By Kaitlyn Knopp, Co-Founder & CEO, Pequity
Halloween is not just for jack-o-lanterns and candy, it’s an occasion to take stock of your company’s recruitment, compensation structures, and overall culture. During the current upheaval in the talent market, it’s more important than ever to make sure your company is paying people fairly while staying competitive with the latest industry trends. If you’re not careful, your company culture and compensation practices might be scaring top talent away.
Here are a few key “scary signs” to avoid, so your company doesn’t go through a frightful experience on your next hire.
Scary Sign #1: You’re Still Insisting that People Work in an Office Everyday
Based on the latest trends we’re seeing in the tech industry, I believe that remote-first has become the new table stakes for recruiting top talent. People want flexibility. They want to control their own schedules. They want to avoid the costs and hassles of a commute. They want the freedom to live wherever they want, or to be mobile as digital nomads.
If your company can’t promise top candidates the flexibility of remote work, your competitors will.
Scary Sign #2: You’re Not Transparent About Pay
Do you make it easy for employees and prospective hires to find out about the pay scales for each position? Some states like California have pay transparency laws that prevent employers from prohibiting employees to discuss their own wages or discuss or inquire about the wages of others.
Some tech companies have been even more proactive about pay transparency, and have started publicly posting their salary ranges; other companies disclose salary ranges to internal audiences. According to the LinkedIn Global Talent Trends 2019 report, 27% of HR and hiring professionals said that their companies were currently sharing salary ranges, and 22% said they were likely to start sharing salary ranges within the next 5 years.
If you don’t make it easier for employees and prospective hires to find out about pay scales, you run the risk of a black market developing around compensation. Sometimes when people can’t get accurate, transparent information about their company’s pay scales, they develop misunderstandings and misconceptions around compensation that can lead to hurt feelings and higher turnover.
There’s no one-size-fits-all answer for pay transparency. You don’t have to publicly post your company’s salary ranges on your website. But you should at least give some careful thought to how to build out and document your company’s pay structures and scales, so that you can clearly explain to people why they’re paid the way they are, and what it takes to progress in their career.
Scary Sign #3: You’re applying a one-size fits all approach to remote workers
Some companies are taking a one-size fits all approach when it comes to tying compensation to paying remote workers. Paying people based in different places the same rates and completely discounting local cost of living is not going to be a winning strategy. The future is remote-first, and that means companies have to adapt their compensation programs to meet the needs of dispersed teams.
If your company headquarters is in San Francisco and you have a top software engineer who wants to move to Boise, Boulder or Bismarck, it’s important to ensure that these individuals are compensated in line with with recommended pay philosophy differentials dependant upon where they are relocating to. This ensures pay parity, and prevents slippery slope negotiations based on personal preference. For example you wouldn’t pay someone living in a penthouse more than someone in a shared apartment in the same city; instead you would benchmark to the local pay rate for their role. The same applies here.
Scary Sign #4: You Haven’t Run a Pay Equity Test
One of the most important guiding principles for fair pay in the state of California is the California Equal Pay Act, which requires employers to provide “equal pay for employees who perform ‘substantially similar work,’ when viewed as a composite of skill, effort, and responsibility.” Running a pay equity test can help your organization figure out whether or not you are currently paying people fairly, by analyzing a group of employees’ pay and comparing their compensation based on their role, level, location, and comparing compensation for employees of different genders or races/ethnicities.
If you haven’t built a pay equity test, you might have discrepancies in your compensation program. Sometimes pay issues happen by accident or by misunderstandings. But finding problems early can give you a chance to make corrections and avoid costly impacts on your organization.
Pay equity is nothing to fear. Even if your company has a few limitations or blind spots with how you’re managing compensation, it’s not too late. Talk to Pequity and see how we can help you build a stronger, steadier compensation program that pays people fairly and keeps your company competitive in the market for talent.
Comments