Pledge Resources: Pay Equality

A special thanks to the author of these notes, Crystal Hansen.

Below are resources related to The Startup Diversity and Inclusion Pledge and we welcome ideas for further resources.

Commitment to pay equality including equity grants.

Pledging equal pay — how do we define equal pay?

• Two or more employees performing the same job at the same level, in the same office location, should be paid equally, unless there are valid, legally-permissible and provable reasons they should be paid differently, such as sustained merit, experience, quantity of work, etc.
• Employees performing the same work should also receive the same stock and bonus programs.

What are the benefits of achieving equal pay?

• “Perceived unfair treatment” is the #1 reason why employees leave tech jobs, according to the Kapor Center for Social Impact. Losing a valuable team member can cost your company over 1.5x their annual salary in lost productivity. Achieving equal pay can help reduce attrition and improve employee morale and productivity. Source:http://www.kaporcenter.org/tech-leavers/
• 50% of millennials share their salaries openly with friends and colleagues. Having a well-thought compensation framework ensures that when employees talk about their pay, they are confident you have their back.
• Equal pay is the law. Companies who do the work to proactively remove unjustified pay differences are at less risk for discrimination claims made against them.

Steps to achieving equal pay

Take the pledge.

1. Be specific about the time frame you are committing to achieve. Taking a pledge without committing to a plan of action may cause more skepticism among employees, than excitement. Ideally, this timeline should be no longer than two years out.
2. Publish this pledge internally and externally so that you can build both anticipation and trust in your plan.
3. Be as specific as possible with employees about when they can expect to receive more communication and updates from leadership on progress.

Run an audit to assess current state.

1. You can either use software tools, or consultants to help you identify areas of concern. Alternatively, your internal HR team can run analysis using your HR system or spreadsheets.
2. Your process should identify employees with the same role within a specific location, and compare their pay, equity and bonus data.
3. Companies should also run reports for average pay by department in order to understand if there are macro trends and differences between how men, women and minorities are paid in different teams. If trends can’t be easily explained, it is important to discuss as a leadership team to see if there are biases that have factored into decision-making for hiring and promotions.

Adjust salaries, equity, bonuses and roles where needed.

1. It is helpful to make this part of an overall compensation adjustment cycle to help streamline the process.
2. Merit, tenure, relevant education, quantity of work and industry experience should all be considered as factors when making adjustments.
3. You should not only affirm women or minorities in this process; for legal reasons, it is important to adjust all underpaid employees regardless of their gender or race and consider as much quantitative evidence of productivity and contribution to the business as possible when making salary adjustment decisions.

Hire a third party to check your work.

1. Having a neutral, unbiased reviewer involved helps safeguard your work, earn the trust of your employees and the public, and lends credibility to the process.
2. You can hire a consultant to do this, or work with SameWorks to get certified for pay equity.

Adopt best practices.

1. To ensure you do not create a pay gap over time, it’s essential to adopt a few best practices in your HR processes.
2. You will need to ensure that all job offers you make going forward are made with consideration to the compensation of existing team members in that same role.
3. All promotions, equity grants, bonuses, and raises must also pass the fairness test in the future.
4. Ensure that new managers who are brought into the organization receive training on equal pay practices.

Be transparent about your accomplishments.

1. Once you’ve done the hard work of achieving pay equity, you can talk about it openly.
2. The first step is employee communications. Make sure managers are prepared to discuss this in 1:1 meetings, as well as in a town-hall format.
3. You can discuss your journey towards equal pay in a corporate blog post, and cross-post to social media as desired. Get as specific as possible about how it went, what you learned, and your underlying motivations. Collecting employee and leadership quotes is a great way to bring the story to life. If you feel comfortable, it helps to share high-level metrics about the adjustments you made and the overall impact to your business.
4. Getting certified for pay equity means you can also get listed in an index of equal-pay companies, and display that certification seal on your website and on job boards.

Follow up every year.

In order to keep tabs on your compensation, hiring and talent management practices, it’s a good idea to review pay equity on an annual basis to make sure nothing falls between the cracks.

Resources for equal pay

• EEOC website on the Equal Pay Act
• Department of Labor guide on Equal Pay
• SameWorks software tools help companies with the process of achieving pay parity

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