As More Employees Reveal Pay, Organizations Must Prepare To Discuss Compensation

Friday, Zach Wilson, a data and software engineer, revealed his pay history on LinkedIn. From his $30,000 per year internship in 2014 to his $575,000 current annual compensation at Airbnb, Wilson laid out his salary and job description at tech giants including Facebook (Meta) and Netflix. The post has gone viral. As pay transparency becomes more common, employees are questioning their pay, and employers are scrambling to defend their pay strategies.

Wilson accompanied his salary history by writing, “I think talking about compensation should be less taboo.” Indeed, sharing salary information is becoming less taboo. Websites like Glassdoor and blind share salary data that they’ve collected anonymously. And a Google employee started a spreadsheet to collect pay information from fellow Googlers. With salary information readily available, employees are armed with valuable data that they can utilize to challenge their employers’ pay practices. According to Maria Colacurcio, CEO of workplace equity software company, Syndio, many companies are not prepared to address their employees’ pay concerns.

One goal of the pay transparency movement is to help level the playing field for minority groups and women. In the U.S., women take home only 82 cents for every dollar earned by a man, and Black women take home a mere 63 cents for every dollar earned by a man. Pay transparency allows employees to know where they stand relative to their peers, and they can present data to their employer and request fair pay.

Most companies aren’t aware of their problem areas, and therefore they just address conflicts one at a time. Colacurcio says instead of adopting this type of “Whac-A-Mole” strategy, organizations need to get ahead of the problem. She says companies need to hone in on their inequities and address them before they become an issue. Syndio’s software and analytics help companies analyze pay equity in the organization (getting equal pay for equal work) and also assess opportunity equity.

Colacurcio describes opportunity equity as “who’s high up making those high salaries and who’s down low making the lower salaries.” Organizations that only look at equity within a particular job description or level may miss out on locating opportunity inequities. If certain groups are picked for promotions more frequently or are onboarded at higher levels, the opportunity inequities add up. Syndio’s software has already helped Nordstrom, Sweetgreen, SalesForce, General Mills, American Airlines and others analyze their pay equity and opportunity equity.

Once companies identify their problem areas, employers need to have a compensation philosophy they can explain simply. Then, they have to empower managers to explain that philosophy. Syndio’s client, Nordstrom, performed role-playing exercises with their people managers to help them become better prepared to address questions relating to pay. They highlighted the possible questions that the managers could be asked and provided them with the relevant talking points. This strategy not only helps the managers address problems but also helps employees feel like they’re receiving a fair wage.

Not only are employees sharing their pay data, but new pay transparency laws in seven states and several cities require that employers report the salary range for all new job postings. This can create problems if the organization pays its current employees less than the going rate. Colacurcio explains “especially in a labor market, like the one we’re in, if you are hiring at these exorbitant market rate prices, and you’re not increasing pay for your tenured workforce, you are going to create a massive remediation problem in the future.” She says managers aren’t prepared for answering questions about why new hires are making more than employees that have already put in several years with the company. “I’ve heard, across the board, that leaders are just not prepared for these conversations,” Colacurcio says.

When given a salary range for a particular position, there’s research evidence that prospective employees will likely believe they deserve to be at the top of that range. Colacurcio suggests this is just one more reason that employers need to have a data-driven approach to compensation, so they can defend their compensation philosophy. Then, they can clearly explain to employees what it means to be at the top of the range, and what it means to be mid-range.

There are additional benefits for companies that rethink their pay structure and analyze their pay equity. Colacurcio believes that identifying pay issues could help companies tap into underutilized people resources. She says, “It really does enable you to unlock opportunity for people and to look across your talent pool and figure out that something as simple as a travel policy or a scheduling flexibility policy is holding back an entire population of folks from an underrepresented background. And when talent is the number one operating priority for so many companies right now, it’s a really big get to be able to figure that out.”