How tech companies are leading the way in pay transparency
“What is your current salary? Or “What are your salary expectations?” Are seemingly simple questions that have become a routine part of the recruiting process. But a growing cohort of progressive tech companies is breaking with this practice.
In fact, they offer pay transparency policies that not only exceed wage disclosure legislation gaining traction in the United States – they also aim to address the gender pay gap.
The current pay gap between men and women stands at 15.5% in the UK and around 16% in the US, reflecting research that shows men are more likely to negotiate higher pay than women. This gap only widens when companies make offers based on current or expected wages, as shown in the same research.
Legislation aside, tech startups are working harder to promote pay transparency than large companies, according to Ruth Thomas, former head of human resources at PwC, Lloyds and Credit Suisse, now pay equity strategist on the Payscale compensation software platform.
“More and more, there is a demand for transparent pay scales that people understand, as a mechanism to ensure pay equity. Tech startups have really been leaders in pay transparency with their open compensation systems, ”said Thomas, who works with companies like EY, AXA Group and Sony Music to improve their payment methodologies.
“The reality is that this is not achievable for the larger, more institutionalized organizations that have been around for hundreds of years, that have quite a history of compensation under their belt that they must unravel to get to a point of pay equity, ”she added.
Thomas cited social media content platform Buffer as a poster for pay transparency, after posting his payment plans online. Software company Gitlab and Zoom rival Whereby have followed suit, in a bid to increase gender equality in the tech sector.
And it works for Buffer. He attributed pay transparency as the main reason for reducing its gender pay gap to 5.5% in 2021 from 15% in 2020. Being transparent has made the company more accountable and motivated to advance women. from lower paid positions, the company claimed.
It should be noted that this is an unadjusted pay gap, comparing the earnings of all men and women at Buffer, regardless of their role or level of experience. An adjusted pay gap compares the wages between people with similar functions. Buffer has confirmed that he does not have an adjusted salary gap at Buffer due to his transparent salary formulas.
So while a company can prove that it does not have an adjusted gender pay gap, with men and women in the same paid positions in the same way, like Buffer, men can still earn more. if there are fewer women in management positions. This is what an unadjusted pay gap shows, and it’s just as important for companies to understand the level of gender disparity in senior management representation and develop ways to retain and advance more. women.
While not all of her counterparts have released such in-depth data on the gender pay gap, Whereby COO Jessica Hayes, who is the third woman on the company’s board, believes that pay transparency “is absolutely crucial to tackling the pay gap” across different demographic groups.
“A fair and consistent approach to compensation has been seen as ‘scary’ by companies in the past because it empowers people, but what they missed is that it actually empowers people. two sides – employee and employer – power, ”said Hayes.
Moving away from salary negotiation to making offers consistent with the formula that Hayes and his team have created manually means the company is able to have a greater impact on diversity and inclusiveness, has t -she adds.
The responsibility buffer referenced as its driving force also rings true for Tandem, a small software company that released salary ranges for each of its roles earlier this year. Its own independent salary audit concluded that there was no adjusted salary gap between comparable roles.
Founder and CEO JC Grubbs said his team came up with the idea of creating and publicizing their pay scales to promote the company’s goals of inclusion and equity, with a leadership team currently made up of 44 % of women, against 52% for the company as a whole.
Salary brackets also allow for more transparent internal progression, Grubbs noted.
“Salary brackets remove the ambiguity around compensation: as an employee at any level, I know my peers are paid like me. When you reach the top of a salary range and you are ready for a title change, you know the accomplishments required to move to the next bracket, ”he said.
“Transparent salary ranges with clearly defined roles help new employees know the compensation structure before they decide to join a company. Once in the company, there is a clear way to plan for your growth: The career path tells you how you will progress in the organization and how you will be paid.
Pay transparency movements are also gaining momentum in the UK, such as the call by the gender equality charity The Fawcett Society to ban the disclosure of salary history as part of the process. interview, and the charitable sector’s “Show the Pay” campaign, which has attracted support from 28 organizations. A recent survey by UK job site Find Your Flex even found that 84% of people are turned off by job postings that don’t include a salary bracket.
“The emphasis is on finding the right salary for the skills and responsibilities of the job, not on haphazard ‘negotiation’ based on what a candidate is currently earning and what the employer thinks they can offer.” said Lucy Smith, founder and CEO of the graduate employment website Digital Grads, which was one of the first to sign the Fawcett Society’s salary history ban pledge.
But without legislation like in the United States, Thomas de Payscale warns that the United Kingdom could be lagging behind.
“A lot of organizations are too scared to publish their pay scales, but that has to be the meaning of the trip. How to educate our employees and managers on how people are progressing through these salary ranges – this is what many organizations are facing right now, ”said Thomas.
There are three things employees want to know about their wages, she explains: how their rate was determined, how they can influence it, and most importantly, how it compares to others.
“Pay transparency has now become a critical factor in employee engagement,” said Thomas.