When Chicago-based software company Tandem conducted an internal salary audit before developing and publicly releasing salary ranges for all of its roles in March of this year, it found something surprising.
The audit found a 14% gender pay gap when analyzing the salaries of people in similar roles, also known as the Adjusted Pay Gap. In this case, however, it is actually women who are better paid to perform roles similar to those of their male counterparts, while historical gender pay differentials tend to show the opposite.
But because four employees left the company during the period covered by the audited data, they were removed from the analysis. After that, the gender pay gap specific to Tandem’s role then became negligible.
The salary for the positions that were cut was set before Tandem established and announced its salary ranges, which include a lower and higher level of pay for each position in the company, emphasizing that the salary ranges are one way effective equalization of wages in a company, regardless of gender. New and internal candidates for promotion can negotiate within this stage, rather than having their new salaries pegged to what they were previously earning, allowing the pay differentials to continue.
Tandem’s audit did not cover any unadjusted pay gap, which is the difference between what men and women are paid in general, in the company, which may highlight the fact that it doesn’t There are not enough women in leadership positions, but he plans to include this in his next audit in 2022.
Tandem is one step ahead of the payroll transparency laws coming into force in the United States, which require disclosure on request as a minimum. Tandem Founder and CEO JC Grubbs hopes the move will spark a broader trend for companies to strengthen fairness and inclusiveness at all levels.
When you’re Google or Facebook, you probably have thousands of different job titles, so it’s harder to put a frame around them to create clearly defined salary brackets. But that doesn’t exempt large corporations from the responsibility of building equity capital – they just need more resources to do it.
JC Grubbs, Founder and CEO of Tandem
Grubbs recognizes that calculating and sharing company-wide salary scales is easier in a small organization – Tandem only has 33 employees, albeit with some major clients such as IBM, Verizon and the department. American Defense. But he also believes that big companies should invest to lead by example.
“Pay transparency is very rare in our industry. Small businesses can be a bit more tolerant of the perceived risk that comes with transparency, large businesses seem to struggle with this, especially state-owned companies, ”said Grubbs.
“When you’re Google or Facebook, you probably have thousands of different job titles, so it’s harder to frame them to create clearly defined salary brackets. But that doesn’t exempt big companies from the responsibility of creating equity capital – they just need more resources to do it, ”he added.
Nuts and bolts
Grubbs began working on the changes last year in response to employee demand for pay transparency. Using Google Sheets, they started with five job levels, but then realized it wasn’t wide enough, so they went down to seven. They split the entry level positions. in two levels and have added a new “main” level at the top.
Tandem’s management team performed a skills-based assessment of each team member, auditing each person’s career progression to group them into cohorts that can perform the same level of work. The team then looked at the market as a whole, noting the salary demands they were receiving from new applicants.
Tandem worked with the network of external companies he partnered with to share best practices, to make sure they were benchmarking appropriately for their industry sector. They also purchased additional wage market data from a specialist supplier. These external data corresponded to Tandem salaries.
Grubbs said they intentionally left wiggle room within each salary bracket, giving managers discretion to keep the salaries of newly promoted staff low if their promotion was speculative, and then offer performance-based increases where necessary.
He added that there is art and science to the process, both of which are needed “to come up with something that feels right.”
Like Tandem, the video calling platform Whereby has also manually calculated its salary formulas, publicly publishing its compensation methodology and announcing the salaries of its vacant positions. Company COO Jessica Hayes then posted a three-part blogging series detailing a spreadsheet approach similar to Tandem’s, incorporating market data and career paths. Hayes also included geography and recommended that companies establish how competitive they want to be.
Tandem and Whereby’s spreadsheet approach is how 57% of organizations continue to plan their compensation strategies, according to Global Human Capital Benchmarking data from Deloitte. The report attributed this to “misconceptions about the specifics of their needs and a lack of knowledge about new market offerings.” He recommended that companies use “compensation management solutions… to enable accurate, efficient and fair compensation of the workforce”.
Hayes maintains his decision to work manually. “At the moment, to my knowledge, there is no technology that makes it easier for startups. Compensation methodologies and frameworks feature a host of legacy, bureaucratic and ‘old-fashioned’ tools, ”she said.
Grubbs also raised concerns about potential AI biases in compensation tools and said it is up to humans to make decisions based on their organization and to recognize and eliminate biases in the workplace. process.
“No two companies are alike, no geographies are alike, so a tool around wages should only be one facet of decision making,” said Grubbs.
When companies don’t specify how they measure and pay their employees, that’s when a bias can seep into the appraisal process, Grubbs believes, adding that equal pay and Equality of measurement are inextricably linked, which is the exact role that salary brackets must play. to eliminate pay gaps of any kind.
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