Pay Transparency - Is our focus in the right place?

As a backdrop to the discussion of pay transparency, let me say that I've straddled the fence as an HR professional, representing both the employee and the company. My experience is that companies will do what it takes to hire and retain talent when talent is providing a positive return. And employees will move to another company if they feel they aren't being valued. Entry level roles often have standardized pay structures. As employees advance in an organization, pay is often subject to a variety of both tangible and intangible variables; performance objectives being met, leadership ability, attitude, communication skills, energy, efficiency, dependability. In my experience, effort and performance unlock a person's earning potential more than anything. 'All things being equal' does not translate to equal pay within organizations looking to progress. May I share a few examples to better illustrate the misguided philosophies behind these new pay transparency laws.

In 2004, I was researching salary information for my company within our local geographical area. I was gathering market data to identify competitive wages for our growing technology business. There was little in the way of pay transparency in those years. No Glassdoor salary information, no details of salaries on job postings; businesses were tight lipped. I was however able to discover average starting salary information for recent graduates from a department within a local university. Surprisingly, the salaries I saw published on this university departments public website indicated starting salaries of nearly 40% above what I had believed accurate through interviews, state government wage and labor data, and current salaries of our employee's. As I dug further into the university's publication, I realized the data was only a collection of graduates who wished to share their starting salary. Not surprisingly, those with higher than usual salaries were more likely to report their pay. It just so happened these employee's were being offered jobs in some of the largest and most expensive metro areas in the United States. And finally, there were only 7 or 8 total graduates who had submitted salary information. In my view, this university department was producing F level work when providing 'transparent' salary expectations for university graduates. An early lesson in my career; dig deeper to understand what is actually being communicated. In addition, cost of living in various markets will make a big difference regarding expected compensation.

Beyond trying to make sense of salary expectations, remember that pay isn't everything. If job seekers are just looking at pay, they are unfortunately missing the mark. Successful companies compensate employee's well beyond just a salary or base wage. Most companies include wide ranging benefits that add another 25-35% of an employee's total compensation. As an example, company XYZ offers a starting salary of $75k for a particular role. Company ABC has an identical role with a starting salary of $68k. Initially, most people would be more inclined to take the offer from company XYZ. With a little more research, company ABC includes a 6% 401k match, full coverage of employee health insurance premiums, and 4 weeks of paid time off. Meanwhile, company XYZ doesn't offer a 401k, the employee pays $400 per month for insurance premiums, and gets 3 weeks of PTO. Now, which job do you take? Understand that your total compensation is more important that just looking at your salary.

Another important but often overlooked element to pay in today's social norms, effort and performance! Most of us have sat in a class, whether in high school or college. Some students make it to class every day. They spend time with the teacher after hours to better understand assigned work. They put in extra effort at home or in the library to perfect class material and assignments. Those students generally get higher grades. Now, what about the student who misses class, is content with a C grade, and just wants to graduate? In our current system of education, both students receive a diploma. Significant in this scenario, one student receives a higher grade due to their above average effort and performance. This higher grade may result in scholarship money. Similarly, employers reward employees differently based on individual effort and performance. Standardization of pay is inconsistent with a culture of effort. Employers may have a standard salary range for specified roles, but once employees begin to show their value, rewards via salary, bonuses or other benefits begin to align with effort and performance. In my career, those who shine always rise to the top.

Lastly let me share this idea. I remember several years ago I was interviewing a person for a mid-level job. This person was qualified with the skills and experience, so we moved to the topic of pay. I asked what it would take financially for them to make a move. The candidate said that their home was paid for and that they had no debt! They were comfortable with a competitive salary, but would also consider a little less, knowing they had minimal financial stress. I was shocked, but so inspired. I can't tell you how many times I've had someone come to me asking for more money. Why? Because they've overextended themselves financially, and they want the company to help bail them out of their mess. Now that isn't the case with every employee request for an increase. But all too often we mismanage our finances. We look for ways to make up the difference.

I'm all for equality! Laws sometimes help us treat all people fairly. Sometimes laws give us a false sense of worth. We live in a world with so much untapped potential and talent. For those who have the desire to excel in life, step into the workforce with GREAT EFFORT! Work hard, exceed expectations, and you will find financial freedom. But remember, your choices outside of work will aid in your financial success as much if not more than the salary you receive.

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