Pay fair

An introduction to correcting—and preventing—compensation inequity.

Part of
Issue 11 Nov 2019

Teams

Years ago, I was the only woman at my level in a particular engineering organization, and I had a hunch that I was being underpaid relative to my peers. When I approached HR about it to ask, they hand-waved me away, reassuring me that I was being paid fairly. (“Fair,” we know, is a relative term.)

A year later, I was assigned a different manager, who corrected my pay at the next compensation-adjustment cycle. The correction resulted in a huge bump in my base salary, and he let me know that I was being paid significantly less than my peers. Though it was an awkward conversation to have, I’m grateful that this manager was honest with me.

I was able to trace the pay gap back to when I was hired at this company; I had been given a lower-than-average salary when I started. Because the person who had hired me still worked there, I asked him about it. The reason he gave is one that I’ve since heard many times about other employees in similar positions: The lower compensation reflected the manager’s decision totake a chance” on me, to hedge his bets. I’m sure he didn’t realize or maybe didn’t carethat a lower incoming salary would compound into a double-digit percentage gap relative to my peers over the years. I’m also sure that HR wasn’t incentivized to acknowledge or correct this deficit until my new manager decided to take action.

There’s a statistic that hits close to home for me: A 2008 study found that, after 10 years of work experience, 41 percent of women in tech left the industry, compared with 17 percent of men. More recently, the Kapor Center estimated that voluntary turnover rates in tech are twice as high as the national average for professional and business services, and found that 37 percent of those leaving cited unfairness as the reason for their departurea much larger group than the 22 percent of departing employees who cited a better opportunity as the reason for leaving. Meanwhile, I often see members of minoritized groups hired at more junior levels in an organization, as when an organization does a lot of hiring out of bootcamps, or mislevels new hires due to unconscious bias.

Plenty of tech companies are working to make their pipelines of candidates more diverse. But if an organization’s leadership team hasn’t already started to tackle issues around inclusion and equity, it’s unlikely that these new hires will enter into an environment that they’ll want to stick around in.

Correcting inequity

When questioned about these disparities, managers tend to defend the reasons why an employee who belongs to an underrepresented group is compensated less than their peers who are members of an overrepresented group. Due to a variety of factors (from unconscious bias to the fact that minoritized people receive much less helpful and actionable feedback), people who are otherwise attuned to diversity and inclusion topics will still look for other reasons why someone is undercompensated.

Some years back, I heard that HR and the leadership team where I was then working had done a round of compensation corrections. I had been working with HR for about a year on fixing the pay gap for one of my reports, making incremental improvements, since she hadn’t received any raises since she’d started there years before (under two previous managers). But for some reason, she wasn’t included in this sweep of catch-up corrections.

When I asked a VP why, he said he remembered that my report had had some performance issues years ago (with a different manager), and he hadn’t thought to ask me if things had gotten better. Instead, he simply excluded her from the compensation corrections. This is how deeply our unconscious biases can affect individual cases, even as well-intentioned folks are actively trying to fix these systemic issues.

The practice not only costs underpaid employees, it costs organizations. Mekka Okereke, a senior manager of software engineering at Google, has described the concept ofinclusion debt,” which can be even more destructive than financial or technical debt.If you had a time machine (and no morals), and went back in time,” Okereke tweeted,would you invest in the Weinstein company?” He continued,What would future-you tell past-you? How would you verbalize the risk?

Correcting inequity, and paying down inclusion debt, requires constant effort and vigilance as well as sweeping fixes. If you’re in a leadership role, it is imperative that you take steps to inspect and address inequity immediately. It’s the right thing to do.

The necessary steps will vary based on your organizational size, HR processes, and the existing performance-assessment methods and reward structures. Calculating whether you compensate and promote people fairly requires some level of manual analysis across demographic groups. Project Include, a nonprofit that uses data and research to advocate for diversity and inclusion in tech, offers a list of inclusive demographic breakdowns worth measuring. These include:

  • Race/ethnicity, with affordance for multiracial identity
  • Gender
  • Disability status
  • Sexual orientation
  • Family status
  • Immigration status
  • Religious background
  • Veteran status
  • English proficiency
  • Age and tenure at organization
  • Educational attainment
  • College attended: public/private/any
  • Criminal background

It takes a lot of work to make this math repeatable, so that you can check in on your organization’s progress over time. And if you’re doing this analysis for the first time, you probably won’t have statistically significant results for many of those demographic categories, because you proportionally employ so many members of overrepresented groups. As Project Include suggests,roll the data up into broader categories as appropriate,” and remind people this is a systemic issue that needs to be corrected across the board. Whether small or large, every organization must begin this work on day one.

Salary

A natural reflex from HR may be to incrementally bring someone’s base compensation up over time by making changes more frequently than once or twice a year. I haven’t seen this be effective. While you are slowly raising someone’s compensation to match their peers’, their peers are getting promoted and additionally compensated, too. In my experience, I’ve found it best to push for immediate, full corrections to compensation, in order to bring people in line with their peers before the next review cycle.

When you make a double-digit correction to someone’s base salary, you’ll need to prepare for what could be an uncomfortable conversation with that person. You could couch it in,You’re doing a great job, so here’s a pay bump!” Or you could choose to be transparent about the reason:We are bringing your compensation in line with that of your peers.

I’ve been on the receiving end of this conversation multiple times. The one that I appreciated the most was when my manager was frank with me. Yes, it suckedand yes, I carried some baggage around afterward about my previous manager. Overall, however, I’m so grateful that my later manager was honest with me. If, as a manager, you’re reluctant to have this conversation transparently, remember: Your direct report isn’t clueless. Trust me, I’ve talked to lots of minoritized people about guessing the unspoken reason behind a major compensation bump.

It’s up to you (and your HR team) to figure out how to have that conversation in a respectful manner.

Promotion

Measure the time between each worker’s start date and their date of promotion. Collect these figures for folks in each level, and compare over time. The math is not exactly straightforwardyou may need to use lots of IF functions in Excelespecially if people have been promoted multiple times since they were hired. Here’s one example, comparing the promotion velocity of a minoritized group versus the promotion velocity of the organization writ large:

LevelPromotion velocity of employees of colorOrganization-wide promotion velocityDifference
1–212 months18 months50% faster
2–324 months24 monthsEqual
3–436 months28 months22% slower

Obviously, this can be a chicken-and-egg problem: If you’re not retaining folks from minoritized groups, how will you be able to promote them? And if you’re not promoting them fairly, you won’t retain them either.

Early in my tenure at one company, I found that men in engineering were being promoted much more quickly than people who were not men. In fact, the staff engineering cohort was 100 percent men at the time. To tackle this, a buddy and I led trainings for staff engineers and engineering directors about sponsorship, and requested unconscious bias training for these groups, too.

I continued to repeat this promotion-velocity assessment, and though there were some seasons when we didn’t reach parity, we caught up a bunch of people and ended up closer to a more equal pace. There will always be more work to do to make the senior engineering cohorts look like the overall engineering demographic, but I’m proud of the work we did toward this goal.

Retention

I’ve found it personally helpful to compare the makeup of my engineering team to the demographics of my company’s region over time, in addition to assessing whether I am only retaining members of overrepresented groups. Your mileage with this benchmark may vary, depending upon where you’re located and whether or not you’re building a distributed team. I offer it simply as a starting place if you’re stumped on where to begin.

I live in Brooklyn New York, and these are Brooklyn’s demographic stats from the American Community Survey, as of 2017:

White43%
Black or African American33%
Hispanic or Latino (of any race)19%
Asian12%
Other9%
Multiracial3%
American Indian and Alaska Native0.3%
Native Hawaiian and Other Pacific Islander0%

Due to the way the American Community Survey records race and Hispanic origin, these figures amount to over 100 percent.

Even when I’m hiring remote employees outside of Brooklyn, I’ve found it personally useful to have a benchmark in my head of what the outside community represents. I don’t want to compare my organization to other tech organizations because, frankly, the bar is far too low.

In terms of retention, figure out if members of overrepresented groups are sticking around in your company’s environment longer than other groups. What’s the median length of tenure for employees who are not part of overrepresented groups? How do these numbers compare to the overall tenure of your employees? Measure start date to departure date, and look at the breakdowns highlighted by Project Include.

Your company should also evaluate the overall makeup of the organization every six months or so, to see how much the makeup of the group is shifting (or not). Don’t just count the number of hires from minoritized groups that you’ve made; count how many you are retaining. You may be losing non-white non-men at a faster rate than you’re hiring them.

Preventing inequity

I choose my words carefully. When describing to leadership teams the statistically significant difference in rates of promotion, I say,We promote women and nonbinary people more slowly,” rather than,Women and nonbinary people get promoted” orearn promotions.” Because, after all, it is managers who are doing the promoting at an unfair rate, rather than minoritized people who are failing to earn the promotions as quickly.

The same applies for other inequities you find:We compensate people of color 10 percent less than white people,” rather than,They earn 10 percent less”;We don’t retain people with disabilities,” rather than,They don’t stay.” Ultimately, the onus is on leadership to both correct these issues as they’re surfaced and continue to track and correct these issues going forward.

To prevent wage inequity, leaders should approach every compensation decision with the question,What if this number gets shared publicly with the rest of the team?” Don’t hedge bets on a new hire by lowering their starting salary. If you fear that a new hire won’t work out or be as effective as another employee, develop better performance-improvement or termination processes. Incentivize your management peers and HR to evaluate compensation fairness and correct gaps. And, most importantly, share how much you make, and how much you’ve seen offered for equivalent jobs, with your peersespecially those who are members of minoritized groups in your industry.

This piece is a follow-up toTracking compensation and promotion inequity” andDealing with your wage gap,” both originally published on larahogan.me.

About the author

Lara Hogan is a coach and trainer for managers and emerging leaders across the tech industry. Previously, she was engineering director at Etsy and VP of engineering at Kickstarter.

@lara_hogan

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