Equitable Compensation: From Strategy to Equity — Highlights from a conversation with DRG Talent Advisory Group
In September, we had an informative and thought-provoking webinar and conversation with the Talent Consultants from DRG Talent Advisory. Here, we compiled a few of the hottest questions about Compensation Practices and what the DRG team recommends.
Should we share salaries in a job posting? Does including salaries in a job posting improve or inhibit equity?
This question is more complicated than it might seem. At an initial level, salary transparency does increase equity. The structures that promote inequality depend on obscuring that information. But first, we need to turn the question back on you and the answer depends on your organization. You have to consider internal equity and external equity, and likewise internal transparency and external transparency. If you are sharing more information externally than you are sharing internally, you will run into problems. It is like leaving the list of salaries on the photocopier without talking to anyone about the how, where, and why of what you are doing. In the short term, implementing this one tactic might not make more equity if enacted alone. Power will adjust, demographic shifts of who takes which roles might adjust, and if management training and support isn’t increased at the same time as pay transparency, then sharing salaries might not be serving equity.
With such a tight hiring market right now, what do we do if we have to offer a higher salary to a new hire just to fill that open position? What do we do if we cannot financially increase the salaries of all our staff?
This is a tough question and you are not alone, but that doesn’t make it easier. Many candidates in the marketplace are clear about what they need and not willing to negotiate, they are able to find jobs. Again, you have to know your organization and this might have implications internally. Take a close look at your compensation structure. Have conversations with your team. Share the challenge. To the extent you are able to shift to bring everyone in alignment, you do that. If that is not realistic, there are ways to be creative with compensation for a new person. You can compensate with extra benefits, a stipend, a performance-based bonus, or with something you are not required to continue in the future. Here, our best advice is to share the challenge with staff, and be candid with the candidate, sharing your values and structures.
How can we approach equity when we have not only full-time staff, but also part-time and freelancers?
First, when you do your compensation analysis as an organization, you must include the freelancers and part-time people. Calculate what their rate of pay would be if you converted it to full-time. Then, you need to make intentional decisions. What is the reason you have short-term consultants and part-time staff? What are your values around that? You are paying someone NOT to look at other opportunities during that time, and that has implications for that person. There are considerations for each type of staff. The key is alignment. While you don’t want to have two completely different structures that don’t speak to each other, differences are allowed. Ask the questions and articulate for yourselves the answers.
What tips do you have for us going into our first-time sharing salaries with our staff?
The most important factor in deciding how to proceed is the historical precedence around this conversation. Is this a first-time conversation or is there a sore spot?
To the extent you can, be transparent about what the philosophy was in the past. Even if it was never articulated, you can articulate it now. Perhaps for your first five years you were just trying to survive, and now you are setting up systems and creating salary levels.
If you are sharing salaries for the first time and some people are above or below where they would expect to be given the newly-created levels, or the sudden transparency, that is because at some point someone had a lot of subjective choices. There can be good reasons, but the more there are subjective choices, the more we see biases. A first choice would be to bring up those who are earning less than the expected level.
This is not just math; it is as much about the heart as the head. You want to be able to articulate what it means to you as an employer and what you hope it can mean to your employees. You can also talk about the total compensation package, include ability to work from home, benefits, professional development, etc. These elements can drive people’s desire to stay in a role.
In the past, it was those in-person relationships that were the glue that kept people in their roles. Right now we don’t have that and you have to be really sharp with defining your philosophy toward compensation.
Do you have advice for moving from cost-per-living salary increases to a merit-based system?
For a merit-based system, you’re going to need a very well-communicated and understood performance evaluation process and definition of what “merit” means. You’ll need to articulate how someone can demonstrate merit, and have a good tracking and recording of merit indicators. There are organizations that are fully transparent not only about salaries, but also about staff evaluations. Anyone can access all the information. Most organizations are not there yet.
The decision to have a particular structure shouldn’t be the starting point. If you are making the decision quickly, and in a vacuum, you probably won’t like the outcome. We recommend beginning the conversation with your staff. Educate your organization about approaches to compensation, why one or another might be better for your institution. Get staff to understand the topic. Get their input. What do they think is good or bad about an approach? This input will also help you learn how to communicate this change in a way that makes people feel safe and comfortable. Have a few focus groups, share proposals, get feedback, build something together. If there isn’t strong trust between supervisors and staff, a merit-based approach is going to be very challenging. You’ll also need training for that process of evaluation. You should expect to invest a year in doing the set up, and then roll it out the following year.
One final thought…
By the time a staff person has built up the courage to ask the question, whether it is about salaries or how they compare within the organization, they have already spent a lot of time thinking about it and wondering, imagining a lot of possible answers, and coming to their own conclusions. They will likely have gone down paths that aren’t very helpful. If you can pre-empt that with real info, early conversations, and growing transparency, you will be all the better.