Get Reworked Podcast: Why It's Time to Be More Transparent About Pay
In this episode of Get Reworked, we talk to David Turetsky, vice president of consulting at Salary.com and host of the HR Data Labs podcast, about pay transparency and why companies should be more open about what workers get paid. More often than not, secrets lead to deals that are ultimately bad for business.
Listen: Get Reworked Full Episode List
"Bargains are bad," David said. "People shouldn't be offered bargain deals. When recruiters hire people, they should be recruiting them for the job at the pay they're going to pay other people. And there shouldn't be this secretive back-and-forth."
Highlights of the conversation include:
- Why it's so hard to talk about salary in today's workplace.
- How pay transparency can lead to greater pay equity.
- Why opening up with employees about pay won't lead to bad results for business.
- The role of regulation and legislation in making pay more transparent.
- Why basing pay on location is short-sighted in today's market.
Plus, co-hosts Siobhan Fagan and Mike Prokopeak talk with David about universal basic income, the importance of a realistic minimum wage, and what it will take for them to open up about their own salaries. Listen in for more.
Have a suggestion, comment or topic for a future episode? Drop us a line at [email protected].
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Show Notes
- David Turetsky on LinkedIn
- HR Data Labs Podcast
- Dan Price and Gravity Payments
- Pay Transparency Law Regulation S-K
Episode Transcript
Note: This transcript has been edited for space and clarity.
David Turetsky: It's an emotional issue. What we get paid is directly related to our self-worth — our value — because it basically is the determinant on what we can eat, whether our kids go to college, or whether we send them to summer camp, or whether we can afford that iPad that they've been wanting forever. It's not even about just the needs or the wants. It's about can I afford the life that I have?
Mike Prokopeak: That was David Turetsky talking about something that is really close to a lot of our interest and heart, which is what we get paid in the connection to the value that we bring to the workplace. We brought him on today to talk about pay transparency and what that means in the workplace. Siobhan, tell us a little bit about David.
Siobhan Fagan: So David is a vice president of consulting at Salary.com, and he consults with a number of clients on people analytics, on total rewards and other HR data governance issues. He also has served on the other side, so he has worked in rewards. He has worked in the HR roles. And so we're really excited to have him on today because he's got a lot of strong opinions, and he makes what can be a difficult conversation easy.
So are you ready, Mike?
Mike: I am. Let's Get Reworked.
Why Is It So Hard to Talk About Salary?
Siobhan: Welcome to the podcast, David.
David: Thank you very much. Glad to be here.
Siobhan: So, I'm so glad that we invited you here today to talk about pay transparency. But before we jump in, I have to ask, why does talking about pay and money, make people so uncomfortable? And not even in the work situation only also on sort of amongst friends, in your family, etc. Do you have any idea why this is such an uncomfortable topic to talk about?
David: I've been doing compensation for over 30 years, I think that we all have a fear of being discovered that maybe we're not worth the amount of money we're getting paid. We have this embarrassment factor about what we do and how we do it. I can't tell you how many TV shows and movies where we see the protagonist come home from work, male or female, and find it hard to say I lost my job or I got demoted, or something happened with my pay that I'm not really happy about and finding it hard. It's an emotional issue.
What we get paid is directly related to our self-worth, our value. Because it basically is the determinant on what we can eat, whether our kids go to college, or whether we send them to summer camp, or whether we can afford that iPad that they've been wanting forever. It's not even about just the needs or the wants. It's about can I afford the life that I have?
And I think today more than ever, we're really cognizant of that, given the fragility of life that we've experienced through COVID, as well as the Great Whatever You Want to Call It, the Great Resignation or the Great Reawakening that people could lose their job in a moment's notice. People are worried. And so it matters. It really matters.
Siobhan: So I'm so glad that you acknowledged the link between pay and self-worth and the fact that it's really, really difficult to separate these two things. During the last two years, a lot of people have participated in the great fill-in-word-that-you-want.
Mike: The reshuffle, the resignation.
Siobhan: The reawakening.
Mike: Contemplation.
What It Means to Have Pay Transparency
Siobhan: And part of the conversations that have come up in this conversation is the inequities that we have seen in many levels throughout society, but also in the workplace. And one of the areas where people have been focusing in, as a place to potentially right some wrongs, is in pay transparency and pay equity. So I was hoping that you could tease out what the difference is between these two very large topics that I know we could devote an entire episode to alone.
David: So when I started working in the early mid late 80s, one of the things that was fascinating was that in the world of compensation, it was all secretive. Whether you worked in a consulting firm, whether you worked inside an investment bank, you couldn't talk about pay to certain people, it was ill-advised and or considered not just taboo, but it could be a fireable offense if you talked about it.
When I worked at Morgan Stanley, we literally told people that there is no water cooler talk about this, if you talk about your pay, you will be fired. And what it basically came down to was, was that what we were trying to protect wasn't a person or a thought process, it was really about making sure that we didn't open ourselves up for issues or problems, and that there was always this embarrassment, as we talked about before about pay. But there was also this realization that if people did talk about it, then special deals that were made, because we had to make some special deals here and there to keep talent, they would be uncovered and it would cause more people to get special deals, and then all of a sudden, whatever process or, whatever good practices you had set up around compensation management were all thrown out the window, because everybody got a special deal.
And special deals are not a compensation process. That's anarchy. And so, pay transparency is, has basically become more appropriate given the fact that the internet has made it more ubiquitous for people to get access to data about pay, whether it's Salary.com or other sites where you can go and find out how much people get paid in the job that you do.
Think of employees as consumers, consumers are smarter now about prices while they're also smarter about their wage rates that jobs like theirs get paid. And so if an employee is smarter about pay, then they'll be smarter about asking, why am I paid what I'm paid?
Pay transparency enables people — it's actually a program, it's a way of being able to treat people differently by showing that there's nothing that we're hiding in developing our compensation programs. Pay transparency means it's OK to talk about pay, because we don't want to make this a secret thing. It's not a box that compensation is being designed in. There are thought processes and business reasons why we pay people what we do. And therefore transparency should be embraced, and not something to be worried about as an organization.
Does Transparency Lead to Equity?
Mike: So if I can jump in for a second, David, the question of equity, there's the assumption that OK, if we make pay transparent, if it's not as taboo as it was for people to discuss pay and know what others are making, then this will lead to more pay equity and up and down the organization, but particularly as it relates to women who have typically suffered from unequal pay. Is that assumption, that connection, accurate? Is there a sort of a chain reaction here? If we make pay more transparent that we will or should see more pay equity?
David: That's the goal. Yes.
Whether it's happened in practicality, we don't know yet. Because transparency hasn't really been enabled across organizations yet, maybe someday there will be. Laws need to catch up to make it more transparent. But company practice needs to be there, that companies need to be enabling pay transparency in order for there to break down this wall that says, I can't know what others get paid because it's the rule.
Let me talk about pay equity for a second. I think the reason why pay equity is a problem is because first of all, there are biases in how people make pay decisions, there are their unconscious biases in some ways. But there just are, I've seen so many studies that say stupid things like, females don't really know how to negotiate pay well. I take a little bit of objection to that. I think a lot of people don't know how to make a good request for pay, some people are shy. Again, it goes back to the being uncomfortable talking about pay, they go, oh, yeah, what you're offering me that sounds good. Let's sign up for that. Even though the company could spend more on that, and they're getting a bargain for this skill or for this job.
Bargains are bad. Bargains are exactly what pay equity is all about. People shouldn't be offered bargain deals. When recruiters hire people, they should be recruiting them for the job at the pay, they're going to pay other people. And there shouldn't be this secretive back-and-forth. So you know, how much do you want to get paid for this job? Well, what are you offering? Well, tell me what your pay history was? Well, thank God, we got rid of that.
I think that's one of the problems is that people aren't trained to be able to ask for what they should be worth. And that's why I love the fact that the internet is exposing how much pay should be for a job so that when you're just starting out and you have no idea, you have a place to start from. I think that will make pay equity more viable, knowing what you're worth and knowing how to value yourself.
Mike: But if I'm looking at this from the employer perspective, and this goes back to the point you're making about what you were talking about your experience at Morgan Stanley and talking about, well, it becomes chaos in a way if we're working out all these deals and if I'm from an employer point of view, I'm thinking this transparency thing is kind of a nightmare. I now have to sort of manage this in a different way.
Before I had information. I had asymmetric information that gave me power. And now you're asking me to give that up? Why in the world would I do that? You know, that would be difficult for me. So why would you encourage — I mean you're working with a lot of employers or consulting with them — why do you tell them give it up?
David: Because the people who are coming to them whether they're as candidates or employees are basically saying, I want information. Tell me how compensation is being done. Because I am no longer going to sit and wait for you to tell me, I'm pissed, and I'm going to leave or I'm not going to come here unless you tell me what the parameters are.
That's fine. That should be something that we're encouraging. You want good consumers, you want good employees, you want people who know what they're getting. You don't want to keep the stuff locked up because they won't know. I mean, the especially with your managers, your managers need to know how pay is set up, employees go to managers to look for advice, they go to look for information. Managers can't say, well, HR hasn't told me or HR won't let me know. That's a baloney excuse. And that's what managers do a lot of times, they blame HR for not giving them the information.
What if managers got all the information and were able to negotiate with employees? What about that? What's wrong with that? Why not have a rational mature conversation about pay? It's a business decision, managers know what their budgets are. They know how much they can spend if the manager is a good manager, and have the skills to be a manager, and they have the skills to know how much they can spend, on what role for what period of time than they should be given that information, and the manager could give it to the employee so that they understand the context for making those decisions.
Information Is Power When It Comes to Pay
Siobhan: I had a question for you about a recent study that you conducted with Salary.com. I had an original question. But I've now changed it a little bit listening to you, because the study you found almost half of employees do not think they are being paid fairly. And I'm wondering if potentially, this is a result of not having that information, and that there is potential resentment where employees, perhaps those people were correct that they weren't being paid equitably, or perhaps there's resentment, when actually they were being paid fairly, but they just didn't have the insight into those numbers. Is that an area where pay transparency would help?
David: Absolutely, you can't not pay fairly if people know the context for how they're paid and how their pay is decided. Because if you're not paying them fairly, and they know the context, they'll leave, or they'll basically say, what's going on here? I'm under minimum, why aren't I being brought to the minimum of the grade range?
Even that statement means that they're informed and understand what a pay grade is, what a salary range is, and know the rules and the context for the decision to give an adjustment to minimum or not. That's empowerment. Empowerment leads to satisfaction. You don't want to set up your employee to feel like they're being taken advantage of because then they won't have the engagement necessary to perform at their peak. And isn't that the goal of having an employee?
I mean, if you want to set up that kind of relationship, if you want an employee who doesn't trust you just hire a gig worker. They're just going to be there to satisfy a current need with a current skill. You pay them what they're asking for and then they leave. That's what you're then setting up, you know. You're basically just gonna get a short-term employee. And we all know that there is incredible switching costs to replacing a W2 employee.
So why not give them all the information they need to understand what it is that they're supposed to be paid? What harm does it do? I promise you it will not be anarchy. Because everybody won't be knocking on your door saying they need an increase. They'll say, now I understand how the rules work.
Siobhan: I think that is the fear though, that that it'll just be absolute bedlam if people start talking about this.
David: Well, so it comes back down to company culture, right? If a culture of a company is you trust me, I trust you. It's a mature business relationship. It's a business conversation about pay. Then what's the harm in it?
When I would sit down with my employees as a manager to talk to them about pay. First of all, I say, we're not talking about the New York Mets. We're not talking about your family. We're not talking about other things. This is a 30-minute discussion — could be 15, could be quick — but it's a 30-minute discussion where we're going to talk about your performance, your contribution and your pay.
And let's talk about your career at the same time, or let's break them down into four separate conversations. But at the end of the day, they have half an hour with me where I'm sitting there invested in them, talking to them about how much they earn, why they earn what they do, and what the rules are. It's a mature conversation.
Linking Pay With Performance Discussions
Siobhan: So David, you just mentioned something, though, that I want to follow up on about having the pay and the performance linked in the same conversation. Do you think that's always a best practice or should there be some separation between the two?
David: Well, if we're talking about a performance discussion where we're going to talk about what you did last year, or last period, last week, those things should be ongoing, continuous discussions about your contribution. How the business is doing. So those are things that happen all the time.
When we're talking about your pay, if pay is based on performance whether it's a merit increase or a bonus you should bring it up. But it should not be a shock at that point. Because you've had those other discussions to set the context for that meeting.
But it, I don't believe you should have your performance review at the same time you're having your discussion around pay because if the person's pissed about the performance review, how do you think they're going to have a conversation about pay, even if you're gonna give them an above average increase? They're gonna be mad because they were taken aback by your lack of understanding about their performance.
So I definitely think it should be broken into two separate conversations and especially give some space between the two of them. So that there's at least a little bit of calming down or realization or walking into the conversation with a mature, clear head.
How Good Is the Public Data on Compensation?
Mike: David, before we jump in to talk about some of the things that have happened with laws around pay transparency, I want to ask you one more question regarding kind of the background here. Because with Glassdoor, with Salary.com, there's a lot of data that is now available to employees. What's your sense of the quality of that data both for the employee as well as the employer who's looking to kind of figure out, "Am I in the range for this job?" Do you feel like that those are accurate parameters? Or is it just one data point among many that you should be using?
David: I always tell people to triangulate data. I always tell them to not ever look at one source so that they're getting a full picture. It's kind of like the difference between listening to mono versus stereo when you're listening to radio, right? Gosh, it's an old statement.
Mike: We've got some audiophiles here, especially our producers. Jesse, I know, is into it.
David: Yeah, but but it's bad to think about it in that context. But it's true, though. You know, if you ever are going to buy a house and you're getting one mortgage quote, what are you doing, right? You need to get multiple. You need to understand all the points so that you can make the best decision possible. Well, in that same context with the internet as you mentioned, Mike, you want to get different perspectives. Whether it's getting a quote from Salary.com or from some other place, you want to be able to understand the context for it.
But it also comes back to really understanding the job. What do you do? You know, are you going to look up on your title and see, oh, I'm an account manager. And then you pull up the data for an account manager, and, well, that's me and it says I should be earning three times as much. Does that make sense? Well, OK, is it in your industry? Is it in your geography? Is it in the kind of things that you do? What kind of account manager are you? Are you an account manager for a small company that sells widgets? Or are you an account manager for a really big organization? Knowing the context for everything matters.
So a smart person who works on understanding your job understanding what's required of you, then goes to those sites and gets the data, and then is set up for having a mature conversation about that with their boss. That's smart. Or if they're going to get a job, if they're looking for a job. And they look at a whole bunch of job descriptions, and they say, oh, my gosh, these fit my skills really well. And then they look at those tools, and they find how much are they getting paid. Then at least you have some ammunition for what could I earn if this company really wants me and wants to encourage me.
So I think that there's a really good way of being able to use this data in a mature way to be able to set up the groundwork for either having a good discussion with your boss, or having a good discussion with a potential employer. It all goes back to having a mature set of expectations. What do you need? What do you want? What is the data telling you? Do you have confidence in it? And what are the potential employers telling you? I think all of that triangulates to having a really good sense for what you should get paid.
Mike: And getting in front of the frontline manager because all that data might not be. It's not the direct managers role necessarily, or [do they have] time to find all that, but having the sort of the organizational structure to gets that to them and empowering them to make the decision, as you said earlier, really is key there too.
David: Right, but a manager who doesn't have that information should go to their compensation or HR team to get that data to have that discussion. And it's up to the employee to give the manager enough time to get that data together. Having been a compensation manager and having been a manager, you know, you put in the request, it takes some time you get the data back. You have to sit down and ask a lot of questions as a manager to make sure that what you're looking at is accurate. And then you're ready as a manager to have that discussion with that educated employee.
The Role Legislation and Regulation Can Play to Make Pay More Transparent
Siobhan: So David, Mike alluded to this earlier, but we do want to talk to you about some changes in legislation as far as salary goes. Now we are going to put in the caveat in advance, you are not a lawyer.
David: I am not a lawyer. I do not play one on television.
Siobhan: Exactly. He's a doctor not a bricklayer. Talk about other dated references. But we do want to get just your sense of what some of this legislation might mean for employers and what it means for compensation. So we've got all the caveats out of the way.
So I'm based here in New York City, and at the beginning of the year, it passed a law which was a requirement where companies listing jobs in New York City specifically had to list minimum and maximum salary ranges for any job that it posted. There was another law that New York City passed making it illegal for potential employers to ask about salary history. You said, hurray for saying goodbye to that.
Many other states have also followed with pay transparency laws last year that they passed. So the question is, are these laws steps in the right direction? And what is going to be the long-term fallout if you are going to speculate?
David: Wouldn't it be great if we didn't have to have laws like this? Where everything was completely transparent and employers would basically put in their requisition how much they want to pay this job from a minimum and maximum perspective, and then set the expectations with the potential employee as to what the other pieces of compensation are?
To me, that would mean that they were being up front and honest with whomever was trying to apply for this job about what it was actually going to pay. I can't tell you the frustration I had when I was out looking for a job. That basically when we started talking about pay, and they said, can you tell me what you're looking for? And I would say no, and there would be this silence or this, "I'm sorry, we're not going to move forward with your candidacy." Why? I'm an expert in my field. Whatever I got paid in the past doesn't matter. What I want to get paid doesn't matter. What are you paying for the role? "We don't give that away." OK. Thank you and that was it.
So I think that these rules and this legislation is on the right path. I think it is just enough to be able to protect people from getting caught in a pay equity conundrum of what deal can the company get. And, yes, I am putting all the onus on the company because it's their responsibility not to get bargains. And I think that having job postings with money is not a big deal for a company to do. They already know the pay range that they want to hire this job for. They already know the incentive targets that they want to hire this person for. Why not post them? Why not tell people what it's going to be?
Siobhan: Do you see these as sort of a net positive in terms of, we talked about pay inequity between males and females earlier, but there's an even greater inequity when you start getting into the interstitial, like women of color, will these kinds of laws help people who have been systematically undervalued, underpaid for so long?
David: I wish I could say it's going to help. I would love to see it help. I hope it does. That's all. That's all I can say. I hope it does. Because I think that the Rubik's cube that is pay when you're talking about race and ethnicity and gender, it just boggles my mind that the pay disparities still exist in the ways in which they do and then the levels in which they do. It doesn't make sense, but it's there.
And these are steps in the right direction. We need to do more analysis of current pay practices. But hiring people the right rates is at least a step in the right direction.
Getting Compensation Communication Right
Mike: Thinking about it from the total rewards point of view, so if compensation — pay specifically — is one aspect of the deal that you get as an employee, you get a wage, what should be a living wage, and then you also have a number of other benefits. They could be your insurance benefits, your retirement benefits, different programs that you have. Having pay transparency, having that sort of salary data maybe upfront and made clear and open, does that change how employers should communicate their compensation practices? You know, should they bring in other rewards a little bit more strongly or dial them back a little bit? How does it change communication?
David: No, I think usually companies have done a very good job on their websites talking about the Total Reward strategy, talking about how they invest in their employees that you may have seen.
We certainly did in in the New England area. Amazon was hiring and they were talking about how not only were they paying a minimum $15 an hour, but they were also paying bonuses and they were paying for tuition reimbursement and other things. And very, very transparently, not just through social media, but in media itself, actually buying primetime spots. Instead of talking about the wonderful things you can buy on Amazon, which obviously we've never seen, they talk about how wonderful it is to work at Amazon and to be treated fairly at Amazon.
And then what happens, you get competitors like Stop & Shop and others who have to advertise as well talking about how wonderful it is to work at Stop & Shop and all of the benefits you get as an employee at Stop & Shop. Love it. It thrilled me as an HR professional to see that we're now breaking down the barriers of how much we'll spend to hire the right people and to get the right resources in our organizations. And even if that's a checkout person or someone who bags your groceries, it's key, critical, to get those eyeballs on those advertisements.
And you know, again, if it happens on the website, or if it happens on social media or it happens on a television set, love all of it. It's great. That's what it should be. That's what companies should be doing to entice people who want to work for you, or who don't know they want to work for you, by telling them they have options. It's all good.
It again goes back to the being a better employee by being a better consumer, and having all the information to make the best possible decision about your career, your earnings and your future.
Mike: Yeah, it's always kind of amazed me that sometimes you get pretty deep into conversations with a potential employer, and you're still finding out information about insurance or whatever benefits that really can materially impact your decision. And, you know, that's kind of like assumed you're almost there at that point.
David: Yeah. I mean, why wouldn't you list all of the things that you're eligible for as a potential employee in the job requisition? You know, in the advertisement, and you see on Indeed or on Salary.com, or wherever you're going to look for a job, find out what the opportunity is to total opportunity so that at least you can compare it to what you're doing now, to what you have now, and be able to make the best decision for your family.
I don't know, man, it doesn't make any sense. It's like walking into a car dealership and saying, yeah, this is a great car. It doesn't come with tires. It doesn't come with a steering wheel. Those things are extra. OK, what else? What else do I not get?
Mike: So it can stay on the communication aspect of it for a second? Because I think what you just said here were employers put everything in the job req. If people are serious about this don't make them guess. Don't waste your time, don't waste their time in going through this. What are some other signs that companies are taking this seriously, the issue of pay transparency, specifically. That they're actually taking the issue of providing equitable pay and everything that goes along with it seriously?
The Role Regulation Plays in Shaping Compensation Practice
David: One of the laws, the regulations that got passed, Regulation S-K, did a really good job of being able to encourage public companies to be more transparent about their issues around pay equity. Still a little different transparency and say, hey, you need to disclose material HR metrics to your shareholders to the Street.
So I think that regulations kind of forced that a little bit, and pushed it a little bit to enable organizations to basically say, hey, I have a reason why I can now tell the Street and tell everybody publicly how we're doing on pay equity, how we're doing on DE&I strategies. And I haven't seen many disclosures yet, but our hope in the HR analytics world is that that becomes the crux of developing, not just an external HR analytics strategy but an internal HR analytic strategy around pay equity and diversity.
To me, it comes down to having a need to disclose all these things, having a want to disclose all these things. It could be your corporate culture, like Apple was very public about wanting a corporate culture that was inclusive and paid fairly and all that, or it could be forced on you, and if it's forced on you, or it's your culture, okay, either way, do it. Make people understand where you are? To me that's, that's where we have to get to.
Siobhan: David, we want to play a little game with you called underrated/overrated. But before we jump into it, I have a last question for this section because we've been talking basically in the United States context. And I'm curious, and I don't know if you can speak to this, but how does this conversation change in other countries? I'm thinking of people in the EU or in Canada who, part of the rewards package would not necessarily be health benefits, because that comes built into your citizenship. So can you talk to that a little bit?
David: Sure, one of the first duties I had, at I think it was at Watson Wyatt in 1990, was to think about pay equity as a strategy for how we can build a good model for weighted job questionnaires to help organizations think about cohorts for analysis for pay equity. So Canada has been looking at this for decades. It's part of Canadian culture now, pay equity. I'm not saying that they're there but they've been doing this as a law for a long time. So you know, kudos to Canada. I'll raise a Molson in your honor.
Siobhan: I thought we were going to all join in around of Oh Canada, but OK, Molson will do it too.
David: My throat is a little not with it today or I would. I'm a hockey player so I know every word. But if you look at the EU, and as we all know, the EU is very worker friendly. And I would love to say that I know more about pay equity in the world of the EU, but I will tell you, I don't know as much.
All I know is when I was working at Morgan Stanley in London that we did have it as a backdrop. We did have pay equity as a thought process. And it didn't happen to us at that point. But I know that it is a thought process for the EU. But I can't get into more detail than that.
Underrated/Overrated With David Turetsky
Mike: Alright. So Siobhan kind of queued us up here. We'd like to do a little segment we call underrated/overrated. We'll throw a few topics at you and get your quick reaction to it, do you feel like it's underrated, this topic, do you feel like it's overrated? Any explanation you want to provide is great. You can skip a question if you want.
David: Can I phone a friend?
Learning Opportunities
Mike: Exactly. Phone a friend. So you want to play along with us?
David: Absolutely.
Mike: All right. The first one has to do with universal basic income. Do you feel the concept of universal basic income is underrated or overrated? Given a lot of what's happened during the pandemic, it's kind of come up again, that this idea of giving people a basic amount of money to live off of, separate from their job, can be a way for us to provide a more equitable workplace environment. Do you feel like it's underrated or overrated?
David: I think it's underrated. I think that while the studies are still being conducted on universal basic income in the United States, there are some programs obviously, that are trying to attempt to get there. But as a program in and of itself, I know that there are some states and some cities that are actually working on it today. I want to see the results of that study before I make a full commitment to they underrate it. But right now it's it's underrated.
Siobhan: All right, David, next one up is again, in the United States context, quite a number of states, I think it's maybe 18 or 19, have $7.25 as the minimum wage in the year 2022. Is this underrated or overrated?
David: Can I just say I hate it?
Siobhan: Yes, sometimes, sometimes the phrases don't work.
David: No, no, this is just horse sh*!. Pardon my French. And if we need to bleep that out that's OK. I don't understand how we expect people to live, anywhere in the United States, on $7.25. At 2080, 2,080 hours a year. How do you expect someone to live on that? I mean, it doesn't make sense. Unless you know, this is a 14 or 15 year-old person who lives at their family home, they get covered from a health insurance perspective. I don't get it. I don't get it.
If you remember back politically, President Bush was in a roundtable talking to a bunch of people. And a woman stood up and said, you know, I worked three jobs. You know, I take care of my family. And I take care of my kids and whatnot. And she sat down and he said, wow, that's great. Look at how wonderful it is that you know, somebody could work so hard. And that was so tone deaf, that the person had to work three jobs to make ends meet. And that's why, it's the minimum wage just sucks the life out of people, as far as I'm concerned.
And by the way, if you guys want to edit that out, because it's a total political statement, that's cool. But it just that no one can earn a normal living on $7.25.
Siobhan: Yeah. And nobody should be working three jobs in order to just make ends meet.
David: But they're forced to.
Mike: Yeah, but we're in hustle culture, people. What are you guys talking about?
David: Yeah. You're a responsible adult, if you can't make a living at something, get a better job.
Mike: That's right. Sure, drive for Uber.
All right. So David, we're talking to you about pay transparency and a lot of compensation topics, but you have a much broader background within HR and in particular, when it comes to people analytics, and really kind of driving decisions about your organization, your data, about your people decisions and your HR decisions through data.
So I want to ask you: Gut feel when you're making decisions, is it underrated or overrated in that context? Do you feel like that people should still be using their guts when we have so much data available to them?
David: I think at the end of the day, even if they have all the information, they're still going to make a gut feel. If the information doesn't change their mind, they're still going to go with their gut.
It's not about which iron I should use on this shot, playing golf as a metaphor. You're talking about making a business decision, as we talked about before, which should be a rational, reasonable, mature business decision about someone's life, about someone's livelihood, you should be using all the information at your fingertips.
At the end of the day, though, people use their gut to make decisions, which is unfortunate but hopefully it's an educated gut.
Siobhan: Next one up for you is Dan Price. And for those in the audience who do not know, Dan Price was the CEO or is the CEO of Gravity Payments, and he announced back in 2015, that he was going to raise his employees minimum wage to $70,000, something he did over a series of few years. Is this underrated, or overrated?
David: It's underrated. I think that he did a really beautiful thing by saying that everybody who contributes in that organization contributes to at least a specific level, that I don't care about the market, I care about my people.
And the difference between his pay and their pay was so dramatic that he basically said, I'm going to invest in my people by taking a pay cut, versus still earning a heckuva lot of money. But I'm going to take a pay cut so that I can afford to grant by people at least a minimum of 70,000.
Did he look at the market pricing for all those jobs? Probably. Did he see he was overpaying for most of those jobs? Probably. Does he give a crap? No, no, he made a business decision based on the way the economics of his company works. And he did it. So I applaud him for it. His people applaud him for it. He got probably lifetime employment from those people. They're not gonna want to leave.
And they appreciated it so much they bought him a Tesla, so you know, kudos to them. But you haven't seen a rash of other CEOs doing this. And you got to ask the question why? And I think one of the answers is because that it's hard. It's really hard. And I'm not sure why. I think it should happen. I think more of the should happen.
Siobhan: It is interesting, because I was reading up about it just a little bit more before this interview, and he has 95% employee retention rate, he saw sales not only stay steady, but increase exponentially after implementing this. So it is kind of confounding why other people wouldn't adopt the same measures.
David: And maybe it works in his industry. Maybe it works for that company and their culture and how things work. You're right. I wish we would see more of it. But it just doesn't happen.
Mike: I think a lot of bosses are reluctant to fix costs, and they see employees as a cost. And therefore, it's like, why would I do that when I want to have that variability within my business plan, so I can cut back if I need to, which we're talking about the Great Resignation and everything that's happening, it's just kind of a dumb decision to make.
David: Well, I mean, he did have to reduce wages during the pandemic. And so it doesn't necessarily mean that $70,000 stayed at $70,000. You know, the article I read said that he did have to, I don't know if it was furlough or whatever, but he did have to change that in bad economic times. Every company does. But the good news for that organization was was that they were able to recover and pay. And I think they got paid back anyways.
So I think that it's a good thing. I think it works in certain economic situations. I think that some companies would have a problem with it. Especially if you're dealing with things like manufacturing, where things are done in a piece rate, and I don't know if it would work as well. I think there are some industries where it works. I think others it may not work well at all.
Why Paying People Differently by Location Is Short-sighted
Mike: Yeah, this has actually been a great transition. Because you know, to close out this conversation, we want to talk to you about pay transparency and compensation kind of in this moment that we're in, which is the Great Resignation, the Great Reshuffle, the Great Contemplation, but also this moment of remote and hybrid working, and how that might change some of our practices when it comes to this?
So one question I have, because we've been seeing a lot of kind of argument about this, as companies have shut down their offices and have allowed employees to work wherever they want, is that some of them now we're saying, OK, you can keep working remotely, you can stay working at your vacation home up in the mountains if you want, but we're going to change your pay, because you're not going to be in the Bay Area, for example, in the corporate office. What do you think about that?
David: I think that's short-sighted and stupid. I think that anybody who's going to all of a sudden give people a decrease in pay because they're not living where they were before, they're gonna lose those people. They're gonna lose a lot of people actually. And they need to be very careful, especially with knowledge workers, because knowledge workers can get remote jobs now for lots of companies.
So I think this is going to usher in an era of flexibility that is now going to be forced on employers to not be as stringent around company location policies. Pay should be determined on where the work needs to get done. That's just the way we've always done pay, not to say that that won't change in the future.
But even if you look at rates across the US versus specific markets, there are crazy differences in pay between the San Jose, San Francisco area and the Butte, Montanas or Sioux Falls. But if you're in Sullivan County, New York versus midtown Manhattan, you're not going to get paid the same. You're not going to get offered the same pay. But that's because the expectations are if you're living and working in New York City, then you're working and living in New York City, versus if you're working for a New York City company, but living in Sullivan County. Are they expecting you to come into the office? Probably not. Are they going to pay you fairly? Probably are, but what does fairly mean?
Well, again, let's go back to the conversation we had before, what makes sense, what's reasonable and rational between the two parties coming to the table to have a good, rational, mature conversation about pay? And so I think I think organizations are going to need to rethink their policies around this, and not be so steadfast because they will lose people, and they will not be able to find people in their stead.
The State of Pay During the Moment We're In
Siobhan: You've been conducting research throughout the last two years. And before that, obviously, about compensation about rewards programs. And I'm just wondering if you have noticed any trends bubbling to the surface? And if you think those trends, for good or for bad will last beyond the current inflection point?
David: As far as pay goes, one thing that we're seeing right now, which is troubling, is that merit increases, were only slated to be 3%, for 2022. As we all know, CPI has gone to 7, I think it's now 7.9%, year-over-year. And that's bad, especially when it comes to gasoline, not because we have to fill our tanks, but because gasoline is the basis for moving things around the US. And so if gas prices are higher, that means everything is going to be higher.
Why does that matter? Well, if the trend on prices is higher, and you're only giving a 3% increase, you're ostensibly giving them a 4.9% decrease, and by them I mean employees. And so one trend we're seeing is that companies are rethinking their pay strategies in 2022, to include a cost of living adjustment relative to merit increases, merit increase may stay at 3%. So you can give out the 3% based on your merit matrices to the people who perform the best.
But given cost of living adjustment is a minimum, so that you can keep people relatively whole, in a period of high inflation.
Mike: All right. So obviously, inflation is kind of a big issue right now. And that really needs to adjust how companies approach compensation. But I think overarching this conversation that we've had is that you seem like you're actually a little bit positive and hopeful about what's been happening over the last couple of years, as far as the pay transparency movement goes that this is headed in the right direction. I mean, what do you think needs to be done to continue this momentum?
David: Well, I think that more states need to create those regulations about requiring postings with the salary ranges in them, or at least the minimum pay, and we need to stop asking people about pay history or what their pay expectations are. Asking about their pay expectations is a an end around to try and find out what they were being paid before. People have no context if they haven't done their homework.
And so I think that, again, I'm not necessarily into hyper-regulation. But I think that those two are a minimum, because companies just haven't been really good at that they have not been good at giving people the information they need to make the mature decision about how or where they want to work, and for how much.
So I think that the next trend we're gonna see is that more companies are going to actually start posting the minimum rates, the grade range minimums in the requisitions in the postings, and that they will stop asking about pay. Hopefully, I'm praying. But if we went to Vegas and asked for what the odds are on that, I tell you they're pretty darn low.
Siobhan: Oh, see, you're not gonna gamble on this?
David: Oh, definitely not, not unless it's regulated.
Siobhan: We're gonna bring it back in a few years and see what happens after all these regulations are implemented, David.
David: Hopefully my throat will feel better at that point.
Wrap Up and Final Thoughts
Siobhan: I know. Well, I want to thank you so much for joining us with your sore throat at all, I hope that you get a nice hot cup of tea with some honey in it after we wrap up. But for our audience, if they want to learn a little bit more about you and find you online, where's the best place for them to look?
David: LinkedIn's the best. My LinkedIn profile's all over the place. It's just under David Turetsky LinkedIn.
Siobhan: Excellent. Well, thank you so much, David. Thank you. And I have to also say thank you for making this a comfortable conversation about pay transparency.
David: Well, it was a mature business conversation. So thank you.
Siobhan: So Mike, are you ready to tell me and our audience how much you get paid?
Mike: I don't think I'm quite there yet. But I think that's kind of part of the point of this conversation is that it is so personal. And the fact that we kind of keep this locked up behind doors really makes it difficult to have the conversation, because there's a lot of baggage that comes along with it. There's a lot of history that comes along with it. And you feel like if I were to just come out with it and say, that it's completely out of context, but if the companies that we work for make that context a little bit more open, perhaps it wouldn't be such a difficult conversation to have.
Siobhan: It's true. It is all about the context. And I think that honestly, one of the things that I've been noticing and that I'm taking away from this conversation, also is that, people are still going to find a way. I mean, the whisper networks, or rather, the Google Spreadsheet networks of how much people are getting paid is only going to increase. And I think that companies would do right to just let the sunshine in.
Mike: Yeah. What's interesting, though, I mean, there is a entire segment of the workforce where this has been happening forever. And I'm talking about government workers, you can go and find out what people who work in government at state, federal, local level, you can find out what they make. I mean, there has been pay transparency there because it's a matter of taxpayer funding. So, you know, it'd be interesting to kind of dig into that a little bit. It's got me thinking a little bit.
Siobhan: It's rare when you would be recommending following the government's lead, but hey, here we are.
Mike: Here we are. And as as David said, really, it's until regulation really kind of comes up to put some bite into this, perhaps the pay transparency movement won't really go very far. So definitely some work to be done and more conversation to be had.
Siobhan: Absolutely.
Mike: Allright, Siobhan, talk to you next time.
Siobhan: Bye, Mike.
Mike: We encourage you to drop us a line at [email protected]. If you have a suggestion or a topic for a future conversation, we are all ears. Additionally, if you like what you hear, please post a review on Apple Podcasts or wherever you may be listening. And be sure to share Get Reworked with anyone that you think might benefit from these types of conversations. And then finally, be sure to follow us at Get Reworked on Twitter as well.
Thank you again for exploring the revolution of work with us and we'll see you next time.
About the Authors
Siobhan is the editor in chief of Reworked, where she leads the site's content strategy, with a focus on the transformation of the workplace. Prior to joining Reworked, Siobhan was managing editor of Reworked's sister site, CMSWire, where she directed day-to-day operations as well as cultivated and built its contributor community.
Connect with Siobhan Fagan:
Mike Prokopeak is editor in chief at Reworked, the premier publication covering the r/evolution of work, where he leads content development focused on the transformation of the workplace.
Connect with Mike Prokopeak:
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