Salary.com – Why Pay Equity Matters With David Turetsky

Music:      This is RecruitingDaily’s recruiting live podcast, where we look at the strategies behind the world’s best talent acquisition teams. We talk recruiting, sourcing, and talent acquisition. Each week we take one overcomplicated topic and break it down so that your three year old can understand it. Makes sense? Are you ready to take your game to the next level? You’re at the right spot. You’re now entering the mind of a hustler. Here’s your host, William Tincup.

William Tincup:      Ladies and gentlemen, this is William Tincup and you’re listening to the RecruitingDaily Podcast. Today we have David on from salary.com and we’ll be talking about why pay equity matters. Might be obvious, might not be as obvious as you think. We’re going to explore it, unpack it, and I can’t wait. David, would you do us a favor and introduce yourself and salary.com.

David Turetsky:      Absolutely William. My name is David Turetsky. I’ve been in the compensation HR technology world for over 30 years, and I am a zealot when it comes to being able to help HR people understand and value their data and their technology, in order to be able to help them be able to provide service and value to their organization. And show the leaders and managers that they work with, not only the value that HR can provide, but also how we can help them solve business problems. And we’re going to be talking about one today called pay equity.

William Tincup:      So let’s think about pay equity. Again, if you read the popular news, everyone’s thinking about pay equity, the board, the C-suite, HR, comp, everybody’s thinking about it. Salary requirements are now being in job descriptions, on Indeed, in Google. So I think we’ve crossed over into the place where, okay, there’s a lot of discussion and a lot of discourse, which is great. But what are you seeing in terms of the… Again inside the organization we have inequities, okay. How do we ratify those inequities?

David Turetsky:      And I think that comment that you just made is one that organizations are finally waking up to and saying, “Yes, we understand that exists.” There was and has always been a reticence to be able to acknowledge that pay gaps do exist in our organization. And now that reticence has pretty much gone away because what’s happened, whether you call it the great awakening, the great resignation, whatever it is, employees feel more empowered to be able to use their voices. And sometimes that voice says, “I quit.” And sometimes that voice says, “I’m underpaid.” Sometimes that voice says, “I love working here, you guys are doing nothing wrong.” But people feel empowered to say something. And that’s okay. As employers, as company owners, as leaders, we need to take responsibility and be able to say the right thing at the right time. And that doesn’t mean always saying the most popular thing.

It also doesn’t mean that we’re saying the wrong thing for as far as our shareholders go, it means being able to own up to the fact that we’ve made mistakes in the past and we have to correct them. And so pay equity isn’t a new concept. It’s been around for a very long time. In fact, when I graduated from college in 1989, you might find this funny, but one of the first projects I worked on as a compensation consultant was Canada’s new pay equity laws.

They came out with pay equity laws in the early 1990s. And by the way we’ve had fair pay as a law in the US for a long time too. But to the extent at which we’ve owned up to it, and there have been teeth or the ability for people to really sue for it. It’s not really been that popular and people have sued in the past for it and they’ve won, but now there’s this new focus on it. People are using their voices and that leads to change. And the good news is that that change, I think, is here to stay.

William Tincup:      Yeah. Fear, especially legal fear only gets you so far.

David Turetsky:      Yes.

William Tincup:      Because the lawyers and the compliance folks are going to do risk analysis and basically say, “Okay, well, if everybody sues, this is what it is.”

David Turetsky:      That’s right.

William Tincup:      And again, now societal pressure is different. Employee, consumer everything that would happen, that can affect the brand, the stock price, et cetera. Okay, the little problem that was a closeted problem off to the side that only a few people knew about. And some people, yeah, they complained, but now it’s on candidates’ minds.

David Turetsky:      That’s right.

William Tincup:      So now it’s even pushed out not just to employees, it’s pushed way out in the recruiting process, which is fascinating. How do you think comp folks should go about either explaining the inequities that are there, compression or otherwise, whatever the inequities are, explaining those and giving a path forward for both the executives, the board and everyone else? But also for employees. I’m thinking like on the annual report, around pay equity. Because you’ve seen that in the last couple years with diversity and inclusion, where it’s… We need to actually get in front of this and show people what we’re doing. Again, it’s probably going to be bad news to begin with, but we’re going to show people where we are. And then slowly we’re going to show people how we get better at this.

David Turetsky:      Yeah. I agree with you. It is a communication process, it is a leadership process, it is a culture process. It is coming up with who are we? What do we stand for? What do we want? Not just our candidates to know, what do we want our stockholders, our owners, what do we want our consumers to know? How should they look at us? What are we in the market? Who are we? What identity do we have? Do people want to come work here because of who we are and what we are? And that comes from diversity of knowledge, it comes from diversity of background, it comes from a diversity of abilities and it comes from a diversity of opinion. And so as a leadership team, as an executive team, they have to start by leading by example, who are we? Who is the make-up? Meaning who is the public face of the company to the world?

For lack of a better way of saying it, if it’s a bunch of white old faces that make up your board of directors and make up your executive team, you’re not really showing a diverse face to the community. You’re showing a non-diverse face and so one of the ways in which companies are changing is, they’re changing the make-up of who leads them. They’re changing their board of directors, they’re changing their executive committees and we’re starting to see progress made on people of color and people of diverse backgrounds. And by the way, this isn’t just an ethnicity or race consideration. This is also, do we have people who are differently abled? And do we have people who are from an LGBTQ perspective different? And who makes us up and how do we speak to the populations of people? How do they look at us and say, “I look like them. The people on the board represent me, so I want to be a part of this.” And that’s either as I said before, as a consumer, as a employee, as a shareholder.

And so the ability for a company to make themselves in the image of who they’re trying to sell to. Again, whether that’s an employment perspective, whether that’s a consumer perspective, whatever. That will speak volumes to how we’re leading by example. And so I don’t know if that necessarily answers your question?

William Tincup:      Yeah. It absolutely does because it helps… Again, you’re dealing with not just current atrocities, if you will. You’re doing with historical atrocities. And so, I say, atrocity is pretty heavy language, but-

David Turetsky:      A Little, but yeah.

William Tincup:      But the idea is that you’re going to have to undo some things that have been done. So every HR leader and every comp professional knows this. They know the dark crevices of all of the pay inequities that currently exist and historically exist and probably are existing even today. What do you believe is the hardest part or aspect of writing the wrongs of pay inequity?

David Turetsky:      I think it comes from a lack of training. I think that once there’s a good understanding throughout an organization about what’s the leadership saying about it? What is the way in which we should be paying people? How should we be treating people? That then gets to a question you asked before about how do comp people help their stakeholders be able to make better decisions? It’s not necessarily that pay is going to become fair day one. It can’t. There are a lot of things… You call them atrocities. I’ll just call them bad decisions, and over time some of them add up to atrocities. But some of these are really bad decisions that people have made agreeing to compensation packages they probably shouldn’t have agreed to. But-

William Tincup:      Well, I’ll tell you that our recruiting, we have our staffing and recruiting. Our hands are bloody because historically we’ve looked at, if a candidate comes in lower than what the budget was… quote unquote, the budget was, then we’ve historically seen that as a cost savings. But what it automatically does is creates an inequity.

David Turetsky:      Yeah. We love getting [crosstalk 00:      10:      54]-

William Tincup:      Right. We kick the can down the road, but we’ve actually… I’ve been in rooms where people are like, “Hey, we had 180, they came in at 160. We saved $20,000.” And I remember celebrating, we saved $20,000. Like, we didn’t save $20,000, we actually kicked the can down the road for someone else to deal with at a future date.

David Turetsky:      And that’s where training comes in. Right?

William Tincup:      Yeah.

David Turetsky:      Being able to make the right decision isn’t necessarily based on cost. It’s based on, can we find the right person with the right skills to fit into this team with the right culture. And be able to celebrate the fact that, yes, we hired someone that’s going to be on this team for a while. And that will cause the company to celebrate when the productivity of the organization gets improved, not just by saving $20,000. But what has happened is that this is what the mindset has been. And that’s why I go back to compensation needs to do a good job of telling leaders, managers, recruiters, everybody who are stakeholders in the pay determination cycle, what does good mean? What is good for of the company? What’s good for our share price? What does good mean? Because sometimes good isn’t getting the best bargain. Sometimes good is getting the best fit or actually all the time…

I should take it back. All the time getting the best fit’s better than getting a bargain. But the problem is that we need to do a good job as compensation folks with the recruiting people hand in hand, to make better decisions by being able to find the right person for the right job at the right time.

William Tincup:      Who do you think organizationally and we’ll just use broad generalizations. Within our organization where’s the biggest roadblock? Because I naturally think it’s the CFO because it’s money. And so I would think that they would probably be the one that would want to hit the brakes the fastest. But I don’t want to assume that. With your experience and kind of, “Okay, we can communicate, we can be transparent. We understand the importance of culture. Now we’re going to train people.” There’s always a group that’s cynical and pessimistic. And about even the need to do it. So just questioning it on its basis. But then the actual financial impact of it. Who has that been for you in your experience?

David Turetsky:      I’m going to take the CFO off the hook for a minute and basically say that if the CFO agrees to add a headcount, then they’ve basically given you the right to hire the right person at the right price. Now I could be wrong and say that maybe the CFO has told you that you have to hit a number, right?

William Tincup:      Right.

David Turetsky:      Or total employee costs. But let me take the CFO off the hook for a second and say that if the manager and the recruiter and the comp person are triangulating, how much do we need to pay for the right person in this job? Then I’m going to say that it’s the comp person and the recruiter who need to lead the manager to say, “This is-”

William Tincup:      “This is what it is.”

David Turetsky:      Yes, exactly. This is what I need to be able to fill this job in the marketplace. The comp person will say, “I did my research, the price is one 150.” The recruiter says, “Well, the current market the price is one 160.” And going back to your example before, if we get this person for 140, did we really get a bargain? And I’ll tell her the answer is no. We need to tell that person, “Look, you might say 140, I’m telling you we posted this job at 150 or 160. And I feel more comfortable giving you 150.” Because I don’t want us to turn around later and go, “We didn’t pay you enough.” And I’d rather there be that transparency and not this baloney of we have to be this A against B. A is the recruit and B is the manager and we’re setting them against each other from the beginning. Let’s work in tandem to get them paid the right amount at the point of hire so there’s a trust issue there.

William Tincup:      So what’s interesting is… And I agree, actually, I think that the hiring manager establishing budget is where a failure point historically, we’ll just talk about history. You’re not talking about things that are happening this hour and hundreds of millions of companies worldwide. When the hiring manager or the manager establishes a budget, they typically do it without data. They basically say, “Here’s the number.” And this is the number and it’s without comp and it’s without recruiting that understands the market, et cetera. And what you’ve already laid the groundwork for is, the manager and the hiring manager should be actually the recipient of, “Here’s what and if you want those skills, that experience. If you want that in this market or whatever, here’s what it costs.”

David Turetsky:      William. We did a pulse survey on pay transparency. And how do employees in HR feel about it. Only 34% of recipients say that a manager at their company can honestly and accurately answer an employee question who says, “How is my pay determined?” So to your point, managers don’t have the data they need to be able to make that decision.

William Tincup:      Not only don’t have the data, that shouldn’t be even something that they consider. They should think of it like this, this is free actually for managers, from this perspective, “Here’s the skills, here’s the experiences and competencies. Now you tell me, what’s the market? What are we internally, externally? What is the market like? What should we be looking at?” And then the conversation between comp and recruiting and bringing those professionals together to then say, “Okay, this is what we see.”

David Turetsky:      Okay, Sure. But I think it’s highlighting two big problems though. One problem is-

William Tincup:      Comp professionals don’t talk to recruiters.

David Turetsky:      And they don’t talk to managers. And that’s terrible because if the manager is HR for the employee, the manager is the first line of defense before an employee goes to HR. They’ll ask their manager a question, “How is my pay determined?” Or “What is fair for me?” And what managers typically do is go, “I don’t know, talk to HR.” People rely on their manager, especially if their managers doing their performance review. They’re doing their compensation increases. They’re determining their bonuses.

William Tincup:      And what are their future on some levels. [crosstalk 00:      18:      01].

David Turetsky:      Yeah. Their future, their careers, but also go back a step. They were the ones who hired you. And if they don’t have all this data like they’re supposed to, have we given the manager all of the information, all the insight, all the training, all the communications, all the listen force. Have we given them how to manage compensation? And the answer is no. And I’m going to put this on comp people. I love you comp people. I’m one of you, I’m a brother, but we have to do a better job. And recruiters, you have to do a good [crosstalk 00:      18:      36] job telling the managers, “Yeah. Don’t take bargains. [crosstalk 00:      18:      41] Here’s what this goes for today.”

William Tincup:      The good news on the recruiting side is because of Indeed and Google prioritizing jobs with salaries in them over jobs that don’t have salaries in them. Now they have an excuse. Now they actually have a legitimate reason to go back to comp and go back to managers and say, “Yeah, we can post it but we’re just trying to get the traffic.” So…

David Turetsky:      And here’s another problem. What you’re talking about now is transparency. You’re talking about transparency and pay which leads to more pay equity. Because if I know how much jobs are being paid, I’m not talking about individual people, but I’m talking about if you know how much jobs are being paid at average or at the median or whatever. At least I know based on my set of experiences, should I get paid more? Or should I not. And if I don’t guess where I’m going to go? To what you just said, I’m going to go to Google and I’m going to LinkedIn. I’m going to go to salary.com and see on our consumer side, how much should I get paid? And the answer might shock them. The answer might be, “I’m not getting paid enough.” Which everybody thinks, or they might say, “Wow.”

William Tincup:      Yeah, I shouldn’t tell anybody.

David Turetsky:      Right, exactly. So the problem that I see with where pay equity is going is that companies need to decide, this is like that old thinking of, “Do we have casual Fridays?” Companies need to rethink, should I allow people to talk about pay? Should I post ranges? Should I post how much jobs are going for? And be open about this stuff instead of thinking of it as a secret thing that no one can understand, it’s held in a box. You can’t see inside that box.

William Tincup:      Well, and worse on the recruiting side is it’s an excuse to reward people around their negotiation skills and not necessarily the competencies and skills that they have for the job that you’re hiring for them. It’s like, “Susie is … She’s a poor negotiator.” And so Susie gets less and Robert is a fantastic negotiator and so he got more. They’re both software engineers, this has nothing to do with the job that you’re hiring for, but they’re being punished or rewarded based on their negotiation skills.

David Turetsky:      I can’t tell you how many times as a compensation professional, I used to have people who’d come to me and say, “Hey, I saw a…” By the way, this is really old. Who say, “I saw something in the newspaper that talked about compensation and said that my job gets paid this, I’m not getting paid that.” And I’d have to take them through how we do surveys and how we do this and how we do that. And they said, “Okay, what’s the range of pay?” “Well, I’m sorry, we can’t talk about that. We’re not allowed.”

William Tincup:      I’m sorry.

David Turetsky:      And it was a-

William Tincup:      Well, you don’t have the clearance,

David Turetsky:      Right? Exactly. You’re not… “I’m sorry. You’re not in the grade where I can talk about that.” “What grade am I in?” “I’m sorry, I can’t tell you.”

William Tincup:      “You keep asking questions and I can’t answer any of your questions. It’s a black box-”

David Turetsky:      “I’m sorry. These are double secret.”

William Tincup:      So, last thing I wanted to ask you about this is the impact of remote. What have you seen in terms of… I don’t even want to assume there has been an impact of remote and pay equity, but is there a relationship that you’ve seen and that y’all have noticed from some of your customers?

David Turetsky:      Well, we’ve definitely heard about, “How do I pay?” We’ve definitely heard those questions. “How do I pay differently now that people are remote? Do I pay them for where they are or where they should be?” Quote unquote, where they should be working from. And the answer is that we still use the location of where the job is. Where’s the job supposed to be? I hired you to work at a specific location. Now, if you chose to move to a location that’s remote, that’s up to you. Pay is commiserate to location. So if you’re now in that remote place and the CPI at that location is much less, I could pay you less. This goes back to your negotiating skills comment before. But what we’ve tended to hear and our advice is, really don’t make major decisions on this until and unless it becomes a big problem. Because we’ve always had-

William Tincup:      Let the wind settle just a little bit before you make a real… First of all having the discussion with somebody that moved from San Francisco to Wyoming and their cost of living is down. And then that discussion of “Okay, we’re going to reduce your pay by 28% because of your cost of living.” That never goes well-

David Turetsky:      No, God forbid-

William Tincup:      There’s that. But you mentioned that location pay is commiserate with location. And if there is this quiet movement of making pay commiserate with skills… And then it’s not going to happen overnight.

David Turetsky:      And we’ve always been paying for skills. Whether we’ve been implicitly saying or explicitly saying, we do pay for skills. The problem is we pay for skills in a place. Right?

William Tincup:      That’s right.

David Turetsky:      So to your point before, if someone’s working in San Francisco, they’re in the San Francisco market, we’ve obviously paid them more because the cost of living in San Francisco is gigantic. If they’ve one off, moved to West Virginia to the mountains, because they believe that that would be the place that they’d go to escape COVID, okay, that’s fine. But then you made a working conditions statement of agreement with that person to do that. And whether their costs of living there are lower or higher, it’s really about that person and that deal you made with that person.

But if you are relocating your development team from San Francisco to Wheeling, West Virginia, that’s a completely different thing. There’s an entire process that goes on with that, which is what you’re talking about. You don’t make sweeping changes. You don’t make big decisions based on one off things. You usually make them when big business decisions occur. We’re going to relocate talent, or we’re going to go to an office strategy versus a remote strategy. Those are all business decisions. And with that comes policy change, it comes compensation change potentially, but there are things that go alongside those things.

William Tincup:      Well, and back to your points of transparency, communications, culture, training, if you’re going to make those business decisions, fantastic. Make whatever decisions are in the best interest of the shareholders. But if you mirror that with the transparency, communication, culture and training, then you’re fine. Again, some people are going to like it and some people aren’t going to like it, but at least you’ve communicated it. David, I could talk to you all day-

David Turetsky:      Absolutely-

William Tincup:      Especially about this topic. So thank you so much for coming on the podcast.

David Turetsky:      My pleasure. Thank you so much-

William Tincup:      And thanks everyone for listening to the RecruitingDaily Podcast until next time.

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