Talking about money, including one's pay, is taboo for many -- but there may be a generational shift occurring in attitudes on talking about pay. How should we talk about pay? Why is there a need for pay transparency? And what is the difference between "equal pay for equal work" and pay equity? Ruth Thomas, pay equity strategist at Payscale, joins the podcast to discuss some effective strategies employers can implement in addressing pay inequity. What missteps can organizations avoid in opening up the discussion about pay?
Camille Lloyd is the Director of the Gallup Center on Black Voices. Follow her at @policyresrchbuf
Dr. Ella F. Washington is the CEO of Ellavate Solutions and a Professor of Practice at Georgetown McDonough School of Business. Follow her at @EllaFWashington
Learn more about the Gallup Center on Black Voices at gallup.com.
Below is a full transcript of the conversation, including time stamps. Full audio is posted above.
Ella Washington 00:11
Hi Camille. It's great to be here with you today.
Camille Lloyd 00:15
Hi, Dr. Washington. Likewise.
Ella Washington 00:17
So I was reflecting on our conversation today around pay, and I was thinking about how growing up, for me, we actually never talked about what anyone made. I did not know how much either of my parents made; I still, to this day, I don't know how much they made when I was growing up -- salary, you know, basically any of that. I just knew that they were working professionals in their respective fields. And honestly, I would have never thought it appropriate to even ask about money. And I think, for women especially, there's always been this cultural stigma around going against gender stereotypes and making too much money and making more than a man. And then in communities of color, it's taboo. I mean, we've heard the saying it's taboo to count someone's money; like don't count someone else's pocket. And so, but traditionally we know that in white male spaces, people talk about salaries very openly, and it actually helps them to get ahead in ways because they have a comparative analysis from their peers. And so that's just fascinated me -- as I just think about my experience, it's like, Why are we like this? And, and what has that maybe done to hold us back in this conversation around pay? What have been your experiences?
Camille Lloyd 01:30
I would say my experience, especially growing up in Jamaica, just take what you just said and multiply it by 10. You do not talk about people's money. People are funny about their money and people watching their pockets or measuring their pockets. And it's almost like I would, I would always think about this as, you don't ask. Money is not something you, you, you talked about. You didn't inquire about, you know, well how much did someone make? I feel like you weren't even allowed to comment. So you would go to somewhere and, you know, kids have a tendency was like, "Oh, they must be rich." Like if you ever did that, you were going to get a stern talking to when you get back home.
Ella Washington 02:14
Asking for trouble!
Camille Lloyd 02:16
You were just asking for trouble. And I feel like that so much of that carries over to me as a professional, even as an adult. When you're in those conversations and you're sharing and you're like, Do I say it? You know, or somebody asks you the question about, you know, "So how much money do you make?" And you're like, "How dare -- you have overstepped a boundary by asking me how much money I make." And so it's still, to be completely honest and transparent, not a comfortable conversation that I have, even with my peers and colleagues or friends, to be honest.
Ella Washington 02:52
And I just wonder how much of that, you know, taboo nature of talking about money and pay has led to the lack of financial literacy that we see in communities of color, right? Because we can't talk about pay and you can't talk about how to manage money.
Ella Washington 03:07
So it's all interconnected. And one thing that my friends and I have started doing in recent years is talking more openly and explicitly about pay. Now I think, you know, the caveat is, you don't go around just waving your paycheck. But when you have friends and peers in like circles, at like levels, it only makes sense to share because it can only help you. I know there have been so many instances where my friends in academia, for example, we have open conversations about our pay and pay expectations, and how we should even negotiate for more pay based off of what happens in other institutions. And, you know, I've been blessed to have great mentors in the field who say, you know, "You should ask for more" or "This is what you should expect. This is what you should communicate."
Ella Washington 03:52
And so I think it's a shift. And I'll say I'm not the only one. You know, a recent study from Bankrate found that millennials who are ages 18 to 37 at the time of this study are more likely than any other generation to share their salary information with others, including coworkers, friends outside of work, romantic partners who they don't live with and family members other than their spouse. And I think it's so interesting, especially the data that it contrasted the millennial generation to baby boomers who, at the time of the study, were ages 54 through 72. And what they found is one in three millennials have shared their salary information with the coworker, compared to only 18% of baby boomers. Nearly half of millennials, 48%, have told their salary to a romantic partner who they do not live with, versus 29% of baby boomers. 58% of millennials have told a friend how much they make, compared to 33% of baby boomers. And almost two-thirds of millennials have told a family member other than their spouse their salary, compared to 43% of baby boomers.
Ella Washington 05:02
It seems like millennials as a generation are making this conscious effort that's starkly different from the previous generation. What are your thoughts on this data? I was shocked. I mean I know it's something my friends and I have tried to do because we are people of color, right? And we know the statistics. And since I teach negotiations, you know, it's like I got to you, got to have the data, right. The best way to negotiate is to have the requisite data. But what do you make of this even generational shift that we're seeing?
Camille Lloyd 05:29
I definitely it's, it's very surprising. You know, you know, just from a practical sense, that there's generational differences in how we communicate and what we share. And you always hear the boomers would say, "Millennials overshare." But the conversation around pay in particular or how much money you make, I would at least not expect it to be that wide because of, you know, some of those professional boomers in the workplaces are in the, you know, kind of know these practices and know the impact of, you know, lack of pay transparency and what that has had on especially the disparities and, and, and widening the gender gap. So that was surprising to me, but I could see how the millennials will share. You know, they are the, you know, the generation of "securing the bag" and you know, you know, all of these references to money and earning and seeming like it's, it's a lot less taboo for millennials than it would be for boomers.
Ella Washington 06:30
Well, I'm quite optimistic, obviously, you know, thinking about this data because I really believe there is power in transparency. And I think there are there is power specifically for women and communities of color in transparency around what you're making, especially in like peer networks, especially within your own organization. And so, you know, I'm really excited for the conversation today to really, for us to dive into, How should we be talking about pay in the workplace specifically? And what do we have to learn about the need for pay transparency?
Camille Lloyd 07:05
I love it. Dr. Washington, I'm really looking forward to seeing and hearing what organizations can do because of these cultural taboos. And who's showing up in that workplace and whether or not they're comfortable talking about pay, I feel like if you have structures and systems in place in your organization that facilitates that openness, it will help people like me, who probably are more reserved about talking about pay. Versus, you know, someone -- I'm a geriatric millennial, maybe; someone who's not a geriatric millennial might come in and be like, "Well, you know how much you make?" And I'm like, "I don't know if I should tell you. Can I tell you?" Right? So I think organizations working on that is really important to kind of help mitigate some of those individual challenges. And that's why I'm particularly excited about this week's conversation with Ruth Thomas around pay equity and, and pay transparency.
Ella Washington 07:52
Ruth Thomas is a pay equity strategist at Payscale, working with organizations to optimize their reward strategy and enable them to provide their commitment to fair pay. Her interest in technology's ability to transform traditional approaches to reward and drive fair pay helps to inform Payscale's innovative product strategy. Ruth has recently led Payscale's pay equity product development. She is a recognized global speaker and author on pay equity, believing passionately in pay equity and pay equality. With over 30 years of global HR and reward management experience, she has international expertise in the management of compensation processes and the design of pay and benefits structures, salary progression systems and management incentive plans. Her corporate experience includes Lloyd's, TSB Group, PricewaterhouseCoopers, Dow Jones Group and Credit Suite. Welcome to our show, Ruth. We are so happy to have you here today!
Ruth Thomas 08:53
Well, thank you very much for having me and allowing me to contribute to this important conversation.
Ella Washington 08:59
Absolutely. So with such a great experience you've had throughout your career, we'd love to just learn a little bit more about you and what has led to your passion around pay equity and equality.
Ruth Thomas 09:12
Well, I started my career as an HR generalist, moved into specializing in reward and was really working predominantly in the financial services sector, which, I think if you look at any pay gap analysis by sector, you'll know that's one of the worst-performing sectors from an uncontrolled pay gap perspective. And I guess I, I felt, I guess frustrated around how pay decisions were being made and the lack of decision-making based on evidence that was happening, that I saw happening as I was looking at how pay decisions were being made. I also had another interest, which was around technology. I've always been intrigued by technology for some reason.
Ruth Thomas 09:56
And so 10 years ago, I founded a company called CURO Compensation, and that was a company that specialized in compensation software solutions for organizations. I think at that time I was a very much frustrated head of reward, couldn't find the solutions I wanted. So for some ridiculous reason I decided, Oh, let's start my own company and build my own solutions. So 10 years later, we did successfully do that. And we were recently acquired by Payscale, which is a very exciting next step in our journey, because we can now take the products that we've created and sell to a much larger client base and with Payscale's, you know, has over 10,000 customers and about 52% of Fortune 500 companies. So it's, you know, that's an exciting prospect for us. And I think, for me really, you know, the passion that I have now is around the pay equity side of things. We, I've always been focused on the concept of fair pay, but I think now it's more a drive towards pay equity and pay equity from the employee's perspective. And I see technology as a great enabler in that, and that's really what I'm trying to do is just work with organizations to make it easy for them to address pay equity.
Camille Lloyd 11:15
That's a great segue for us, because one of the things that we wanted to talk a little bit about with you is really to understand the difference between "equal pay for equal work" and pay equity. Pay equity is a an issue that's becoming more and more salient today. Can you help us just understand what that distinction is between you know, "equal pay for equal work" and pay equity?
Ruth Thomas 11:39
Sure. Yeah. Well, I think historically, if we go back in time to the first pay equity legislation in the U.S., you've got the 1963 Equal Pay Act. That was all very much focused on equal pay for equal work. And coming rapidly behind that, you have the Civil Rights Act, which extended that protection from just gender to other protected-class status. But really the focus was very much on comparing people doing the same jobs. And one of the ways we describe that is, you know, the controlled wage gap -- when you compare people's pay after you've accounted for factors like where they work, how much experience they have, their job level, their education level and things like that. But there is actually more to pay equity than just equal pay. We really also need to understand what we call at Payscale, the uncontrolled pay gap. So basically that takes the ratio of median, median earnings of one group and compares them to another.
Ruth Thomas 12:39
So from a gender pay-gap perspective, men compared to women; and from a racial pay gap or race and ethnic groups compared to whites. And that's a figure which, until recently, a lot of people said actually wasn't real, and they didn't really understand why it was important. And I think there's been an increased understanding probably over the last two years that you could also call that pay gap the "opportunity gap." And that's because the factors that drive it have less to do with pay, but they're more of a consequence of the structural or systemic issues that exist in workplace in society. And I think now we're getting to the point that we can understand that the concept of pay equality, which kind of is an extension of the term of pay equity, pay equality is really important. And for me, pay equality is about creating an environment where everyone has the opportunity to earn the same. So I think if you're going to tackle pay equity, you've got to look at it across the whole lens, looking at equal pay, looking at pay equity and looking at pay equality.
Ella Washington 13:47
Thank you for that. You know, for our listeners who may not be as familiar with the HR side of the house of their organization, how might this structural pay inequality and equity show up? So how might, what that what might that look like within the organization?
Ruth Thomas 14:05
From the uncontrolled pay gap perspective?
Ella Washington 14:07
That's right.
Ruth Thomas 14:08
Yeah. Well, I think, I mean we -- it's very evident to exist. Once you do that basic mathematical calculation, you would take your organization, you would compare the average pay of men to the average pay of women. And we do see, you know, those gaps prevailing. So, you know, a national level, the -- for example, the overall pay gap, from a gender perspective for women is 82 cents on the dollar. For every dollar a man earns, a woman earns 82 cents. And then for black women, that figure is more around the 63 cents level. So you can do the numbers to sort of look at where you sit, but what you need to do is look beneath and look at all the issues that actually can drive that. And for the different minority groups, they, some of the issues overlap, but there are also very specific issues to each protected category group. So things like occupational segregation, where, you know, you have different minority groups tend to be, congregate in certain sectors of employment, in certain levels of employment. I think most people are familiar with that concept. Vertical segregation is where you get, that's a representation issue in organizations.
Ruth Thomas 15:20
So the fact that there are less women and less people of racial or ethnic categories at the top levels of organizations, and we read about that in the press every day. But you know, when you look at gender, you've got issues around parental care, caring, you know, cover and things like that, that can cause massive issues for women around their ability to maintain work in the workplace, and therefore maintain their pay equity. From a racial perspective, It's issues around access to education and, you know, that having an impact on how people actually gain entry into the workplace in order to move up the career chain. And then another really interesting factor I find when you look at racial pay gaps is immigration status, or whether you're a first-generation, second-generation immigrant has a big impact. So if you're a first-generation immigrant, you're coming into the country, your qualifications are maybe less likely to be recognized. And what is one of the first things that you get asked when you go for a job interview is, what are your job qualifications? Well, if they don't understand what they are, then you may be prequalified out. And experience is another interesting one. Because if we're really going to create equality, and we're going to have more people moving up, but there aren't there people that are getting that experience, then you've got to kind of have a discount for experience as well. So you do see recruiters now trying to focus more on skills-based interviewing rather than saying, Oh, do they have the seven years' experience in doing this, in terms of qualifying for a job? So it's looking at all those types of issues that really drive that underlying pay inequity in the first place.
Ella Washington 17:00
What do you see globally? So I know you have extensive experience. And do you see any differences in trends or even behaviors around pay globally, as you compare different workforces?
Ruth Thomas 17:13
Well, yeah, huge, huge differences. Because pay equity, it's a very emotive issue. It's, it's cultural; it's, it's got everything in the mix here: There's culture, there's religion, there's history. You know, everything plays a part in why we're where we are in terms of pay equity today. So generally, you know, in the developed world, where you see high levels of participation from both women and ethnic minorities, then you will see the trend where they are trying to address the issues around pay equity. Still for some countries in the world, it's not even a discussion because it's just culturally not a discussion that's allowed. In some countries in the world, it's still illegal to capture data on race and ethnicity and even, you know, and particularly any other protected classes, things like sexual orientation or religion, you wouldn't be allowed to capture that data. So there's no way that you're going to be monitoring pay equity. So yeah, quite a big, a big range of responses to the whole topic.
Camille Lloyd 18:17
Yeah. And I know this is a topic and an issue that we've talked about a lot and have been dealing with for quite a while. So with your three decades in the field, I love to ask this question about progress. You know, what, if any, progress are we making in terms of addressing and reducing those disparities that exist within pay? And are, are, are there specific things and areas where we've made progress in versus others?
Ruth Thomas 18:42
Sure. Yeah. Well, I think, if we talk about the controlled wage gaps or equal pay, you can look at some of the national figures, and they'll say it's like, you know, women are paid for example, 99 cents on the dollar. So that pay gap is actually very small. I don't know which organizations they were surveying or what people they were surveying, because I think we all know people who feel they are being paid or know they are being paid unequally in organizations. So we haven't got equal pay, right, when we talk about people in the same work. The uncontrolled pay gap, that has been getting smaller, over the last 10 years, particularly. So we are making gains, for example, in people coming into the workforce and progression. So some of those barriers, we are making small gains. I think the general feeling is that that progress is just too slow, and that potentially it will take another generation to close those uncontrolled pay gaps. And that's kind of just not acceptable anymore. I think that's the general feeling is it's not acceptable for it to take that long.
Ella Washington 19:44
You know, some of the research that Payscale has put out on this, two-cent or one-cent gender difference in pay, even it's still astounding, when you look at how the numbers are aggregated over time. And so, you know, in looking at older reports, when women were paid 82 cents on the dollar, right, to men, versus now, 98 or 99 cents can seem like, Oh, we've made so much progress. It's not that big of a deal. You know, what is one cent anyways these days? But can you let our listeners know how that aggregate impact, you know, is really significant over the course of someone's whole lifetime?
Ruth Thomas 20:20
Well, I think the issue is that if, you know, pay gaps or lack of pay equity stay with you throughout your whole career, and they compound over a lifetime, I can't create the figures from the Payscale survey off the top of my head, but it's a significant amount of money. That, you know, as a woman, if you come, in for example on 20% less than an equivalent male colleague, over a lifetime, I think it can lead to a significant amount of money that you're actually underpaid. And I think that's one of the key issues. And when we work with clients for most organizations we look at, we do see, you know, the issue of male tenure when we're, if we're looking at this from a gender perspective, but also from a racial and ethnic minority perspective. It's that predominant class category where they have accumulated the tenure and they've accumulated pay. And that is where you get these historical, you know, pay equity issues. And the reality is that even though an organization might say, "We have a strong record on equal pay," every organization has a legacy pay issue because a lot of this has built up over time. If you think about how your pay actually evolves year on year, particularly with the low wage inflation that we've had for the last 10 years, most people, you're getting another 2% increase or you're getting a 3% increase, and that's just building up over time. And if I'm paid unequally from you then that is just gonna, you know, that difference is just going to continue to compound. Hopefully that answers your question.
Ella Washington 21:51
It does, it does, thank you. And, you know, one of the figures that I saw, it was a gap in in money -- in the U.S., over $400,000 over the course of someone's career, just with that, you know, 1% or 2% gap. That is astounding. And those are what, those are things that we know so far, right. I think there's so much, as you're talking about the uncontrolled elements of this process, that probably exacerbate that already large number, just based off of demographics alone.
Ruth Thomas 22:20
Yeah. But I mean there is some good news here is that we're now seeing a number of forces colliding that are compelling companies, legislators to take action. You know, you've had, we are seeing, I mentioned legislation -- we've got growing body of legislation emerging at a, you know, federal and state level that is trying to -- and an international level. We've got so much new legislation coming out all the time. But you've also got social movements, obviously like hashtag #metoo from 2017 and Black Lives Matters from last year, which have really highlighted the need to improve obviously gender and racial equality. And what we've seen is employee expectations have really heightened as a result. It was really interesting last year, we had a lot of companies saying, We just don't have time to do pay equity analysis because of COVID. We're dealing with moving people to home, and they were dealing with all the people issues associated with that. And then Black Lives Matter -- June events happened, and the number of HR reward CEOs who came to us in the fall and said, "We have to address pay equity now. Our employees are asking it. It's the employee voice that is driving this now." And so we had a significant rush of companies who were saying, "We've got to do some analysis. They're asking us where we stand on fair pay." So that was really interesting.
Camille Lloyd 23:42
This idea about, you know, just to keep it real a little bit, where people always say, talking about pay can be very challenging. And so for, for, when you think about employees you, I think there's a term, "People are funny about their money." It's how do you communicate internally about pay equity? So if you're an organization that have said, OK, I want to take an assessment as to where I am. What are some of those tools that are available? But also how do you communicate it to your workforce? And how do employees? Because pay sometimes is a taboo issue when you run into transparency issues around pay and whether you can or cannot talk about your pay. How do you navigate that space?
Ruth Thomas 24:22
Well, I mean, we've made progress here as well. I mean, when I was, probably like 15 years ago and we would write everybody's paychecks. And on the bottom of every -- everybody's paycheck, it said, you know, "This is strictly private and confidential, and please do not discuss this with anybody else other than your manager." Well, we've had legislation come in since, you know, say that that's, you can't, you know, you cannot be restricted from talking about your pay. It's a very sensitive subject, talking, talking about pay anyway. You know, how, how many of us actually talk about pay with our friends? You know, and one of the things we are trying to encourage is people to do that, you know, to, to talk about pay, that will ultimately help drive this agenda. That as an organization, you really have to be, kind of think about what your goals are from the pay equity perspective. So, many organizations are still at the point where this is kind of managing risk. It's about legislative compliance. And so they're probably going to be less likely to want to communicate outcomes from pay equity analysis more broadly. They're probably going to keep that to the working group who are initially working on it -- unless they come out with brilliant results. And then of course, you're going to see them aggressively saying, "We have no pay gap!" or whatever. I think if you are authentically trying to tackle pay equity, in terms of enhancing your employer brand, then you do need to communicate more broadly. And this is where we'll work with organizations to kind of tell them the best way to do that when we know what their results are.
Ruth Thomas 25:53
So you need to kind of start with a tiered approach, start with your executive team. You really need executive buy-in to make this work. I mean, I think, hopefully you've for more of the conversations about diversity, equity and inclusion that you've had, you know, all the surveys indicate executive buy-in is really important. So getting them bought in, getting them to understand what the issues are, understanding the level of risk and what it costs to close pay gaps is a really important starting point that you need to communicate with them. And then it's about getting your managers ready -- the people that are actually going to be making pay decisions and communicating with employees, making sure they're well equipped to have those conversations. Because when you start talking about pay equity, there will always be a lot of misinterpretation. Things can go wrong quite quickly when you start having a conversation about pay equity. And we sometimes get asked, you know, "What, what do you do if you have done your analysis and the results look really bad? You know, what do you do?" Well, I think, you know, that comes back to your commitment to transparency overall. I would say that organizations -- and, you know, that we see it with the organizations we work with -- rarely fix pay equity in their first year. This is a journey, you know, this is something that is going to take time to fix. And being authentic about that to your employees and saying, "This is where we are now. This is what we plan to do to fix it. And this is where we would like to be," is a more open way of gaining trust around this issue with, with, with your employees, I would, I would suggest.
Ella Washington 27:35
So why isn't it as simple as just getting everyone's pay on a spreadsheet and leveling it out by, you know, taking some of these discriminatory practices out. For our listeners that may be confused about, why can't we just level it out? Why does it take years to do something like this?
Ruth Thomas 27:54
Well, I think from an equal pay perspective, it's the historical legacy buildup is there, that, you know, there may be some significant pay discrepancies that have just built up over time. And the cost of leveling those out, while it is the right thing to do, it could take a company out of business. So that's kind of one aspect. From the uncontrolled perspective, when you look at uncontrolled pay gaps, you know, why can't we just fix this today? It's because the issues that you need to fix are sometimes not something you can do within an organization; they're to do with, as I said, systemic societal issues that will need to be fixed over time. So that's when we, you know, we read about the lack of women in STEM technology or, you know, generally, you know access to sectors that have traditionally been white male sectors. And those things are going to take a lot longer in order to fix. But, you know, we just think organizations should be proactive here in terms of, you know, going beyond what is set from them from a legislative perspective in order to try and make these pay gaps smaller.
Camille Lloyd 29:04
What are some of those common missteps that organizations make when it comes to addressing pay equity?
Ruth Thomas 29:12
Well, I think one is thinking about it just as a pay-only conversation. So we'll obviously work with companies to help them understand and analyze their pay data that you also need to set up measures across your whole talent life cycle. So you need to be also, from that diversity lens, you need to be looking at your, how many numbers do you have coming into the organization? How many people are progressing? How many people are taking leave? How many people are moving to remote working, even? You know, there are concerns about how is the move to remote working, going to impact different protected classes? Are we going to see all the women working at home and all the men in the offices? You know, what's, what's going to happen? So I think it's important to also set up monitoring practices across your talent life cycle. And then bringing those two pieces of information together, then you can start to build a sustainable pay equity approach. I think another misstep is just being too afraid to do the analysis in the first place.
Ruth Thomas 30:16
So I, I mean, you know, a lot of organizations think it's actually safer not to do the analysis than to do it. And that comes from the fact that, you know, from a legislative perspective, doing pay equity analysis can be discoverable, in the event of an equal pay claim against your organization. So if, if I, as a claimant, came to you as the organization, I could potentially ask to have access to any pay equity analysis that's done to try and prove my case. So for many organizations, they've just said it's just too dangerous to actually do the analysis in the first place. The issue is that that risk doesn't go away, you know, just because you're not doing the analysis that -- for the reasons we just said earlier, those pay equity issues are just compounding over time. And there's an even bigger risk there, which is around your employer brand, you know, your, your employees, your customers, your shareholders all have a much higher level of expectation now around how you are performing from a fair-pay perspective.
Ella Washington 31:19
So the issue of pay transparency is one that many organizations are trying to tackle. And I really appreciate all the information that Payscale has put out on what is pay transparency? It's more than just, you know, letting everybody know who makes what an organization. So what, how do you describe pay transparency, and what are the things that organizations can do to be more transparent about communicating their pay?
Ruth Thomas 31:48
Well, pay transparency isn't about knowing what everybody in the organization is paid, on an individual basis. So it's not about me knowing what you're paid or what, you know what, what the person next door to me is being paid. It's really, there's a, there's a number of strategies that you can deploy, from a pay transparency perspective. But it's generally opening up an understanding around how pay decisions are made in the organization, so that managers making pay decisions and employees on the receiving end of those understand how their pay is determined; how their pay can be progressed; and how their pay compares to their peers' or, or to the market. You know, those are traditionally the three things people want to know about their pay. So we're seeing, you know, many more organizations trying to decide where they want to sit on the transparency continuum.
Ruth Thomas 32:43
So, you'll have organizations, you know, at one end that share no information; at the other end, you've got some small HR tech company, or small tech company, sorry, that publish everybody's pay on the internet. You can go into some of them and you can see what everybody's paid. I think that's the extreme, you know, I think it's settling somewhere in the middle, where potentially you have developed, you know, pay, pay ranges, and you share that information with employees around pay ranges. But there's a lot you can do around pay transparency as well. For example, advertising salaries during recruitment, so people can sort of self-select them into the roles, particularly when we've got these salary history bands, you know, where people are no longer to ask about pay. But you can advertise salaries during recruitment. You can advertise salaries during promotion. And, you know, just generally open up the conversation, I guess, around pay in the organization.
Ella Washington 33:39
Have you worked with any organizations that have done a good job of taking the stigma out of conversations around pay? Because a lot of what we're talking about, it's structural, but it's also very much cultural. And we can even think about, you know, cultural norms in different countries, right, about talking about money. But I think that, you know, in most countries, there is a lot of like, kind of hesitation to really dive into these conversations. So, have you seen any organizations really do a good job of that cultural piece of making it just less taboo to talk about pay?
Ruth Thomas 34:15
Well, I think if you, if -- they're the organizations that have put the effort in to, to create structures of, you know, levels within organizations. So they know, they group people into levels so they know how people are contributing, and then they've attached pay ranges to those. And then, you know, it's kind of out there in the open, so you can say, Well, you're, the reason that you've had this pay increase is because you're, you're contributing at this level to the organization and the level of pay that's associated with it is that. Again, it comes down to manager training. You know, I know, historically, lots of managers who would rather not have the pay conversation with their employees and just wait for them to get their paycheck after their annual merit review and hope that that's OK. We actually have a little piece of functionality in our compensation review software that the manager has to sort of tick a box to say that he's actually spoken to an employee before he sends them their, their letter -- whether it actually happens. But, you know, it's, we're sort of recognizing that people, people feel uncomfortable talking about, about pay. We share everything, you know, on social media; we share, you know, everything on group chat channels within your company, but people still feel very uncomfortable, as you say, culturally talking about pay.
Ella Washington 35:39
Are there any downsides of sharing too much information? So, you know, often people will compare corporate organizations to the U.S. government, for example, where you can look up anyone's pay or university systems where you can do that. Are there any downsides that organizations that are really just trying to understand where they fit on this continuum and where they want to be -- are there any things they should be considering?
Ruth Thomas 36:04
I think you've got to put the legwork in around developing the culture as well. You know, because you could drop the bomb and just post everybody's salary, you know, on your company intranet. But if there's no kind of cultural acceptance and cultural understanding -- and again, understanding of how pay are determined in the organization, then that that kind of needs to be considered as well. I think, I think one of the other things I've thought about in the past is transparency is very much about your values as well as an organization. And if you look at some of the companies that have gone to a full transparency approach when it comes to pay, transparency was a very key part of their value system. If you look at a company like, I think, Buffer was one of the first ones -- transparency across the whole business was a really important part of the fabric of their business. And accepting that transparency really does breed trust. So, you know, trust only comes from having conversations and setting a platform where people can have conversations around, Why is my pay what it is? And how do I make my pay more? And how does my pay compare to, you know, someone outside the organization? And people being able to answer those questions and have those questions answered.
Camille Lloyd 37:26
As we think about the future and how work is changing, and as an employee, if I'm someone who's really committed to ensuring that I, there's pay equity in my organization, one question is, how do I, is it a "one and done"? Or -- I know you mentioned it being a journey. What do I do to continuously make sure that I am aware of where I am on that continuum -- if I'm where I want to be? And, and as work changes, you know, how do I stay ahead of that so I don't kind of perpetuate disparities in the future?
Ruth Thomas 38:04
Well, the traditional approach to doing any kind of pay equity analysis was, it was, it was a set of number crunching that you did every two years, potentially. But the problem with that very static approach to pay equity analysis is if you think what happens, as soon as you've done that analysis, all these people-related transactions are happening. You've got people being hired. You've got people being promoted. You've got people being awarded bonuses -- all sorts of things happening with the organization that allow paying equity to creep back in. So you need to set up one more regular check-in on pay equity analysis. So most of our clients will do an annual audit that will be in advance of their merit review. But then, depending on how much the people, the people in- and outflow of their organization is, some of them will do analysis quarterly; some of them half-yearly. But as I said earlier, it's also about tracking the other issues that tend to be the root causes of pay equity. So what measures do you have in place to monitor hiring pay decisions? What measures do you have in place to measure promotion pay decisions and those types of things? Because they will all contribute to the issues that you will find whenever you do your kind of quarterly, half-yearly annual pay audit.
Ella Washington 39:24
Thank you for that. So, you know, in thinking about the future of work and the future of pay equity, I saw the recent Payscale survey found that 81% of organizations do not have a pay strategy for their remote workforce. And over 62% of organizations say they're actually not planning to change their pay strategy for increased hybrid and fully remote workers. What are, what is the advice that you're giving to organizations now, as you're thinking about the future of work, how it looks different? They're looking to save money, in some cases where it makes sense, but also making sure they're not kind of going in the reverse around pay equity, especially as you mentioned earlier for some -- parts of the workforce that may be more likely to stay home, such as women, or minorities that may feel more comfortable working from home than entering into an office every day, where they may be the only one. So what advice do you have for organizations as they're really grappling with this major shift that has actually already happened?
Ruth Thomas 40:27
Yeah. And one of the most hotly debated topics in reward, you know, at the moment is, you know, should I be reducing pay for people who, you know, have moved to work from home? And I think that survey was really interesting because it did show that people are undecided at this stage -- you know, that, that people just don't, haven't made a final decision. It does raise a really interesting ethical question, I think, about pay equity -- and the fact that we've proved many of us can do work from anywhere -- is, you know, should it matter where you are, if you're contributing the same value to an organization? So that's one kind of question that's being raised. I mean, I think we will see, potentially over time, you know, less differentiation in regional pay. And there's talk of, you know, moving more to the national average and, and maybe we'll, that will be adopted, But, you know, there's no clear path yet for organizations. And I think they are just kind of watching each other to see what will happen.
Ella Washington 41:27
Absolutely. Well, you know, we like to think about what are we working towards in the future? What is the sense of when we have arrived at a good place in this really important work that you do? And specifically, I'd like to ask, you know, what is workplace utopia for you? What does it look like for all of these challenges that you have been passionately advocating for over the course of your career? What does an ideal future in the workplace look like for you?
Ruth Thomas 41:56
Well, ideally that pay gaps are zero, whether on a controlled or uncontrolled basis. I think, in the short term, it would be seeing more organizations committing to taking proactive action on this. So I think the compensation best-practices report said that 46.2% of organizations were planning to do pay equity analysis this year on both a gender and racial basis. And that's quite a big jump. That was 8% from 2020. So I think, you know, committing to and doing some analysis and putting in the policies and processes in place. And I think that's got to be the immediate short-term goal here. And I think if we could see, year over year in in that survey, the numbers going up and that maybe every organization is doing pay equity analysis, that would make me very happy. It was one of the key reasons we decided to create technology to drive this process, because it was an expensive process to do. If you did a pay equity audit, you'd normally have to engage external advisors, and it would cost a lot of money. And that, I didn't want that to be a reason that people didn't do pay equity analysis. So for me, technology was about democratizing the process so that every organization could afford to do pay equity and put the foundations in place to create a sustainable pay equity environment.
Camille Lloyd 43:30
Absolutely. Well, Ruth, it has certainly been our pleasure talking with you today. That's this week's episode of Cultural Competence. Can you tell our listeners where they can find out more about your work? And also, for those who are listening who might be interested in venturing into, you know, looking at what pay equity looks like for their organization, what are some resources that they can actually leverage?
Ruth Thomas 43:56
So you can find us at payscale.com. There's a great research section on our website where you can get hold of the reports that we've mentioned today. So the compensation best practice report is a very extensive report, and we cover pay equity somewhat in that. And then also we have a gender pay gap report that we've been doing for 15 years now. And that's also extended to cover racial pay gaps as well. So there's, you know, great resources there, in terms of, you know, finding out more about pay equity and how pay gaps are revolving.
Camille Lloyd 44:30
That's this week's episode of Cultural Competence. Thank you for coming on ruth.
Ruth Thomas 44:34
Thank you very much for having me here today.
Camille Lloyd 44:37
That's our podcast. To subscribe to Cultural Competence from any podcast app, just search "Cultural Competence." You can learn more about the Gallup Center on Black Voices by visiting gallup.com. Cultural Competence is directed by Curtis Grub and produced by Justin McCarthy. I'm Camille Lloyd
Ella Washington 44:56
And I'm Dr. Ella Washington.
Camille Lloyd 44:57
Thanks for tuning in to Cultural Competence -- a diversity and inclusion podcast.
