In 2018, employees are becoming increasingly vocal when it comes to issues surrounding fair wages and benefits. Most recently, 397 employees of the Washington Post – ranging from columnists and critics to delivery drivers – petitioned Jeff Bezos, The Post’s owner, to share the company’s financial success with its employees.
This letter employees wrote called on Jeff Bezos to ensure “fairness for each and every employee who contributed to this company’s success: fair wages; fair benefits for retirement, family leave and health care; and a fair amount of job security.”
Employees pointed out specific pay-related practices they perceived to be unfair. Here are just a couple:
- “Offering $10 a week in pay increases – or about 0.6 percent of the median salary and less than half the current rate of inflation.”
- “Refusing to improve retirement benefits is unfair, particularly since you froze the traditional pension. The current retirement plans, including a one percent match on our 401(k), suggests you place little value in your employees’ future financial security.”
- “Pushing for the right to indiscriminately lay off anyone is unfair – and a recipe for future discrimination against older employees and minorities.”
Employees are Taking Their Discontent Public
Washington Post employees aren’t the only ones who are demanding better pay. Recently, Disney employees also petitioned Disney CEO Robert Iger to increase wages. This petition has more than 117,000 signatures, according to a news release from SEIU United Service Workers West. The Union argued that Disney, Anaheim’s largest employer, is profiting from millions in taxpayer subsidies while employees struggle to pay their bills.
Earlier this year, BBC lost its long-term editor, Carrie Gracie, who is widely regarded as one of the best in the industry. Gracie resigned in epic fashion after she found out about the enormous wage gap between male and female staffers. Once she resigned, she posted a letter on her site, went on TV to reprimand the BBC and appeared before Parliament to fight for equal pay.
In an age when anyone can broadcast information to the entire world in a few clicks on their smartphone, your employees have many avenues to say what’s on their mind. We’re seeing a trend: when employees feel that company owners and leaders aren’t sharing the wealth with them – the people who helped create that wealth – they share their views online. Just as an example, between November 2015 and November 2017, 276,097 employees have come to PayScale to review their employers on “pay transparency” and “pay fairness”.
Paying attention to your pay brand – how you pay workers, and why you pay the way you do – has never been more important. At a time when talent is scarce and top candidates have a host of employment options, one of most effective ways to differentiate yourself from your competitors is to build a strong employer brand, one that’s known for treating workers fairly.
At a time when talent is scarce and top candidates have a host of employment options, one of most effective ways to differentiate yourself from your competitors is to build a strong employer brand
If your employees feel that they’re valued, not only will they remain productive, they will be your brand advocates and help you maintain a strong talent pipeline. On the other hand, if your employees feel that you don’t pay fairly, some of them will do what they can to discredit you – by publicizing your pay practices online, amplifying the perception that your organization doesn’t value its workers.
So, how do you build a pay brand with intention, one that you can boast about?
1. Be Intentional About Your Compensation Plan
To be intentional, think about the following:
- Do you proactively address pay disparities due to gender or ethnicity, so that employees feel like they’re getting equal pay for equal work?
- If you say you value a particular behavior in workers, do you reward people who exhibit that behavior with actual cash?
- Do all employees get to participate in the financial success of the company, or just the executives (e.g. bonus tied to fulfillment of company-wide goals, profit-sharing)?
- Do you give meaningful merit increases to high performers so that are noticeably higher than inflation?
- Do your employees understand how they can move up and earn more in your system?
2. Treat Compensation as an Ongoing Dialogue
With the proliferation of salary information online, your employees can easily look up the market value of their role. To make sure employees are fairly paid, you’ll want to evaluate your pay practices frequently and reward employees in a timely way (i.e. monthly, quarterly, at the end of big projects rather than just annually).
PayScale’s Compensation Best Practices Report found that top performing organizations consider pay to be an ongoing dialogue with employees, not an annual event that comes and goes. In practice, this means that these organizations do certain things more frequently:
- Conduct a market study — 56 percent of top-performing organizations have completed a market study within the past year vs. 51 percent of typical.
- Give bonuses and incentive pay — 31 percent of top-performing organizations give bonuses or incentives at least quarterly vs. 28 percent of typical.
- Obtain market data for individual jobs — 37 percent of top-performing organizations get market data for individual jobs at least monthly vs. 33 percent of typical.
3. Be More Open About Your Pay Practices
Transparent pay practices lead to higher satisfaction and lower intent to leave, according to PayScale’s 2017 study on employee engagement. A study by professors at Cornell and Tel Aviv University suggested that employees work together more effectively when pay is transparent. Plus, being transparent helps you gain greater control over the company narrative and stay ahead of issues that would otherwise blow up.
Being transparent about your pay practices helps you gain greater control over the company narrative and stay ahead of issues that would otherwise blow up.
Here at PayScale, we take a “middle-of-the road” approach to pay transparency: each employee knows the salary range for their individual position, where they are in the range and why they’re placed on that spot on the range. They don’t know everyone else’s pay (because not every employee wants to know this), but they do have a sense of how they can increase their pay over time.
One of the prerequisites to being more transparent with employees about pay is to know who you are as a company and what sort of talent you want to attract. Then, you have to tell employees what you stand for as a company, what’s unique that you have to offer that other higher-paying competitors cannot offer. For example, perhaps you are not the highest paying employer in your talent market, but you offer interesting work and a high degree of autonomy, which is attractive to particular type of candidates and employees.
Anil Dash, CEO of Fog Creek, is a leader who has done this exact thing and shared his thoughts on Twitter (full disclosure, Fog Creek is a PayScale customer). Recently, he was publicly challenged on Twitter by the question: “why do companies like Fog Creek which do have a fairly high degree of salary transparency pay so far below the market?”
Below is his response.
4. Make Sure Your Managers Are Trained to Talk About Pay
The manager-employee relationship is a critical one. It matters so much for workers’ satisfaction today and how they feel about their future prospects. In most organizations, it’s managers who communicate pay decisions to their direct reports. Managers need to be trained on how to have effective conversations about pay with employees. That means they understand your compensation philosophy and strategy, the specifics of your comp plan, and how to answer questions and address concerns from employees (e.g. people asking for raises outside of review times).
Tell Us What You Think
What’s your organization’s pay brand? We want to hear from you. Share your story in the comments or join the conversation on Twitter.