at my company to be more fair?

—Frustrated by the System

I’m thrilled that you both want to help the people who directly report to you and also fix the overall system at your company. You are more likely to be able to help the people who report directly to you, but it’s worth thinking about how you can help other people at your company. This post will focus mainly on making systemic changes across your company.

First, a disclaimer: I’m not a lawyer, and this column is not legal advice. Depending on the location, laws about compensation vary wildly. It’s up to you to be aware of the laws in your jurisdiction and consult legal advice when necessary.

Make fair initial compensation offers

Scales of justiceThe first thing to recognize is that future compensation is highly dependent on current compensation. In other words, compensating someone fairly when they are hired is an effective way to reduce compensation inequality.

What is your company’s system for deciding on initial compensation offers? At many companies, job offers leave a lot of room for personal decisions by the hiring manager, which opens up opportunities for bias to operate. If you have influence in this area, you can argue for the standard corporate-friendly interventions:

For more details on how and why to implement many of the standard corporate-friendly changes, see the Bias Interrupters website.

Riskier ways to make fair initial compensation offers

If you are willing to take on more personal risk to your own career and compensation, you have a few more options for improving initial compensation offers. The risk for most of these options comes from the fact that many companies try hard to only allow management to see information about worker compensation. This helps companies depress workers’ wages because in a negotiation, the party with more information usually gets a better deal. Here are some risky actions you might consider to improve the fairness of initial compensation offers:

You should consider seeking legal advice from a lawyer who is not representing your company before taking these actions. I am not a lawyer and this is not legal advice. Depending on the legal jurisdiction you are in, corporations may have succeeded in passing anti-worker laws which make these actions illegal. Even if your lawyer assures you that taking these actions is legal—and even if retaliating against employees for taking them is illegal—you may still be taken to court and/or retaliated against. One of the reasons I don’t talk about employment law much is that companies routinely violate employment law and get away with it. Short version: Don’t rely on the law to protect your job.

Erica Baker’s experience sharing compensation information is a good example of how this kind of action can play out, and how privilege can affect it. She and several coworkers created a spreadsheet for Google employees to share their compensation with each other. While it is technically illegal to retaliate against employees for sharing compensation information in the U.S., she was denied peer bonuses and criticized by her management chain for her role in creating the spreadsheet. She then learned that a white male coworker who helped create the spreadsheet was receiving his peer bonuses while Baker, a Black woman, was not.

The next section will include safer ways to advocate for compensation transparency in a systemic manner. Keep in mind that these safer systemic changes are made possible by individual acts of resistance like that of Baker and her coworkers.

Improve performance reviews

Tall stepladderOnce a worker is hired, the next opportunity to improve their compensation is during performance reviews. The first question is, does your company have a standard system for reviewing worker compensation at fixed, predictable intervals? If not, privileged people are more likely to ask for and get raises and promotions. Most of the interventions for improving initial compensation (standardized job types and ranges, career ladders, anti-bias training, anti-bias statements, etc.) will also apply here.

Compensation transparency

A more radical intervention is to advocate for compensation transparency—sharing the compensation for everyone in your company. The business world is full of arguments against compensation transparency that pretend that the issue is how workers will react—it will create jealousy and discontent among workers, workers don’t want others to know how much they make, workers won’t work as hard, etc.—but whenever it is actually implemented, it usually works just fine.

For example, the salaries of everyone who works for the U.S. government are public knowledge (although the names of some employees are withheld for national security reasons). Buffer is a tech company that publishes both the salaries and equity distribution of all its employees. Compensation transparency doesn’t have to be all-or-nothing; for example, Glitch (formerly Fog Creek Software) is a tech company that surveyed its employees about what level of compensation transparency they wanted. Based on the results, they decided to share salary ranges of all its workers in an internal spreadsheet, as well as formally support employees voluntarily sharing their exact compensation. SumAll is a data analytics company that shares exact employee salaries internally but doesn’t make them available to the general public.

For the specific case of a 100 person Berlin-based company like yours, Germany passed a law in 2018 requiring companies with more than 200 employees to allow employees to find out the median pay of their peers, split up by gender. You could make the argument that you’re just implementing pay transparency a little ahead of schedule.

Line drawing of a handshake
CC BY Aidan Jones

When you look at the objections to compensation transparency, the problems are caused not by knowing what coworkers make, but by knowing that some workers are unfairly compensated. If workers feel they are fairly compensated, they are more satisfied and happier at their jobs and less likely to quit. Compensation transparency actually improves employee satisfaction and the perception of fairness—one survey found that 90% of workers who thought they were paid below market rate were actually paid above market rate. The true motivation for compensation secrecy is to protect unfair compensation practices and to reduce workers’ wages overall.

Compensation audits

Those are the standard methods for fairly compensating workers, but often a company has a built-up level of unfairness that is hard to fix in the normal review cycle. In that case, you can advocate for a compensation audit: an across-the-board review that compares the jobs people are doing to their compensation, and quantifies any patterns in differences based on race, gender, age, etc. Compensation is then adjusted for a large number of people at once. Salesforce now does yearly compensation audits, spending several million a year to raise salaries. If you’re planning to increase compensation transparency, it would be wise to do a compensation audit first.

None of these approaches will entirely fix compensation inequity: for example, it’s fairly common for marginalized people to be doing higher-level work than their official position describes. In that case, they may be paid the same as more privileged people holding the same position, but still be undercompensated for the work they perform (as Buffer discovered). Fixing this level of misperception requires that the people assigning these positions learn to compensate for their bias, and that takes more than one or two anti-oppression trainings. And systemic oppression at a societal level will limit the opportunities of marginalized people long before they apply for a job at your company. What you can do is improve fairness and equity for people once they apply for a job working at your company.

How to advocate for change

An hour glassYou probably shouldn’t show up at your next meeting with all of these changes in one big proposal. Instead, start sharing the articles linked to in this post with other influential people at your company, chat with your coworkers about these ideas at lunch, and invite experts to speak about these topics at your company (and pay them). People often believe that no other organizations have taken these steps and survived, so sharing real-world examples of organizations that have improved compensation fairness is helpful.

Ally skill: Argue for changes based on your values

Argue for these changes based on your values. You value fairness, so you want to know your coworkers are fairly compensated; you value justice, so you want a workplace culture that actively fights oppression; you value transparency, so you want your workplace to be more open about compensation practices. Don’t argue for or speak on behalf of marginalized folks directly; avoid statements like “We need to do this because women at our company are unhappy,” which easily lends itself to a variety of stereotypes of marginalized people being “ungrateful” or “lazy” or “a hard worker but not a leader.” Instead, say things like, “I believe in fair compensation regardless of gender, and I want my company to live up to that standard.” Speak for yourself, gather support, act strategically, be patient and persistent, and you will have the best chance of progress.

Have you been in a similar situation? Share what worked (or didn’t work) for you in the comments!

Next column: It seems like I get more praise for doing the same anti-oppression work as more marginalized people. What’s up with that?

Featured image: CC BY Eden, Jeanine, and Jim https://flic.kr/p/JU9Aiz

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