Conversations around salaries are gradually shifting from being hush-hush to becoming more commonplace. While some companies are yet to get there, the wave is making its way, and navigating this transformative period isn't always straightforward.

This transformation requires challenging traditional norms, setting new expectations, and building strategies to reshape these conversations. By marrying data with narratives, organizations can navigate these complexities without deviating from their core values, goals, and market demands.

In our recent webinar, “Navigating Pay Transparency: Strategies for Philosophy, Communication, and Compensation Structures,” we hosted the amazing Samantha Feldman, the Head of Compensation & People Analytics at the media company Future plc, and Gregor Teusch , who leads reward and operations at Nikola, alongside our host, Roxanne Laczo.

Here are some insightful nuggets from the webinar.

1. On Market Changes And Compensation: Don’t panic. Adjust

More than ever, a nuanced understanding is required to adjust pay ranges in response to market dynamics while maintaining an unwavering commitment to internal equity. 

It can be tricky to remain innovative and creative while maintaining internal equity and transparency, but as Gregor said, ‘Markets change; that’s what they do. If you don’t fix the internal before the external, you’ll always be chasing something.'

The job market is almost as dynamic as the stock market. Values fluctuate based on many things that may or may not have to do with your company - from skill scarcity to economic shifts to in-demand skills. So, adjusting compensation isn’t about knee-jerk reactions to every little market tremor. It’s about thoughtful recalibration, ensuring that pay scales reflect the current market value of skills and the company's capacity to sustain its payroll.

But how do you explain these adjustments to your team without causing unrest or dissatisfaction? It starts with transparent and timely communication. When employees understand the rationale behind pay scales and adjustments, trust grows. This communication is not just about relaying decisions but about opening a dialogue and offering insights into the company’s financial health and vision for growth and sustainability.

Also, while market changes can dictate the range, recognizing the unique value each employee brings can help tailor compensation within those ranges. It's a balancing act, aligning individual achievements and contributions with broader market trends and organizational capabilities.

2. On Internal Values and Market Realities: Find Your Balance

Finding harmony between what your company believes in and the hard facts of the job market is no small feat. It's like trying to balance on a seesaw where the key is to not let either end hit the ground too hard. This balance ensures that while you're competitive in attracting and retaining talent, you're also staying true to what makes your company unique.

One of the takeaways from the webinar is that internal equity and market rates need to coexist. It's easy to think that paying top dollar is the only way to keep employees happy or to attract new talent. But, it’s also about being smart with your compensation strategy and ensuring that it reflects market values without compromising the principles that define your company's culture.

Like one of our speakers explained, balance often means working on the internal values that market realities cannot affect. For instance, if your company is a tight-knit community that values work-life balance and personal development, your approach to compensation could mean prioritizing benefits and perks that enhance work-life balance or personal growth, even if the market suggests a salary increase.

This doesn’t mean ignoring market realities though. Companies need to be aware of these changes to ensure they're not left behind. This might mean conducting regular salary audits to ensure your pay scales are competitive or adjusting your benefits package to meet new expectations from the workforce. It's a delicate dance between staying true to your internal values and adapting to the external market.

“What's important to us? What do the employees control? So let's engender the right behaviors and reward the folks that have chosen to work here and maybe expedite some things along the way.

Basically, balancing internal values with market realities is an ongoing process that requires flexibility, transparency, and a deep understanding of both your company's culture and the broader job market. It's about making informed decisions that support your employees while aligning with your company's mission. This is so that, as the market evolves, your company remains a place where people want to work, not just for the paycheck but for what the company stands for.

3. On Compensation Education: Show the whys and hows

When we talk about earnings, it’s easy to focus solely on the salary figure. But compensation goes beyond the monthly paycheck. Total compensation packages, including bonuses, health benefits, retirement plans, and sometimes even stock options, make up the broader picture of what employees truly earn. The challenge, however, lies not just in providing these benefits but in ensuring that employees understand and appreciate their full value.

So education!
Webinars, one-on-one sessions, and easy guides or comp-focused FAQs can be powerful tools. It really comes down to how companies offer a series of valuable workplace offerings that will ensure that people are attracted to the workforce and continue working.

Breaking down the components of total compensation packages into simple, relatable terms can demystify what might otherwise be complex benefits. It’s about showing not just the what but the why and the how. These conversations are not just about the compensation. In a culture where pay transparency is becoming increasingly important, understanding the full compensation package is a critical piece of the puzzle.

In essence, educating employees on their total compensation packages is not just an HR task. This art of simplification is a strategic move toward building a more engaged, satisfied, and productive workforce. It’s a testament to the company's investment in its people, not just as workers but as individuals with needs, aspirations, and futures to secure. By prioritizing education around total compensation, companies can create an inclusive understanding and transparent workplace culture.

4. On Equipping Leaders: Necessity, not perfection

Leaders often find themselves at the frontline of compensation discussions, and while that may feel like walking a tightrope, it’s often a necessary tightrope.

While these conversations are about numbers, they're also deeply personal to employees and tied closely to their sense of value and recognition within the company. Consider a scenario where an employee approaches their manager with concerns about their pay. The manager's response at that moment can significantly impact the employee's morale and perception of the company. 

Therefore, equipping leaders for these discussions also involves prepping them to handle these conversations with empathy, clarity, and confidence. This means leaders need to be well-versed in both the specifics of the company's compensation strategy and in the art of communication. They also need to be equipped to talk about the factors that influence some compensation decisions, company performance, and individual achievements.

In the webinar, the speakers emphasized that achieving this required using a multifaceted approach that is tailored to the reality and needs of your company. Providing leaders with a toolkit or a set of guidelines that are replicable and expandable can be incredibly helpful. Such resources can include key talking points, FAQs, and tips on handling difficult questions or emotional reactions. It's about giving the leaders a roadmap that ensures consistent messaging across teams. 

Finally, having an environment where healthy feedback is the norm can make compensation conversations less daunting for everyone. When feedback is regular and constructive, talking about compensation becomes just another aspect of an ongoing dialogue about performance and development. It reduces any tension or anxiety, making the discussions more productive and effective.

5. On Diversity, Equity, Inclusion (DEI): Data is key

Sam highlighted an insightful observation from her analysis: sometimes, higher compa ratios for underrepresented groups do not signify overcompensation but rather indicate slower promotion rates, thus necessitating a deeper dive into the underlying reasons for such disparities. This approach highlights the integral role of both compensation and people analytics in fostering a deeper understanding of employee movement and tenure, beyond mere snapshots in time.

Gregor, complementing Sam’s analysis with a visual perspective, shared his experience with scatter plotting salary data by gender within job levels. This visual method not only clarifies salary disparities but also reveals representation issues, particularly in higher job levels, thereby urging organizations to confront both compensation and structural inequalities within their workforce.

The webinar also touched on the challenges and strategies involved in attracting and retaining diverse talent, emphasizing the importance of aligning compensation practices with company values and the external job market. This alignment involves making informed, strategic decisions about pay structures and benefits, aiming to maintain internal equity while remaining competitive and inclusive.

In essence, addressing DEI&B in compensation is a multifaceted challenge that requires a comprehensive, data-informed approach. Organizations are encouraged to continuously analyze compensation data, ensuring their practices are fair, equitable, and reflective of their values. By doing so, companies can not only mitigate biases and disparities but also foster a more inclusive, equitable workplace that values and promotes diversity at every level.