At the beginning of my career, I worked as a specialist in executive compensation. With this experience came the understanding that executive compensation was of the utmost importance for shareholders, as they always demanded to understand what executives were paid, why, and how that pay related to the increase of their shareholder value. With that demand, all publicly traded companies have a compensation philosophy embedded in their annual filings, with particular attention on executive pay.
These days non-executive roles are most often the focus of articles and pay topics around the globe, and with the EU and certain US states creating legislation related to pay transparency, it is clear the majority of the employees at companies (who are non-executives) want as much transparency as shareholders receive.
But as a compensation professional, there are few processes less appealing than needing to incorporate a new law into an unguided and undefined pay program. The law becomes the driving factor, and usually, the practices around pay within the organization have been left unchecked for so long that the development of new policies and procedures becomes law-driven, not values or strategy driven.
Don’t get me wrong. I am happy to see legislators start putting something in place to regulate secrecy around pay practices. However, this usually leads to the HR team's efforts being highly reactive, undermining the development of a strong compensation strategy.
Typically, start-ups begin paying employees before having a specific position on how pay could develop during the business cycle and how pay is aligned with company values and business strategy. This is a mistake but can be remedied by starting at the beginning with the compensation philosophy.
What is a compensation philosophy? A compensation philosophy guides the programs, procedures, practices, processes, and behaviors related to your workforce's attraction, development, and retention. It is the first building block to developing the right compensation strategy, which should align with how the compensation strategy supports your business’ success.
There are many ways to develop a philosophy statement. Here are a few standard components to consider:
Understanding and incorporating the organization’s values and business strategy
Defining compensation objectives with a focus on the long-term
Describing the compensation elements used to pay and reward employees
As with all compensation topics, at its core, the compensation philosophy should be based on dignity in the workplace (respect, value, and ethical treatment).
Compensation work will inevitably increase as a business develops, and you will need to ensure employee concerns, company values and strategy, and shareholder interests are kept at the forefront of changing economic, business, and legislative landscapes. Your compensation philosophy will become an anchoring guide for these changes.
Please contact me if you would like a discovery call to determine how I can guide or support you in building your company’s unique compensation philosophy.
While recently discussing ways to create a healthy workplace culture, I couldn’t help but notice that the Code of Conduct for an organization was never mentioned. It became clear that a Code of Conduct rarely (if ever) underpinned healthy behavior. It was barely seen as an aspiring document meaning one of the most widely used ‘best practices,’ outlining fundamental values and principles for employee behavior, had become a missed opportunity.
The inception story of the corporate Code of Conduct is varied, but after large U.S. companies in the 90s were toppled by fraud, and most recently, the #MeToo movement put sexual harassment and abuse in the spotlight, these documents were updated and reshared across organizations. Unfortunately, this did not translate into unlocking behaviors that allowed people to succeed together and treat each other with dignity.
So, what can be done to turn this relic of corporate environments into a document employees embrace and a cornerstone of healthy workplaces? Accountability, Transparency, and Accessibility.
Accountability requires individuals and organizations to be held to a standard, and harmful behaviors must be addressed and modified. People act from their own experiences and beliefs without any check to determine how their behavior contributes to the health of the culture. Feedback conversations are not enough if not addressing specific behaviors that need to be changed.
Too often, behaviors are not addressed, and team cultures are, in some cases, toxic. If toxicity is in any part of an organization, harm and trauma follow. No person or organization has the right to inflict harm or create trauma.
We are all responsible for our own actions, but managers and leaders are responsible for tying team values and principles back to company expectations. Managers do not control what people do, but they do control how they respond. If you manage a team, you must be humble and vocal, addressing your own and your teams’ behavior. The healthiest environments welcome empathetic feedback and self-assessment for personal development and growth.
When was the last time you saw a report from your HR compliance team? Generally, almost everything these teams touch is confidential. Still, it could be worth sharing general terms and figures on compliance cases to support greater transparency. Employees could have insight into what these teams are working on and how they are auditing and streamlining their procedures. Even sharing basic information on the number of issues reported and themes could be helpful in understanding if the Code of Conduct and related policies and practices are effective. For example, was there an uptick in Covid-19 based discrimination? What, if anything, was done to address these complaints? This type of information would allow connected teams to address significant issues more openly and before great talent resigns for want of feeling heard and protected.
Some companies are doing great work behind the scenes, and employees are unaware because leaders are afraid of sharing information that will make them vulnerable to employee scrutiny. Anyone concerned most about ‘optics’ may not be thinking deeply enough about creating meaningful transparency that supports trust-building and essential change.
Creating a short and easy-to-read document in the company’s ‘official language’ is only the beginning. A Code of Conduct should not only be in the language of each country an organization operates in; raising the bar would also mean creating documents in the countries where they have customers and providing an audio version in each language.
Employees identified as having a visual disability could have the code of conduct mailed in their braille language of choice. Those with cognitive differences would be given a chance to explain what they need to make the Code of Conduct accessible to them so it can be acted upon. These suggestions are not exhaustive, but if we are going to write documents meant to set the standard of expected behavior, and everyone is responsible for understanding and acting accordingly, organizations must become more advanced in the format and distribution of these documents.
Ultimately, organizations are looking to create a standard of professionalism. Real Professionalism is a skill and a tool that businesses should push to promote efficiency, good work performance, and healthy cultures. By increasing accountability, transparency, and accessibility, the Code of Conduct can be a central tool in driving professional behavior and positively impact how employees relate and perform together.
I had to get out. It was toxic.”
I am too familiar with that sense of urgency to leave a job and a company after workplace trauma. It’s horrible to start a position ready to contribute, only to leave defeated and traumatized sometimes. Once, years ago, a Sr. Director told me that when one of his female peers talked, he wanted to punch her in the face. Yes, it can be bad out there.
Unfortunately, no one I know has been able to say they haven’t had a toxic experience at some point in their career. The idea that experiencing a toxic workplace is inevitable concerns me and even makes me afraid for the future of work.
But what is a toxic workplace?
I like looking up the definition of a term, so here goes: Toxic — very harmful or unpleasant in a pervasive or insidious way. (Oxford)
My definition: The behaviors displayed and words used at work are devaluing, disrespectful, demanding, and harmful to employees’ mental, emotional or physical health.
That is precisely what my peers, friends, family, and myself meant when we labeled our past workplaces this way. The behavior we witnessed or were subject to was harmful.
Statements you may hear at work:
“It’s not safe here.”
“I am afraid to say anything about what they did in the meeting because I know it will only be turned on me, or I won’t be believed.”
“They can do whatever they want; no one is going to challenge them.”
It’s pretty simple, and the definition helps us more clearly describe how we feel and what behavior we experience.
After I completed my MBA and returned to the workforce, I was offered $70,000 for an executive compensation role at a multi-billion dollar international company based in the U.S. This offer was more than twice the pay of my last role. The benefits were standard for an American company, and I was excited to learn more and increase my expertise in this niche field.
Within a couple of months, it was clear my skills and experience far outweighed what I needed for the role as I was quickly moved into discussions with executives and asked to help make critical decisions for executive and board-level benefits programs. It was exciting, I was doing what I came to do, and I was praised for my efforts.
But then something happened that shifted my excitement and damaged my trust. I learned that I was the least-paid individual at my level, despite having more education and experience than my peers. My pay was $15K to $20K, below what my skills and experience were worth.
I was shocked and hurt. I thought my salary matched my experience and education. I couldn’t imagine the decision-makers would pay me less than less experienced and educated employees. For a while, I blamed myself; maybe it was my fault for not negotiating. Or was it their fault? Was it because I was a woman? Was it because I was black? Was it because of my previous pay? I would never really know, but they bet I would be happy with the offer, and in the end, they were right.
What they didn’t bet on was how much trust I lost in the leadership team after I learned the truth about my pay. Within nine months, I had a salary adjustment, labeled as an increase because of my excellent work, and I was making $85K, but that was not a consolation. I knew they were finally paying me fairly, not rewarding me for great work. They could not make up for the lost income or restore my faith in their ability to treat me fairly.
Unfortunately, mine is a typical story.
In my 15 years of speaking with and coaching women and ethnic minorities on pay, everyone I spoke with who thought they were underpaid was right. Even those who were happy with their salaries were not making as much as their white or male peers.
We have spent the month celebrating the achievements, successes, and overall badassery of women around the globe, and that is wonderful, but more is needed to fix the pay problem.
Even with new pay laws in the U.S. and the E.U., most companies will continue to use outdated policies, ignore biases, and ask unnecessary questions about past pay that will keep women from earning as they should.
I imagine a world where companies everywhere try the below (or some alternative version that suits their business) so that women are consistently paid what their skills, experience, and potential are worth.
Prepare to review or create a pay philosophy
It is essential to ensure you create a clear set of values to drive pay decisions. When a pay philosophy is in place, you can consider what it means to remedy past issues and stay on course going forward. The pay philosophy also usually includes where you want to pay in relation to the external market (lead, match, lag). Include diverse voices in this discussion and communicate this new / changed philosophy to employees.
Know your numbers
What are the pay problems in your organization, and how much will it cost to remedy them? This requires analysis, and you need more than your raw pay gap. Be ready to dive deep into base, bonus, and equity compensation by job type, and if you are a pay-for-performance org, gather performance information. If necessary, buy or borrow the skills to collect and analyze data and gain insight.
A tip: If you don’t have external pay data, don’t worry. It’s unnecessary if you are focused on adjusting women’s pay for internal fairness. However, you will need external data to determine how to pay across the company to meet your pay philosophy to lead, match, or lag the market. This can be completed in a different exercise.
Close the gap
Once you know your numbers, it's time to take action. Consider:
Don’t forget to include diverse voices in these decisions, and remember to put your money where your values are (follow your philosophy). This will be a complex exercise, and hard choices must be made, but it is worth it.
If you don’t communicate well, the efforts will be lost. Make sure to have a sharp and robust plan to explain pay changes. Ultimately, what you do will be important, but how you communicate the decisions will be critical to the success of this exercise.
Closing the pay gap is as simple, although the exercise can be a challenge. If your organization wants to build trust, get ahead of regulation, and develop sound pay practices, paying women fairly is a good place to start.
Let’s make 2023 the year of paying women what they deserve.
With layoffs in the last six months comes a new pool of talented and skilled women applying for positions. In the battle against the gender pay gap, and in line with treating women with dignity, it is crucial that compensation teams work with recruiters and hiring managers to ensure hiring practices do not create or perpetuate the gender pay gap.
Here are some practical tips to consider implementing this hiring season (and beyond):
Tip #1: Stop asking candidates for previous pay. This outdated practice builds salaries based on compensation that could have been depressed due to previous bias in a woman’s career. Focus on what the candidate offers, not what another company pays her.
Tip #2: Create a hiring range with a minimum and maximum salary for each role based on market data, internal pay, and budget. Use this minimum and maximum to keep offers in check. Hiring ranges are usually within the minimum and maximum of a role’s salary range. This allows for further pay progression for new hires once they join and their performance has been assessed during the standard review cycle.
Reserving part of the salary range also allows flexibility for hiring managers during negotiations. But be careful here and be transparent with the hiring team about the skills, experience, and other role-relevant characteristics worth paying more for. This allows you to measure women and men more fairly in negotiations.
Hiring ranges can be a bit tricky as you don’t want to falsely adverse your salary range, so be transparent with candidates about how the hiring range is calculated and why you reserve a part of the role’s salary range.
Tip #3: Don’t allow previous or current negotiations with other candidates to be the reason to pay a woman less. Historically, many women have been socialized not to negotiate or end up negotiating for less than their skills are worth. Just as many men have been socialized to negotiate. Don’t pay less than what’s fair because she didn’t ask for more. If you know you would pay more, and should pay more, do so.
Tip #4: Become self-aware and check your bias. If you find yourself during an interview or in a follow-up call with your hiring team thinking about offering less because of something immaterial to the role (for example, personality, accent, school attended), check your bias and offer what is fair.
Tip #5: It is ok to pay women for their potential. Many women have been socialized to downplay their skills and ideas. Become a better interviewer by asking the right questions. Also, ensure your hiring team has strong interview skills. Determining which candidates will deliver and innovate is much easier when the interviewing is robust.