Sam Feldman – Are We Paying People Fairly?
Welcome to the HR Leadership Podcast
In this episode, eqtble Co-Founders Joseph and Gabe talk to Sam Feldman – a leading expert on fair compensation and People Analytics. We talk about how her team helps companies through compensation design, pay equity, and what constitutes “fair pay”.
It was a great conversation, with so many valuable insights. Before we dive in, here’s a little bit more about Sam and her background.
Sam Feldman has over twelve years of experience in the people analytics and recruitment space, and is one of the foremost thought leaders in the field.
She is now VP of Compensation and Analytics at Gray Scalable, an HR consulting firm in NYC. Gray Scalable helps growing companies match the standards of the world's leading tech companies, by building sustainable processes for talent acquisition, HR, training, and more.
As the Head of Compensation and Analytics, Sam helped clients improve HR decisions using data – particularly compensation design and pay equity. Before joining Gray Scalable, she worked in the People Analytics team at AOL, and over her career, has gained an end-to-end understanding of HR processes.
Sam holds an MS in Analytics from NYU Stern and a BA in Psychology from Colgate University.
It was amazing to speak to Sam, and understand more about her specialty.
Here are some of the big points we discussed during this episode:
What is a good compensation strategy?
Why do salary bands exist?
Is it fair to cut remote workers’ pay?
How do you measure pay equity?
Key takeaway: it’s all about an internal sense of fairness – not the numbers
What is a good compensation strategy? Huge question…
Sam explains that in general, a good compensation strategy is a way for a company to be proactive, intentional, and consistent in their pay practices.
That might mean things like consistent benchmarking, and defining how they account for total rewards – like cash compensation versus equity plans and benefits, for example.
There are as many reasons for variable compensation as there are reasons for an employee joining a company. Some companies, especially fledgeling or growing organizations, have purely financial constraints that can put an upper limit on total compensation – but a good compensation strategy will be crystal-clear about the value offered, even if the company can’t pay top dollar.
She adds this;
“A good compensation strategy is really about how you structure your compensation process. How does pay change at an organization? What's your promotion process? How does pay increase? What's your performance review process?”
In Sam’s experience, companies hit an inflection point when they have grown to 40 or 50 employees. At this point, many of their employees have hit 12 to 18 months of tenure and begin asking “what's next for me?”.
But it’s not all down to data. Fair compensation takes a huge partnership between people management, hr, and leadership, to communicate effectively and pair any compensation program with a career development program. Her case study findings on this are particularly interesting – listen out for those.
Why do salary bands exist?
When it comes to fair pay, there are two trends emerging in recruitment.
One, companies are not engaging in negotiations on salaries – they make an offer, with no range, and that’s it.
Two, companies are eliminating salary bands. Everyone at the same level gets the same pay.
Seems fair, right? So why do salary bands exist?
“I fundamentally believe in bands as a good practice”, says Sam.
The reason bands work well for most companies is that, as employees become more senior within a level, a range of experience, skills, and performance will become apparent.
Companies should be able to differentiate between employees effectively, and that's where Sam highlights the difference between equality and equity: it seems very fair to pay everybody the same at that level – but what if there are major performance differences between staff at three and five years of experience?
Sam explains that eliminating salary bands just shifts the burden away from pay being unfair into promotions being unfair – leaving companies with the same problem under a different name.
Geography and fair pay: is it right to cut pay for remote work?
Pre-pandemic, adjusting pay scales to geographic locations was pretty much standard practice. But is it fair now, with remote work becoming the norm?
“When I've spoken to employees, there's a little bit of a misconception that differentiating pay by location is a cost of living calculation – but it's not. It is a cost of labor calculation. And they're a little different; they're directionally the same, but I think there's a fear that if an employee is based in New York and they move to where the cost of living is like, 40% lower, they think that salary range is 40% lower. That is not the case when it comes to the tech market…”
But what about companies like Google, cutting pay for remote workers moving out of the Bay Area?
It doesn't scale well to give everybody Bay Area pay, everywhere. But at smaller companies, doing so can be highly detrimental to morale and competitiveness.
Sam talks us through some of the salary geo-distribution solutions that smaller companies are using to retain staff who move out of their original locale.
Measuring pay equity: misunderstanding the metrics
When trying to understand pay equity among key demographics, the HR metrics analysts tend to go for are average salaries by gender and ethnicity.
But this leads to more of the same results:
“What tends to happen in lots of places, unfortunately, is – the more senior you get, the more white and male you get”.
Understanding that the mechanism behind this isn’t always revealing an equity gap, but an opportunity gap, is a leap that not everyone makes at first.
Representation and opportunities matter greatly – and often, this is the root of what feels unfair about compensation.
Sam explains the metrics and strategies that can be used to effectively measure and address equity.
It’s all about an internal sense of fairness – not the numbers
The key message we got from Sam was that fairness comes from within a company. It's not about the numbers, the competition, the market rate – it’s about how leadership and HR communicate their compensation and promotion strategies.
Feeling listened to, or simply having clear guidelines that say when you’ll be reviewed for progression, can alleviate so many of the grievances felt by staff.
But where things really are going wrong, the data tells the true story.
Talking with Sam was such an eye-opener, and we hope you enjoy this episode as much as we did.
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