How pay transparency makes companies more equitable

The size of your paycheck is still a taboo issue in many workplaces, social settings and even within families — but it shouldn’t be, Crystal Coache and Jess Gartner say.

Coache, the chief of staff of the education nonprofit Urban Teachers, and Gartner, the CEO and founder of Allovue, a Baltimore-based education finance technology company, led an interactive workshop with area executives to tackle the topic of pay transparency as part of the Most Diverse Tech Hub initiative.

“I very much grew up with the mindset that this was something that you didn’t talk about,” Gartner said. “I also very much grew up being taught that compensation or worth was tied to your credentials, and a big part of that would be where you went to school and how good of a school you went to.”

That’s not unusual — and it creates and exacerbates disparities that are then hidden when pay is kept a secret.

“I was compelled to make a difference as a leader of an organization and do things differently,” Gartner said, “but there was definitely a period where a lot of that felt very uncomfortable to me, and I was also surrounded by people who thought that it was an absolutely catastrophic thing to do as a leader. I still get that pushback.”

The importance of standardization

When committing to pay transparency, some trends that may seem employee-friendly may be making it more difficult to define a position’s worth — things like using “creative” job descriptions like “data ninja” or “coding rockstar.” Standardized titles is one area where the status quo can be helpful, because it makes it easy to categorize positions into pay levels where everyone earns the same amount.

And yes, going by this philosophy of pay equity means no negotiating salary.

“It’s widely understood that negotiation causes tremendous harm, specifically for women and people of color, and especially women of color, so we do away with it,” said Coache. “And it becomes much easier to do away with negotiation when you’re paying towards the top of the market or at least at market.”

Pay floors should mean pay ceilings, too

This all means you’ll paying people what you’ve determined their position is worth, regardless of their salary expectations. Consider this example from Gartner:

“One defense against pay transparency is that if you’re going to say the floor for a role is $60,000, but you get an applicant who’s currently making $40,000 who says they want to make $45,000, a true capitalist would say we’re wasting $15,000 by offering them $60,000 when they would have taken $45,000,” she said. “But an equitable compensation structure says they were probably being dramatically underpaid for their skills at $40,000. We have independently decided that the responsibilities and accountability and experiences that we are looking for in this role is at least a $60,000 job, and to pay less than that is to exploit your labor force. And it will inevitably create pay disparities because the next person who applies for that role is going to ask for $65,000.”

Having a pay floor means having a pay ceiling, and you will likely lose prospective employees because of it, just as you lose prospective employees for not being a good fit in other ways.

“We are not paying people half a million dollar salaries,” Coache said. “If you want to go work for Apple or Google and make half a million dollars, go for it. We’re not the place for you. That’s a conscious decision you have to make. You have to think about what you will do when your top candidate comes to you and says, ‘Your salary maxes out at $150K, but I have an offer in hand for $350K at this cool Silicon Valley company.’ If you make an exception, you don’t have a compensation structure.”

An authentic assessment

Developing salary bands come about by a complicated process that requires a change in management plan, as well as an assessment of where and what the company’s pay inequities are.

“Especially if you are a white leader or a male leader and you find discrepancies between gender and race in your organization, you need to work really hard to decenter yourself and decenter your feelings from that process,” Gartner said. “These conversations can not be about your employees making you feel better about it. So these are really tough conversations to have. They’re tough facts and realities to confront. It’s hard, but on the other side of this, having a more equitable and transparent organization is really worth it.”

Read their full how-to guide on the process of auditing, then changing, your pay structure for more equity, and watch their full 50-minute workshop here:

P.S. Mark your calendar for the next edition of Technical.ly’s workshop series, “Tokenism Without Change: The Ethics of Brand Marketing,” happening Wednesday, June 29 at 12:30 p.m. EST.