Pay transparency: Are you prepared for employee pushback?
Acumen’s Director of Talent, Anna Stillwell, shares what she’s learned leading the organization in early adoption of pay transparency and equity policies.
As an international nonprofit working in poverty, Acumen isn’t able to offer candidates the higher salaries or flashier benefits of other employers—but what we can offer is greater transparency.?
Instituting pay transparency and equity has allowed Acumen to stand out in an increasingly competitive job market. First, we started offering a “Total Rewards” statement outlining details about the compensation and benefits of a position during the first candidate meeting of the hiring process. Then we began rolling out pay bands for different geographic areas, paired with compensation literacy classes that helped employees understand how employers think about pay.?
After five years and a lot of experimentation, I’ve learned a lot about implementing pay transparency—and handling people’s reactions. Here are some of the steps we went through and the lessons we’ve learned.
Why employees push back on salary bands
People in senior leadership roles may imagine that they’ll be celebrated by staff for rolling out transparent salary bands (pay ranges for each role) at their organization. But in my experience, these new policies are often met with anger and frustration. Some employees may feel that this new system places them in the wrong pay band, thereby undervaluing their work. But those feelings have always been there. Now, you’re just hearing and talking about them.
Why do employees at mission-driven organizations, who are ostensibly dedicated to pursuing justice, often have negative reactions to an equity-focused policy?
Because humans can be really weird when it comes to money. Tension when talking about money is a feature, not a bug.
For most people, conversations about money bring out our competitive side. In my 10 years in talent management, negotiating salaries, I’ve consistently seen people assume that I’m trying to get the upper hand or take advantage of them in some way—even if that assumption is counter to our normal relationship.?
It’s important for people managers and senior leaders to remember that conversations around salary are going to be tense, even when those conversations are ultimately about equity. This isn’t to say that employees don’t care about equity—at Acumen they certainly do—or that framing this policy as equity-focused isn’t helpful—it is. But that framing likely won’t be enough when most people, especially young people, have been conditioned to see salary as a way to measure their own worth and their worth relative to their peers, and to always ask for more.?
Before we rolled out our transparent salary bands, I had numerous frank conversations with Acumen’s president about how the pushback might make us feel like we’d made a big mistake, even though we hadn’t because ultimately these policies are crucial to realizing our organization’s values.
How to mitigate pushback with proactive steps
Now for the good news. Because we knew to expect pushback, we were able to proactively prepare for it, and mitigate the quantity and severity of the pushback we received. It took us about two years to properly set the foundation for rolling out salary bands (we had instituted transparency earlier), and when we did the backlash was minimal. Here are three ways to lay that groundwork:?
1. Clarify the basics
In order to have a substantive conversation about moving to a transparent salary band model, you first have to make sure that employees understand how salaries are currently decided and how they’ll be decided going forward. When I first started at Acumen, I sent out a survey to employees asking them about their pay, their benefits, and what kind of relationship they wanted to have with their employer. Based on the results, I learned that many employees had either an outdated or false understanding of how pay, performance, and promotion were linked together.?
The first thing we did to address this knowledge gap: we put together a user-friendly pamphlet called “What to Expect at Acumen” that answered three questions that all employees have:?
Although these questions seem obvious, they can often get lost in the onboarding process or the day-to-day shuffle of work. Giving employees this clear foundation meant that we were all on the same page and that there weren’t any feelings of secrecy around pay. As a result, employees were aware of our policies and were more likely to feel that we were ushering in this new era of salary band transparency together.???
2. Promote transparency?
As we moved to a salary band model, we wanted to make sure that employees understood how we, as employers, determined the compensation amount for each band so that they knew we were operating in good faith and had the language to talk about salary and money going forward.
I led a class where I explicitly talked about all of the additional costs, besides salary, that come with employing someone, so that they would better be able to take the perspective of the person on the other side of the table when asking for a raise.?
Not only was teaching compensation and financial literacy important for laying the groundwork for fruitful conversations around compensation at Acumen, but its knowledge will serve them well throughout their careers at different organizations as well. Sharing that knowledge and the power that comes with it, showed our staff that we care about their ability to succeed at Acumen and beyond.??
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3. Get creative
When we started talking about pay equity, we also ran a number of experiments analyzing the gap between the highest and lowest paid employees, and talked openly with employees about this comprehensive approach to equity. As a nonprofit, we didn’t have money lying around that could easily be tapped to decrease that pay gap, and we were wary of skyrocketing costs that would cause donors to push back against the initiative. We had to get creative.?
We held the CEO’s and President’s salaries for three years straight, and halved the COLA adjustments for Chiefs in the US. We reallocated the money we saved and put it towards increasing the pay of the people making the least. We increased intern pay by the week and conducted compensation benchmarking focused on the middle.?
Of course, every organization’s budget, staffing needs, donor base, and leadership structure are different, so these specific solutions won’t work for everyone, but when you’re committed, you can find creative ways to make employees feel like they are all in it together.?
How to handle the tough conversations?
Although we were able to mitigate pushback, we didn’t eliminate it entirely. I continue to have difficult, sometimes heated, conversations with employees. Here are some of the things I keep in mind when these conversations arise:?
1. Return to your principles?
My guiding principle is equity and Acumen’s pay philosophy—comparable pay in comparable markets for comparable accountabilities, experience and education—reflects that. Essentially I remind employees that their pay is comparable to people with similar levels of responsibility, experience, and education working in places with similar costs of living and market demands. If I give the employee in front of me a raise without giving the same raise to everyone else in that cohort, that destroys pay equity. I invite the employee to think through these broader implications with me. Sometimes, reminding them that these decisions are based on equity is effective. Other times it isn’t but this exercise reminds me to stick to my principles, even if that means disappointing, or even losing, an employee.?
2. Recognize your limitations
As a nonprofit with a limited budget and, as a result, limited benefits and pay increases, we’re going to have employee turnover. We already know that. Sometimes, people will leave because in order to stay within our salary bands, we can’t offer them more money. But chances are those people were going to leave eventually anyways. I've seen employers throw counter-offers at their employees and after a while the employee usually ends up leaving anyway.?
3. Get comfortable saying “no”
I am a person that is comfortable clearly and directly saying no. People sometimes think that “no” is offensive and try to beat around the bush. I truly believe that “no” carries transparency and honesty that employees appreciate. That doesn’t mean that they’ll like that that’s my answer when they’re asking for a raise, but at least they know where I stand and why I stand there.
Pay transparency’s effect on recruiting?
It’s no secret that we’re in a tight labor market for employers. When I first came to Acumen, I looked at the challenges we would be facing in terms of recruiting and hiring. I knew that we couldn’t throw money at the problem because we’re an international nonprofit on a limited budget. We were never going to be able to offer the same level of benefits or salary that private sector employers, or even some larger nonprofits, are able to offer. I had to ask myself:?
How could Acumen compete in the talent market on a limited budget??
The answer was highlighting two things most employers don’t have throughout the recruitment and hiring process: equity and transparency. Besides the feeling of moral obligation to promote equity and transparency, I also knew that these were two areas in which most employers are sorely lacking. Moving to transparent pay bands, and being incredibly transparent about that move throughout the hiring process has actually strengthened our recruitment efforts.
It took us a while to figure out exactly how to highlight transparency in a real, tangible way. Anyone can say they’re transparent, but to really appeal to candidates, we had to show it.?
First, transparency isn't just about the money. It's about being realistic about what working at the organization is actually like, including the parts that are difficult. Candidates are likely interviewing with multiple organizations and hearing multiple pitches for why they should work there. Many of those pitches leave out the hard parts, so when they come to us and we describe working at Acumen, warts and all, they find it refreshing.?
To further transparency, we began sharing a “Total Reward” statement with candidates at the beginning of the interview process. We use these statements to walk employees through exactly what their compensation and benefits will look like at Acumen: the base, the bonus, the time off, retirement, parental leave, medical, and the costs and premiums that come with those benefits. Again, we’re not only sharing the attractive parts, but the parts that may pose a challenge for a candidate as well. For example, a person with a chronic health condition may want to find an employer who offers lower health care premiums. This way they know what we’re offering up front and don't feel like they’re wasting time going through a process that ultimately won’t pan out for either party.?
After each interview, we send them the “Total Rewards'' statement and make it clear that none of those numbers or benefits are negotiable. When we first started doing this, some people thought this was a negotiation technique, but it’s not. Candidates are free to look at what we offer and compare it directly to what other employers are offering. They’re also free to walk away if our offer doesn’t suit their needs.?
Takeaway
Luckily, people looking to work at international antipoverty nonprofits tend to also be passionate about equity. We might lose some current employees because we’re unwilling to negotiate their salaries, and we might lose some candidates as well, but overall our commitment to transparent salary bands, as well as equity and transparency more generally, has enabled us to attract and retain excellent talent. Instituting equitable, transparent pay can be difficult, but it’s important. Keep going. ?