Sally Loftis - Pay Equity Isn't Scary - Here's How and Why to Do It

[00:00:02] Here's an experiment for you. Take passionate experts in human resource technology. Invite

[00:00:08] cross-industry experts from inside and outside HR. Mix in what's happening in people analytics

[00:00:14] today. Give them the technology to connect, hit record, pour their discussions into a beaker.

[00:00:21] Mix thoroughly and voila! You get the HR Data Labs podcast where we explore the impact of data

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[00:00:35] challenging and enhancing your understanding of the way people data can be used to solve real

[00:00:40] world problems. Now here's your host, David Turetsky. Hello and welcome to the HR Data Labs podcast.

[00:00:48] I'm your host David Turetsky and today we have a very special guest, Sally Loftus of Loftus

[00:00:54] Partners. Sally, how are you today? I am wonderful. The sun is shining and I'm grateful.

[00:01:00] It's actually shining here too in Massachusetts which is very strange. Yeah, yeah. We have really

[00:01:06] long winters. I live in the Blue Ridge Mountains and our winters are like a good six months so a

[00:01:10] sunny day in the middle of winter is a gift. There you go. And so thank you for having this

[00:01:16] I'm sorry I'm not saying thank you to you. I'm saying it to the weather gods. Thank you

[00:01:21] very much for shining on us today. So Sally, tell us a little bit about your background and how you

[00:01:26] got to today. Yeah, well I mean I won't go back to the day I was born but I will say you know I grew

[00:01:32] up in the south in a small town. My caregivers kind of worked in the margins of the community

[00:01:38] so that really made me aware of some of the inequalities in the world right these people

[00:01:42] maybe who weren't seen or heard and kind of fast forward to college decided to major

[00:01:48] you know and have a pursuer career in human resources and so I've worked in human resources for the last

[00:01:53] 25 years and really focused more on the strategy side. And so in the last 10 years I've kind of

[00:02:00] moved into a niche around pay equity especially within nonprofits and small businesses so that's

[00:02:06] where a lot of my work happens now but also in organization development and social justice.

[00:02:12] Excellent well it sounds like a lot of fun and you're probably pretty busy too.

[00:02:17] Yes, I am. So Sally one fun thing that no one knows about you.

[00:02:23] This was a hard one because the people in my house know this but you know I'm completely obsessed with

[00:02:29] our dog Rocky and I literally talked to him like he's our child. He's a shepherd doodle

[00:02:34] and even when no one is home like I'm totally talking to him he sits in my front seat of my

[00:02:40] car when we drive around. Where's the seatbelt right? I have to I have to buckle the seat

[00:02:45] belt because otherwise my car beeps. So yeah we say he's our favorite child I'm just joking.

[00:02:51] Being a crazy dog person I understand what you're saying I actually have two dogs both pug one pug

[00:02:58] mix one pug pure pug and they are my kids beyond the three that are that have the two legs so.

[00:03:06] Exactly same I have three two-legged ones too.

[00:03:10] Yes well I don't think necessarily think that's necessarily that different than most dog owners.

[00:03:18] Most dog owners consider their dogs children so but I will give you one thing. I definitely don't

[00:03:25] have my dogs in the front seat so that's definitely unique. I live in a small town so most people

[00:03:31] know me when they see me and they'll be like it's so funny your dog looks just like a person

[00:03:35] in the front seat. Well Shepardoodle's probably pretty big too right?

[00:03:38] He's like 45 pounds so yeah yeah yeah. My pug mix is 70 was 70 probably about

[00:03:48] I don't know 20 dinners ago 30 dinners ago. I was like that's a big pug. No he's a very

[00:03:55] but he's got the mind of a pug so he wants to eat forever. Of course. But he's a Norwegian

[00:03:59] Elkown pug rat terrier and boxer mix so. Quite eclectic the family. Yeah yeah we will talk

[00:04:10] genealogy at some other time but first so let's let's transition over to our topic today which

[00:04:16] is a really amazing one and one that we've talked on the HR data labs podcast a lot.

[00:04:21] It has a lot to do with a lot of things and you talked a little bit about it in your intro.

[00:04:26] Our topic for today is pay equity and digging into your pay data. So what's so important about

[00:04:40] digging into your pay data? What will you find? What might you find? Yeah that's a great question

[00:04:46] David I appreciate it because I feel like pay equity and pay transparency are words we hear

[00:04:52] a lot now right and a lot of people are talking about it but we don't always kind of have our

[00:04:56] hands around really what it means and so one thing is as important when you're looking

[00:05:01] at pay data is that you really need to look at it beyond just kind of overall and at the position

[00:05:07] level. It's important to look at it around some of those demographic markers if you have access

[00:05:12] to that data right around maybe you know by department by gender by race and ethnicity

[00:05:20] by tenure by age things like that because what happens is that's when you start really uncovering

[00:05:28] more of some of the inconsistencies in your data for instance you may be like hey we you know five

[00:05:35] years ago the technology department was our priority and we were willing to pay you know 30

[00:05:41] percent more than everybody else at the time and that process has never changed but now that's

[00:05:47] really not the same and you've never kind of updated your internal kind of pay systems

[00:05:51] and decision making and so digging deep helps you kind of see some of those little things

[00:05:57] that you hadn't really thought about in a while but really probably need to change.

[00:06:00] And you mentioned the when you dig in who's the you in this circumstance who are the people who

[00:06:05] are actually doing that digging? Well you know it varies across company you know there's

[00:06:11] obviously there are vendors out there who offer you know will do the pay equity some of

[00:06:16] those assessments for you if you have the software you know HR maybe the HRS that does

[00:06:22] that you also some people you know some HR people are able to do it themselves actually

[00:06:27] have a blog post that shows people how to do a free pay equity assessment kind of based on what

[00:06:33] I'm describing that you can you know basically do on your own if you have the data accessible to

[00:06:40] you. Well a lot of times when we deal with pay equity a lot a lot of the audience that we're

[00:06:45] dealing with is primarily at the head of HR level or at the head of HR plus the general

[00:06:51] council level so it's not not every HR generalist not HR business partner not every

[00:06:58] compensation person even will have access to or should be doing those analyses right?

[00:07:05] I mean obviously I think it depends on the team and what level of access they have to that.

[00:07:09] So for instance I worked at a corporation for many years where I was kind of part of the

[00:07:14] greater HR team and then the compensation team would come in once a year and we'd sit down

[00:07:18] and review all the pay data for that department of you know a thousand people and you know kind

[00:07:24] of work through that but then I'll also work with a lot of small businesses and nonprofits where

[00:07:29] HR they may not have an HR person or you know it's more of like a generalist role versus

[00:07:37] like somebody you know who's a director level or something like that so that then becomes

[00:07:43] you know a little bit different than if you have an entire HR team that's kind of there and

[00:07:48] ready to do the work. Right so it really does vary on who they are how big they are and what

[00:07:54] resources they have at their disposal. Yeah absolutely. And so let's talk a little bit next about

[00:08:01] what are disparities because you mentioned basically a Rubik's cube of

[00:08:05] lots of different things right so you could test by gender you can test by ethnicity, race,

[00:08:11] age, disability, veteran status there's a ton. Which where do you start?

[00:08:19] Yeah I think one thing is whenever you're doing that and you know kind of pulling that

[00:08:23] pay equity assessment out and doing the work first is approaching it with a sense of curiosity.

[00:08:28] A lot of people one don't want to do the assessment because they're scared of what they

[00:08:32] might find. Exactly. Right two is that they'll be like oh my gosh we're you know really bad

[00:08:39] in these areas and it's more about like let's just kind of look at it and see what's happened

[00:08:43] because you know how I mean even especially you know with larger corporations sometimes you just

[00:08:47] inherit pay structures that you didn't create very few times in my HR career have I gotten to create

[00:08:54] you know organizations pay structure from scratch and so you know or there's just you

[00:08:59] know mergers and acquisitions you know high turnover whatever so understanding that we all

[00:09:04] inherit situations that maybe we didn't approve or weren't and you know didn't have any involvement

[00:09:10] but just preparing for the conversations that might happen because what I find is when you start

[00:09:14] digging into that pay data it's almost like a weaving right and once you kind of pull that key

[00:09:20] string things start unraveling because you start having conversations about well the promotion

[00:09:26] process or you know the hiring practices or maybe development for a staff member so it tends

[00:09:33] to kind of connect to a lot of other things. Well you're getting into something beyond even

[00:09:38] just strictly pay equity because a lot of times pay equity starts at base salary and I think you're

[00:09:43] getting into a couple of other things here you're getting into opportunity you're getting into

[00:09:48] maybe incentives over time there's a lot of other things beyond just base pay in pay equity

[00:09:55] that then could get looked at. Yeah that's thank you that was a great insight because yeah one

[00:10:00] thing I typically will have conversations with people with you know because we pretty quickly

[00:10:04] start talking about benefits right because then it's saying you know one thing I work with

[00:10:09] organizations and really try to center employee voice in the process so we're getting feedback

[00:10:13] we're hearing from employees and sometimes people are kind of surprised by hey you know in the

[00:10:19] last two years maybe this benefit is not as important anymore or maybe we need to add

[00:10:26] this benefit or even some of the ways in which we work like I literally was just talking to a

[00:10:30] client yesterday about how they needed to kind of build some pause and reflection into their

[00:10:35] practices and we at Andrus was like what if you had like a no internal meeting day

[00:10:41] you know or what if you built a retrospective after meeting after each of these processes

[00:10:47] and that's kind of something that helps the whole organization and wouldn't be categorized as

[00:10:52] an employee benefit right but might give people some capacity if they're giving you feedback about

[00:10:58] like hey my most important thing right now is not being so busy. Right and I hear you and that's

[00:11:03] really a brilliant insight I was thinking we're going to go a little differently on benefits where

[00:11:08] most benefits that have been created have been centered on the family unit as it stood

[00:11:14] probably in 1950 and hasn't really evolved since then you know you think about life

[00:11:21] insurance you think about health obviously health and welfare you know as part of everything like

[00:11:27] health insurance and dental insurance but you know it doesn't really cover off on things in 2024

[00:11:33] that we really care about like for example pet insurances we were talking about before or

[00:11:38] seriously too but you know are we missing the boat is there also part of pay equity

[00:11:44] that needs to look at what do people in 2024 need as far as benefits go? Oh yeah that's a great point

[00:11:51] I think one is like what are you trying to motivate people to do right and then two is what are the

[00:11:56] supports you're putting into place for that and you know supports as far as in you know

[00:12:03] in the workplace but also around benefit structure so to your point yeah I mean it's

[00:12:09] been kind of a one-size-fits-all and with benefits and for me at least in my HR roles there was always

[00:12:15] like looking at the utilization numbers right how many people are using this and so I think

[00:12:20] there's a shift that's happening and will continue to happen that there's probably going to be

[00:12:26] maybe an increase of benefits or an expansion of benefits in a way that you it may only apply

[00:12:32] to a few people it may not be something that everybody wants to opt into but it's really

[00:12:37] important to that group of people is important for you to have it so it's kind of almost like

[00:12:43] targeted benefits a little bit like you know like a multi-tier program. Well in the old days back in

[00:12:50] the 80s and 90s we used to talk about something called a cafeteria plan oh my gosh yeah you got

[00:12:55] to check off the box of which one you want and yeah today we really do have something like that

[00:13:00] it was really a la carte where you don't just sign up for all your benefits you actually

[00:13:03] have the choice of getting cash versus your benefits and I think what you're talking about

[00:13:08] is a little different it's a you get to actually choose what benefits you'd like even if they're

[00:13:13] not standardized and even if you don't have the very high end to be able to really really

[00:13:19] make it make sense there are some vendors that actually have that service where you know

[00:13:23] they have a marketplace filled with benefit vendors or perquisite vendors and you can

[00:13:29] sign up and the company signs up for it and the employee gets to elect based on a

[00:13:33] I guess it could say uh having a menu and you pay the price yeah yeah and sometimes I've seen

[00:13:39] where companies like give you you know X many credits that equals however much you know dollars

[00:13:44] and you kind of choose what you want right I think the other thing around benefits to

[00:13:48] emphasize is with pay equity once you get people all into living and thriving wages your

[00:13:55] benefits conversation is different right because if people aren't into the living and thriving

[00:14:01] wages so they're taking anything they can you know I mean it's like survival man right so

[00:14:07] it's important to I think have that conversation alongside pay equity but also know that that may

[00:14:12] change once you get any pay equity changes implemented like what you hear so far make

[00:14:19] sure you never miss a show by clicking subscribe this podcast is made possible by salary.com now

[00:14:26] back to the show let's say somebody does an analysis and they find that there are gaps

[00:14:33] and whichever way the gaps are what happens next what do HR professionals do when they actually find

[00:14:41] inequities in their in their pay yeah that's a great question one thing is that people will

[00:14:47] assume that once they do the assessment they're ready communicated out to staff and you know

[00:14:52] employees and I'm like there needs to be a pause there because we need to communicate these results

[00:14:59] with some actions right like we need to kind of figure out how are you going to address that and

[00:15:03] so that's not always a quick or easy fix right what I'm finding is more like I said earlier

[00:15:10] is that people are having to kind of update their internal thinking systems personally

[00:15:16] and organizationally and team-wise you know and so it takes some time to kind of have some

[00:15:21] conversations and it may be your step is like we need to update our compensation philosophy

[00:15:26] right you know or we need to change our promotion structure and that may not you know

[00:15:33] that could take six to twelve months sometimes if you're really doing it you know and then

[00:15:37] you have a group of C-suite executives who may be super busy and have all these other things

[00:15:41] going on so it's important to kind of think about like this is going to take some time and

[00:15:46] how you communicate to employees about what you're doing or when you're doing it is just

[00:15:51] knowing that once you do the assessment if you're telling them ahead of time setting expectations

[00:15:55] well so let me step back a second though but when we find that there are gaps we need to make

[00:16:01] sure first of all there's statistically significant gaps right and the second thing I want to

[00:16:06] bring up is don't you think that it's really a good time when those gaps are found to then

[00:16:12] communicate about transparency and about how things should work especially given the way in which

[00:16:18] most states are going or many states are going and how those rules are kind of invasive to even

[00:16:23] non-regulated states do you think the best way to forward is to just be open then yeah I

[00:16:29] agree absolutely when it comes to pay transparency I tell people it's really important to not just be

[00:16:36] about the legal compliance of it is about like it is a it's an intervention of trust within the

[00:16:44] organization right and so you don't want somebody finding out what the person next to them is getting

[00:16:50] paid because they saw your job posting right right so there is an element that I work with

[00:16:55] with the clients around let's talk about your appetite for pay transparency if you're in a state or

[00:17:02] country or whatever that doesn't have it but if you do and then trying to do that in a manner

[00:17:08] that builds trust rather than reactive or you know just kind of throwing something out there

[00:17:16] and there's a level of consent that needs to happen on that too like some people would be like

[00:17:19] okay we're just going to show everybody's pay I'm like don't do that don't do that

[00:17:23] but that's not pay transparency that's something else I mean that's yeah and like I said I work

[00:17:28] with a lot of organizations that are smaller and are like oh yeah we can do that but I'm like no

[00:17:32] you know there's some level of protection for the employees but that you can share ranges

[00:17:36] and help them understand how these ranges were established and how people move through the ranges

[00:17:42] does that answer your question yeah and that actually is a mature conversation from a business

[00:17:47] perspective as well as personal because now what you're saying is here's the data like you're a

[00:17:53] professional you're an adult here's the data that we use to judge who the right person is for this

[00:17:59] role and what level of pay we can support in that role if you're being paid less than that and

[00:18:05] you're in that role we're going to have a conversation you know we're going to have a

[00:18:07] discussion about your performance your experience if you were going to be hired again today in

[00:18:12] that role you know what what rate would it be at and then we'll talk about you know fixing

[00:18:17] it over maybe maybe it's immediate maybe it's over the long term and maybe it's during the next

[00:18:21] focal cycle but at least it's a business conversation and it's a mature conversation

[00:18:26] not a oh go ask your manager and the manager goes oh go ask HR and there's the finger

[00:18:32] pointing that goes back and forth well totally resonates with me because I think about

[00:18:36] there's times I work with companies that managers don't even have access to their employees

[00:18:40] pay data right so that there's a level of education sure and having a manager pay that

[00:18:47] and structure that conversation well but to your point yeah I mean it's really being able to

[00:18:53] I usually work with clients to build a pay grid where anybody in the organization you could kind

[00:18:58] of give them the resume you know maybe if someone and they could 99% of the time get it into

[00:19:04] this is where this person should be paid based on what the grid is so it's a little more

[00:19:09] objective in a very subjective world and it you know pay is such a mystery right like it's just

[00:19:17] what I do focus groups with you know employees I'll be like so what pay cape conversations you

[00:19:22] have not work and they're like it's first time we've ever talked about pay in an open atmosphere

[00:19:27] or like we don't like there's no conversations about pay unless it's like with HR in my

[00:19:32] performance review that's why we treat employees like children we really do and that's why I think

[00:19:37] transparency is finally maturing the conversation to a business discussion not you know some emotional

[00:19:44] horrible conversation you can't have what I worked at Morgan Stanley back in the 90s it was a

[00:19:50] don't talk about pay or you'd get fired that's not it's not good yeah well and if you're doing

[00:19:57] the work around pay equity right and you're looking at cost of living and you've really kind of

[00:20:02] done that intentional strategic work around your pay ranges then hopefully it becomes less emotional

[00:20:10] because you are paying people what they're worth and that's tying to a living that they can afford

[00:20:17] and keep on and grow in their development right so it's not as you know working in HR you're

[00:20:23] getting people's emergencies all the time of things happening at home or you know whatever

[00:20:30] and giving you know pay equity allows people to have a little bit of cushion to handle the unexpected

[00:20:35] exactly exactly hey are you listening to this and thinking to yourself man I wish I could talk

[00:20:42] to David about this well you're in luck we have a special offer for listeners of the HR

[00:20:47] Data Labs podcast a free half hour call with me about any of the topics we cover on the podcast

[00:20:53] or whatever is on your mind go to salary.com forward slash hrdl consulting to schedule your free 30

[00:21:01] minute call today let's talk about the third question which is what can an HR person do right

[00:21:08] now to actually have these conversations or at least start them in their company yeah that there's

[00:21:14] you know several steps one is breathe it's okay um you know yeah you're gonna live through this

[00:21:21] and it's just a really good time to really kind of look at your pay right now you know coming

[00:21:27] of the last four years obviously the market has been so topsy-turvy I've talked about that a lot

[00:21:31] on this podcast and so things are starting to stabilize a little bit so it's it's a great

[00:21:36] time to have those strategic conversations I think one is just seeing kind of what the appetite

[00:21:42] is for those discussions within your decision making group whether that's your HR group

[00:21:48] your C-suite you know kind of see what people are willing to say also I always say employee feedback

[00:21:54] get your data right what are people saying what are they you know get all the data I work with a

[00:22:00] lot of organizations that don't even have like really good employee feedback groups so that may

[00:22:05] be the first place to start right um is starting to get that employee feedback so it's really kind

[00:22:12] of starting to kind of prime the pump right of like starting to have these conversations

[00:22:16] kind of getting the ball rolling because you don't want to jump into this and then find out

[00:22:20] you know do an assessment and then find out nobody's going to do anything about it because

[00:22:24] then you're just sitting there holding the information absolutely and to me it also starts

[00:22:28] with having conversations at the top and making sure that the leaders understand especially finance

[00:22:34] that there is something that we're going to find here we don't know what it is yet

[00:22:38] but we're going to find something and when we do we need your support to be able to understand

[00:22:43] how it's going to impact the business because it will and it might be small it wouldn't be very

[00:22:48] small pockets of impact but it could be big and we're going to have to fix it one way or another

[00:22:54] because this is an institutional problem or it's not and either you get on board with the fact

[00:23:00] that we have to fix it or you don't and that's a bigger problem but if you don't have their

[00:23:06] support from the beginning there's really no way of being able to be successful in this

[00:23:10] great point I work a lot with finance people in this work obviously because they're typically

[00:23:15] trying to do the kind of the cash flow you know cash flow projections but also to your point too is

[00:23:20] looking at some of your data right if you have a 40% turnover rate which is fairly common right now

[00:23:27] you know thinking about what's the cost of constant recruitment and the lost work right

[00:23:34] for the three to six months it takes you to get a new person in and up to speed

[00:23:39] if you could decrease your employee turnover by retaining more people potentially with pay

[00:23:45] really the money's there you know you just kind of kind of you know the turnover is more of a

[00:23:50] lagging indicator and pay equity than a leading one but if you're having more people except job

[00:23:57] offers having more people stay past the first year those are all signs that you're doing the

[00:24:01] right thing and you're going to have to watch those metrics very carefully and you're going to

[00:24:06] have to pay attention and feed them back and watch the feedback loops and one of the things that I

[00:24:12] typically do when I'm at the start of this process is to your point it's not just about to me

[00:24:16] it's not just about employee service I love looking at term reasons term reasons give me that feedback

[00:24:22] that we either know we don't know why someone left and either it's detailed or it's really high

[00:24:28] level but what I like to do before anything happens is or as I'm trying to to your point prime the

[00:24:36] pump with it with feedback loops is at least make the termination reasons well put together enough

[00:24:44] that I'll have the right reason codes that will at least either tell me the story or that that

[00:24:52] don't make it so generic that it doesn't help me at all and there are many companies

[00:24:56] that haven't looked at their term reasons in years anyway so it's a good time to kind of open that

[00:25:00] that table up and take a look that's such a great point yeah there are some people who don't even do

[00:25:05] that work right haven't kept up the data don't do exit interviews of course exit interviews when

[00:25:11] you're doing them internally you know how you know some people be real blunt with you on the way

[00:25:16] out but you know some people you know don't want to burn a bridge and may not share everything

[00:25:20] but yeah absolutely exit data is huge a huge indicator for you so if there's anything else

[00:25:28] that you would tell someone when they first are getting started on this what would you tell them

[00:25:33] is there any other advice you'd give them yeah I would say you know kind of what my clients

[00:25:38] tell me is that they didn't realize that there was going to be kind of so much change management

[00:25:42] work and all of this because it really is kind of pulling that thread that unravels the sweater

[00:25:49] and so it ends up you're having to have conversations in other areas that you weren't expecting

[00:25:55] so really assessing your capacity I mean obviously I encourage everybody to go ahead and start doing

[00:25:59] it now but understanding it's probably going to take more it will take more time than you wanted to

[00:26:04] because you are having conversations and it's it's going to take more of your work time than

[00:26:09] maybe initially assess and maybe need more skill than you actually have because you might have

[00:26:15] to do some regression analysis to see if there is statistical significance you may need to do tons

[00:26:21] of excel work you may even need to gather more data right like if you don't have all of those

[00:26:26] pieces of data on each person you can't start this thing that's exactly right I mean sometimes

[00:26:32] your starting place like I said is just do we even have the data yeah and that's a good starting

[00:26:38] place so if you are going to try pay equity you're going to try to find out where you are

[00:26:46] within the world of pay equity you have a lot of work to do and it wouldn't both both Lesali and I

[00:26:54] are okay if you want to hang up now put the podcast down and go start looking good but if

[00:27:01] you're still with us that's great and we would encourage you to do whatever you can

[00:27:08] hire experts like Sally or myself to come in and give you some of our advice as well

[00:27:13] but seriously it's a long it's a journey it's not it's not a quick it's not a quick race

[00:27:19] it's not like a foot race I love how you frame that and I will say one thing I've learned

[00:27:22] from my clients is it's really important to be in community you know build community with

[00:27:27] organizations that are doing kind of the similar type of pay equity work or headed in that same

[00:27:31] direction start having conversations because you're going to need some people you know of course we

[00:27:36] consultants will stay all day long if you need us to but like you're going to need some people

[00:27:41] that you can just call up and be like how did you you know do this you know do you negotiate

[00:27:48] salaries what's your you know 50 percent of my clients don't 50 percent do so I mean just

[00:27:53] kind of talking you know through that kind of thing and business reasoning is super helpful

[00:28:06] all good words of wisdom Sally it's been a pleasure thank you so much thank you David I really appreciate

[00:28:12] it and we'll have to have you back on another topic whatever is near and dear to your heart

[00:28:17] sounds like it will be our dogs so that's our next episode with Sally Lofvus Sally

[00:28:23] thank you so much for being here thanks David thank you all take care and stay safe that

[00:28:28] was the HR data labs podcast if you liked the episode please subscribe and if you know anyone

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[00:28:39] tuned for our next episode stay safe