Ep 84 - Pay Transparency: Why Employees Care

[00:00:00] We're live! Welcome to another episode of Comp and Coffee. You know, here in New England, it's autumn, just turning into fall here. And for autumn in New England, to feel like New England here, to feel like autumn is coming, it's basically two things. It's apple picking.

[00:00:38] My wife just made an amazing apple crisp over the weekend. But also corn from the local farms and on the grill. Got a couple guests here today. Liz is with us here from our content marketing group. Liz, where are you? I'm in Seattle.

[00:00:51] And what's your flavor of fall? Like, what do you like for fall? I'm in Seattle. Thank you, Russ. And I'm a diehard apple fan as well. What's your favorite apple? Do you eat them straight or is there like a certain combination of baking that has to

[00:01:05] happen with apple? I'm never going to turn down baking. So kind of anything it's in. But actually, I kind of prefer a fresh apple. And I'm not a pumpkin fan. I know that can be. The honey crisp apple, by the way, is legit. Yeah, love it.

[00:01:19] And Lulu's here, of course. Lulu's no stranger to the show. So welcome back, Lulu. Lulu, where are you right now? And what is your taste of fall there? So I'm in Dallas, Texas. We just had our first rainfall like since the past hundred days yesterday.

[00:01:32] So it's finally starting to crisp into fall. And Liz, we're going to have to have some words. I am a pumpkin fanatic. My mother has this pumpkin chocolate chip muffin recipe that I make almost all year round just to feel like it's fall when it's 115 in Dallas.

[00:01:48] But I also love apples. We were just in Minnesota last week. So everything in Minnesota is corn and apples and things like that. So I love fall, but I'm a pumpkin gal. I like pumpkin too.

[00:02:00] I do have a pumpkin pie recipe, a homemade one, and I'll do so next time. If you're up this way, Lulu, we'll have to do the pumpkin pie thing. Sounds good. Awesome. So where are you and what's your taste of autumn?

[00:02:11] I am back in London after a week in Denver. Blackberries, do you have blackberries on your side of the pond? So blackberry and apple is quite a tradition like blackberry and apple pie, blackberry and apple crumble. Do you have the same thing as a crumble?

[00:02:24] Do you do blackberry and apple pie together or are they two separate pies? They're together. Oh wow. Yeah, we do have apple crumble and apple crisp and everything else with apple, but I've never heard of blackberry and apple together. I haven't either. It sounds delicious.

[00:02:37] So pivot into fall, blackberry and apple crumble is kind of like a good side of that. I don't know if blackberry and apple is the same season here in the States. Maybe it is. I don't know. Yeah, blackberries are kind of fading out here. Yeah, springy summer.

[00:02:48] But that's awesome. Well, I've got to try that. Fruit pies, it's all about the fruit pie. Well, awesome. With this esteemed panel, we're not here to talk about fall fruit, although we could all day obviously, but more importantly, the topic on everyone's mind every time you turn around,

[00:03:01] I think we've talked about it now, I don't know, maybe four times on comp and coffee, but we just can't get enough of it. And that's pay transparency, you know, it's just hit the world so fast in really exciting ways.

[00:03:13] I think now the stats are something like one in four employer or employers or employees United States are into some sort of pay transparency law, right? So you really can't turn around or wave a stick and not hear hit a pay transparency thing.

[00:03:25] Lulu and Liz, you guys are like on the front lines here out talking to our clients and, you know, name a media outlet about this and what's happening. I just love to kind of think about a little bit, you know, what's the latest update on this?

[00:03:40] Where are we going? And I know Lulu, you were just speaking at San Diego World at Work talking about this very subject and sort of one of the big topics was sort of like, would you apply for a role that didn't have a salary range?

[00:03:52] Like is the expectation now that people think if it doesn't have a range on it, I'm not even going to bother? Like where are we on that Lulu? Yeah. So we did have an informal poll when we were at World at Work in San Diego.

[00:04:01] So for those of y'all who were there, thank you. It was great to meet you in person. But the poll was actually a little surprising. The results I thought were surprising. In regards to would you apply for a role that doesn't list a salary range, 51% of those

[00:04:14] that we pulled said no, while 49% said yes. So initially I was very surprised at how close the poll was. But then I started thinking about who we were pulling. We were pulling folks from all over the country.

[00:04:30] And I thought about folks like myself who live in a state where pay transparency doesn't exist. If I'm looking for a job, nine times out of 10, I'm probably going to have to apply for

[00:04:39] a job without a range in it if I want to look for a job in Dallas, Texas where pay transparency doesn't exist. So I think the results were close because we still have a lot of people who have no

[00:04:50] choice but to apply to roles that don't list salary ranges. With that being said, we do see that 79% of survey respondents do actually want some form of pay transparency. So that comes from this year's pay transparency pulse report from 2022.

[00:05:09] But I'm not a betting gal, but if I were a betting gal, I would say 100% of people on this podcast, so between the four of us, none of us I think would apply to a role that didn't have a range in it.

[00:05:21] I mean, we don't want to go in blind anymore. Yeah, I think that's for sure. And I think you raise a good point. It's like we often think about as comp pros and people who think about compensation all

[00:05:31] day professionally as part of our job from the perspective of the employer. But it's really important to start thinking about the employee's perspective. And even if you're in a state where you don't have a law yet affecting your particular company

[00:05:43] or geography, your employees are still seeing these numbers and they're still affecting how they think about things. So Ruth, what are your thoughts on how the employee experience really is when you go in there and there's no pay range? What do you think sort of happens there?

[00:05:56] Yeah, it's really interesting because we have probably for many years, I was a practitioner and worked with many talent acquisition teams. We probably didn't really think about the employee perspective in this. But it does seem kind of ridiculous that something as important as your salary is unknown to

[00:06:11] you when you're applying for a job, something that really guarantees your livelihood, that your salary helps you to support your family and you're applying for a role and you're not quite sure what you might be paid because there is no range posted with that job.

[00:06:27] Of course, you can go away and research, obviously, PayScale's online salary survey is where many people will come to research the market price for a job. There are lots of sources available today.

[00:06:40] So you will hopefully get some idea of the market rate when you are applying for that job, even if they're not showing the range. But what you won't know is what that company is paying for the job if they're not sharing that information with you.

[00:06:52] And therefore, you also won't know kind of where you're going to fit in into that company based on your skills and experience. And I think that's really kind of sad as an employee because there's this almost like a

[00:07:04] lie starting even at that very early stage of the employment relationship. We're not being honest and truthful with each other over something as important as pay. And also what we have seen historically is that by not sharing pay ranges, all the

[00:07:20] bargaining power sits in the hands of the employer and definitely not in the hands of the employee. And I mean, I was probably guilty of the practice as well as a practitioner where you would potentially think you were doing your company a favor by negotiating someone down

[00:07:35] on their starting salary. You know, we always save the business $5,000, you know, actually when you probably were doing a disservice to that employee and maybe not recognizing their full value. So I think we are just now more increasingly thinking about what that employee

[00:07:51] experience is if there is no pay range posted with the job. And it's a very different experience than if they're able to see that. Yeah, and I think there's an opportunity. You raise a good point, Ruth.

[00:08:00] There's like a real opportunity to exceed expectations and delight an employee with early direct conversations about compensation and being very open and honest about it. I say delight there, though, because I'm thinking about it from my generation's

[00:08:12] perspective or like a to your point, Ruth, as I grew up, we didn't you know, we didn't talk about salary. We didn't even talk about the early interview process. It was only to the very late stage where you actually talk numbers, which is kind of

[00:08:22] silly because then all of a sudden that could be a deal breaker. But but I do wonder if it's changing. And Liz, I want to ask you, do you think is there a generational change here?

[00:08:29] Is there is there a pivot going on as people, millennials and Gen Z's become a broader and bigger majority almost part or maybe they are majority part of the workforce now? Like how should we respond to that? How's that moving?

[00:08:41] Yeah, I definitely think that the generational influence is going to be a big push for this. I'm a proud member of Gen X and I honestly I'm just shocked. I echo that experience, Russ, of being in interviews and just going in and you know,

[00:08:57] either they asked me, what are you making right now? And they would base my my offer on that or just wait until five interviews in. And then you're like, oh, this isn't going to work.

[00:09:06] So that being said, yeah, history of pay secrecy is going out the door and just all the information that these up and coming generations have to them. I think it's exciting. We at a recent webinar we held, we shared a survey from LinkedIn's workforce confidence

[00:09:26] survey, and it was about 5000 people surveyed. And across all age bands, people said, yeah, we're comfortable sharing our salary with our family. But then where the gaps came in were the Gen Z, 32 percent of them were

[00:09:41] saying, yeah, we would tell our coworkers compared to my generation, Gen X, which that came down to seven percent. So, yeah, it's a big spread in between the generations. I would say even like for millennials, like I'm an elder millennial, which is a new term

[00:09:59] that's been around a little bit. Like even I'm a little bit uncomfortable sharing my salary with my coworkers. Like I'll share it amongst my friends, like my friends and I, we talk about it all the

[00:10:09] time. Like I remember when I was applying to be at PaceGet, which was almost two years ago, one of my dear friends was also applying for an in-house role at another company. And we both were in our interview processes almost were parallel.

[00:10:23] So we were talking to each other. How much are you looking for? I don't know what my worth is at a company because I had come from the law firm world where I was very knowledgeable about what kind of the dollars looked like in a law firm

[00:10:33] world based on my experience. But coming to a company, I had no idea. So it was really helpful to have that person talk through kind of like, oh, they gave you this offer. They gave me this offer.

[00:10:43] They gave me equity. They didn't give you equity, you know, sort of thing. But I don't know that I would be comfortable. Like Ruth and I are quite close. I don't know that I'd be comfortable telling Ruth how much I make, although we're quite

[00:10:52] close, you know, as coworkers. Well, we've done some interesting experiments, haven't we, Lulu? And we've been speaking, thinking back to a conference that we did with one of our partners, Payformance Partners in Charleston. And I asked the audience what would they be more comfortable disclosing their salary,

[00:11:10] the color of their underwear or whether they had ever been caught for a traffic incident. And more people were willing to share whether they'd been caught for a traffic incident and the color of their underwear rather than share their salary.

[00:11:24] So, Ruth, we actually took that from you at the Texas Total Rewards Conference. Oh, did you do it as well? We did. And actually, I think Liz remind me, I think it was the underwear question that people were like the most comfortable sharing, which I was surprised.

[00:11:37] I was a little worried. I was worried. I was like, oh, it was an interesting. Liz loved that when I pitched it to her. I said, this is what Ruth just did at a conference. Love that. I got to do that next time. That's awesome. I love that.

[00:11:49] That's fantastic. And I remember very clearly when I was a few lifetimes ago, a different company, I had a product team and it was right about the time that female employees were being encouraged to talk about their salary because of the pay discrepancies. Right. We're like 2012, 2011.

[00:12:04] And I remember my whole team went out to lunch because we were doing an on-site and they came back and they said, hey, Russ. So we started talking to each other about what we're paid. And I'm like, OK, let's look at the numbers.

[00:12:15] And it sparked a really interesting conversation. Fortunately, our salaries are reasonably level. But it really got into the next challenge you run into with transparency is, well, person X understands why they're paid less. But what do they got to do to get to the next level?

[00:12:28] Right. And that's sort of even that's a tough, tough challenge for some people. And I wanted to kind of follow up with you on this. It does feel a little bit like like that kind of a question really is a question of comfort and trust.

[00:12:40] It seems like it's really about trust, the trust of the employer, the trust of the employee, our relationship with other employees and other people. What's your feeling on the on the trust element of pay transparency? Well, trust in the workplace is a really important concept.

[00:12:53] And there are lots of different things that influence that. Things like manager relationship is quite an important factor in that. But pay trust is also really important because as an employee, you want to be able

[00:13:05] to trust that your employer is paying you fairly for what you're bringing to the organisation. And we see through some of our fair pay research that where people don't see that they're being paid fairly, then they have a much higher intent to kind of leave the organisation.

[00:13:21] And I think we've had a prolonged period where we've seen trust in pay gradually kind of on a downward trend. And if I look back to it, I could see it kind of tracks back to the financial recession

[00:13:34] of 2008. And if you can think back to that time, all the headlines were about started off being about bankers' pay. Then it was all about executives' pay and we're all up in arms about how much these people were being paid.

[00:13:46] We saw a lot of increased reward governance come in as a result of that. So, that was kind of where people really started to question the fairness of pay. Then over that whole period of time pre the pandemic, we saw a slow decline in real income.

[00:14:01] So, employees were really, although they were getting pay increases, they weren't feeling the value of that in their pockets and in their spending power. And then we had all the Covid crisis or the income disruption.

[00:14:13] And then now with the cost of living crisis, there's this really kind of slow trend, I think, of people not really feeling they're being treated fairly around pay and losing trust in pay practices.

[00:14:25] And so that's why I think we're seeing the demand from employees to say, please tell me about why I'm being paid what I'm paid and then I can trust you and we can have a good working relationship together.

[00:14:38] So, that's how I see the two very much linked together. So, pay transparency is for me very much about trust and building a culture of trust within your organization. It does really feel that way. And I wonder, does the legislation sort of drive it that way?

[00:14:54] Like, Lulu, do you feel like the law is actually sort of, are they directionally correct in encouraging this sort of trust building? Yeah, absolutely. I mean, Ruth and I say all the time on the webinars we do during our pay

[00:15:05] transparency legislation series is pay transparency is the easiest way. It's the easiest branding opportunity for employers. And if you do it right and you're able to post competitive salaries on your job postings, you're inadvertently telling folks in the world, this is what I value

[00:15:22] my workforce at, come work for us. And we're going to be open and honest about the process to begin with. I mean, we go, I've seen companies go so far as to say, here's the range. We aim for the 50th or 60th percentile.

[00:15:35] We will adjust based on maybe experience, maybe location, maybe some other non-discriminatory compensable factors. But those are the organizations that are going to be in the best position to not only attract the best talent, but keep their own folks.

[00:15:52] And I know Ruth said earlier, you know, candidates don't want to go in blind anymore, and I've used this analogy and Ruth has used something, an analogy similar to this, which is the time before caller ID.

[00:16:04] This is, I think, a great way to explain it to the generations, you know, the older generations that may not understand it, is that how many times do you answer your phone now not knowing who's on the other end? I mean, it's the same thing for candidates.

[00:16:17] They don't want to get to the fifth interview just to realize they aren't aligned on salary like you were mentioning earlier too, Russ. So I think it's, you know, the laws are forcing the compliance.

[00:16:31] And I think that that's going to be the initial step to get companies to start complying and building that trust. But we are seeing companies, you know, like I talk about Texas and Austin all the time. We talk about tech in Austin.

[00:16:42] There's a lot of companies in Austin who are posting salary ranges because they know that they're trying to attract the same talent from those who are looking in Silicon Valley for the same jobs. Yeah. I love the, I love your angle on that.

[00:16:55] It's basically we as employers, right? And comp folks, we shouldn't look at this as a pain thing we've got to comply with, we should look at it as an opportunity to really up our game on both trust and brand awareness and really our comp strategy.

[00:17:08] So I think it is driving a lot of exciting change. Liz, I'm curious. I know you've been doing a lot of research with our clients on how employees and candidates for jobs are reacting to transparency. What are you seeing in some of that research? Yeah.

[00:17:21] So I felt like everybody is talking about pay transparency out there in the world from the employer perspective. So I really wanted just even as an employee myself, like, what do I feel? What do employees feel? What do employers experience from their employees?

[00:17:36] So in talking with folks, Lulu, something you mentioned somebody in the New York Times, a new graduate. This is right again, the new generation coming in person graduated and said it was so helpful because my fellow students and I had no idea what we should be asking

[00:17:55] for our pay. We've never worked out in the workforce. This is totally helping us that ranges are posted. We know we can ask for what we deserve. Others are saying, you know, it's amazing when people come in again, what we've experienced like that.

[00:18:12] The candidate knows how much we're offering and then they come to the interview. We know what we're offering. It takes a whole uncomfortable chunk out of that process. People are also saying, you know, this is our generation and this is going to be the

[00:18:28] demand. So we were ready for it. And employers who are providing that are the ones that we want to work for. One final note in our research, two things, actually, one person was saying it can be a bump in the road for candidates because human nature, right?

[00:18:46] We think of the top of the range. That's what I deserve. And that's where it really plays in from the employer's perspective of you have to explain and be really cognizant of what are the skills that are required for those

[00:19:01] various levels and kind of what you were saying, I think, Lulu, that we're aiming for this range and this is what it means. So, yeah. That's an awesome point. Yeah, that's an awesome point. Lulu, so my daughter's in this literal experience right now that you just talked about,

[00:19:16] she's literally graduating from college next spring. She's been in an internship for a while there. They just made her her first job offer and she and of course, she knows what I do. So she's like, dad, I don't know if this is a good number or not.

[00:19:30] I look online, I see all these, you know, and she's looking at remote work. So she's like, I'm looking at salary ranges for entry level software engineer all across the United States. I should I be up at the top? Should I be down at the bottom?

[00:19:42] Am I asking too much? And she's very fortunate because, you know, her father can go and I can use all of our pay scale tools and I can come back to her and I'd say, here's the compensable factors. Here's what you know right now.

[00:19:51] Here's your years of experience. Here's what you could expect. And actually, the offer she got was very competitive. But like this is where it's an opportunity for the employer to come in and actually have that conversation with a candidate down to like, here's why we're making you

[00:20:03] this offer. Here's how we think about things. Here's how we comp it. And if you're considering other opportunities, ask them directly, why are they giving you that number? And that way you can really compare.

[00:20:13] And I think we need to train our managers and our hiring managers and our recruiters on how to have that conversation to really effectively help people understand why the number is what it is, because it's almost like too much information and very confusing

[00:20:24] for folks. They don't really know. And these ranges are very broad. So and I'm really curious, Lulu and Liz, you guys both spoke on this at Texas Total Rewards. What reaction did you learn from folks about their thinking and pay transparency at that event?

[00:20:40] I was I think Liz and I, I don't want to speak for Liz. I was just very pleasantly surprised. So Liz and I spoke at the very last session of the conference and it was about pay transparency in Texas.

[00:20:54] So Liz and I and the other speakers were slightly worried, like who's going to stay for our presentation because this is Texas, like there's no pay transparency laws here. We had over 100 people. I would say probably 60 percent of the conference stay for our presentation, which was

[00:21:10] incredible. But even after we gave the presentation, Liz and I were talking to some of the attendees. And what I heard from them was that although their businesses are maybe headquartered in Texas, they're multi-state employers and they are understanding how important it is to post salary ranges.

[00:21:28] And a lot of them are trying to get their leadership to accept them to post ranges for all roles, not just in the states where it's legally required. So they understand that it's a branding opportunity. They understand that it's effective to keep talent.

[00:21:43] They understand it's effective to retain talent, which is very expensive when you lose talent. So and then a lot of them, too, were actually in the process of providing salary ranges to their current employees, like making that part of the annual review process,

[00:21:59] which we do that at PayScale, which is amazing. But a lot of companies don't do that. So Liz, what did you what did you hear? Yeah, I echo those. And I going back to our what color is your underwear and have you ever had a traffic

[00:22:12] infraction? We saw right there in the audience, there's vividly remember two people on two opposite sides of the room and they had very strong reactions to that one person, maybe for more of my Gen X said, it's no business what I make. You don't need to know that.

[00:22:30] And then somebody else on the other side was wanting, no, I need to know what all my peer group in my role makes. So again, like they had completely taken off their practitioner hats at that point and were employees having that reaction.

[00:22:45] And so it just struck me again how how it's affecting all of us. I think they really did appreciate, too. We shared with them information from our retention report and PayScale's research. We found that. The more transparent a company is, we asked employees how transparent is your

[00:23:05] organization about pay, and if they said very transparent, it went down the scale of the less transparent they were, it would drop by 30 percent each kind of level of transparency with how likely somebody was to leave. I muddled that up.

[00:23:21] Basically, if people aren't transparent, it's more likely that their employees are going to be looking for a job elsewhere. I think back to the topic of this comp and coffee, it's just the employee expectation is high now around this topic.

[00:23:37] And if you're not doing something about it, then you are missing out on an opportunity, as Lulu was saying earlier. And even if your business leaders maybe don't want to do something about it, we hear that

[00:23:48] quite often when we're interacting with audiences on our webinar is like, how do I persuade my executive leaders to buy into this? The first thing they need to understand is that their employees are very focused on this and have very high expectations around pay transparency.

[00:24:03] And I guess part of the message from today was really thinking, be aware of that employee expectation. Yeah, I think that's right, and I think it's interesting, really, talking this through with all of you and hearing the feedback, it was amazing to hear the feedback from Texas

[00:24:19] and all these direct interactions. But when you think about these laws are really creating or driving or leveraging, I guess, a generational shift. And even if you think, even if we all take our comp hats off and we look at the larger

[00:24:31] data of how younger generations are less concerned with privacy in general than older generations, this is just a subset of that. Like younger people just don't probably don't mind wearing their salary on their sleeve. It's perhaps a badge of honor or a badge to complain about.

[00:24:45] We got to make this right. My salary is not great. Well, and Russ, too, just to piggyback off of what you just said, one of the statistics that we heard at World at Work in June was that by 2030, 30 percent of the workforce are going to be Gen Zers.

[00:25:00] Yeah, that is huge. So I mean, the expect that's only that's less than seven years away. Right. And if almost half of your workforce are Gen Zers who are going to expect it, you got to you got to start working towards pay transparency because you're never going to

[00:25:15] attract or keep your folks. Yeah, exactly. Exactly. So I'm so excited to chat with all of you today about this topic. We could go on for hours, but we got a we got a time limit here.

[00:25:26] You want to respect that? We know that everybody's got got lots to do, but that's what we think here are our panel here today, here in the autumn of 2023. What we think about pay transparency. What do you guys think? You are listeners. We'd love to hear from you.

[00:25:38] We'd love to know. Send us any email with your thoughts or comments to coffee at Payscale.com. Cop and Coffee is a Payscale production dedicated to the compensation community. We welcome your feedback. Send email to coffee at Payscale.com, tweet us at Payscale or share your thoughts in

[00:26:11] our Payscale Connect community. Until next time, keep your coffee hot and your data fresh.