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What comp people are saying about pay transparency–on and off the record
8 things Tauseef and I have overheard in the last few weeks
A couple weeks ago I caught up with Tauseef Rahman, a Partner at Mercer, to talk shop over a glass of Zinfandel. 🍷
The topic of pay transparency came up repeatedly — everyone is feeling disoriented as we figure out what’s really changing.
So we wanted to share what we’re hearing from comp teams as they adjust to the new world to help you calibrate your own journey.
Before we get into it, a quick poll — what are you hearing the most?
Here are the top 8 things we’ve overheard recently from comp teams:
1. “What happens when pipe-fitters in Oklahoma City learn what managing directors make in Houston”
Oil & gas companies. Retail giants. Ride-share apps. Offshored call centers.
For companies that run a large field organization, those corner offices felt hidden a world away… not so much any more. How will pipe-fitters making $45/hour react to an HR Director job posting listing a $120,000-$180,000 salary range? Maybe we will see more labor organizing.
2. “My employees in Vancouver, BC, are wondering why pay is so much higher in Seattle, WA”
Once companies moved past compliance of posting pay ranges on job postings (either in states where required, or just nationally to try and simplify), and dealt with explaining geographic differences within the US, the questions started to pop up from places like Canada and the United Kingdom.
Employees in places like the Philippines and India can understand labor cost differences compared to California, but will Londoners understand (or be good with) why New York pay is running 20% to 25% higher?
With EU pay transparency legislation in play, perhaps not a bad thing to start working on answering that question.
3. “Job boards are making my life difficult”
Sites like Indeed now show an estimated range on your job listings if your company doesn’t include it. The thing is, it can get a little annoying when it recommends something way off from what you actually pay.
Got pay ranges on all your job postings? Still a problem because candidates can see recommended ranges for similar jobs at other companies that make your ranges look way off. Contextualization of the pay ranges is the new name of the game.
4. “‘Comp misinformation’ is a new problem”
It used to be that if you Google how much you can make for a role, everybody knew it was bad. But now, it feels more plausible, sitting in the uncanny valley between junk and professional-grade.
So more people are entering offer conversations with fixed expectations from questionable data. How do you reconcile what people on the internet think your pay is versus what it really is?
Comp teams have to combat comp misinformation now, and more importantly, be ready for when data becomes closer to professional-grade.
5. “The ‘art and science’ era is ending”
Our favorite euphemism in comp for not really having the data you need. We call it art because it’s impossible to name the price, but not any more. With pay transparency, combined with new real-time market data sources coming online, more and more comp leaders see this era sunsetting.
Pay transparency is forcing accountability and consistency like never before on every comp process. Days are spent solving communication problems instead of whiteboard problems.
6. “Performance ratings are poised for a comeback”
Qualitative evaluation criteria and manager discretion have been in vogue for some time now. But with pay transparency and pay equity going mainstream, those squishy comp decisions are becoming more problematic.
Add to that tighter budgets in a slowing economy, this one is moving fast.
7. “I’m conducting all my executive searches privately now”
The idea is to avoid posting executive jobs with salary ranges because it’s so difficult to accurately nail VP and SVP-level pay, and where the offer lands is so dependent on the individual factors involved. Keeping searches private avoids the problem, for better or for worse.
8. “I need our people managers to be people managers”
Comp folks have done A LOT to enable the organization to talk about pay in the context of pay transparency. Some have even directed managers to refer any question to HR to make sure the right message gets delivered.
But as expectations increase and pay transparency scales globally, comp teams are starting to worry that patience will start running thin.
Bonus – “I might finally give up relying on Excel”
Will pay transparency finally force comp people to give up Excel and embrace connected tools?
Kidding, this will never happen. ;)
Peer Group is a newsletter for comp leaders navigating the new era of pay transparency! If you want to share my newsletter, you can forward this email to your colleagues and fellow comp leaders.
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