Driver’s seat in salary capacity

Thanh Nguyen is co-founder and CEO of OpenCompa compensation information company for high-growth companies.

Pay equality is the cornerstone of the modern business. Good business, top talent, state law and increasingly loud segments of the world demand it. It’s up to CEOs – and those who support them – to advocate for this change. This article examines five fact-based steps to make wage equality an institutionalized business practice.

Why CEOs need to break the status quo?

In the US, women make 83 cents for every dollar earned by men – a pay gap that has existed since 2006† In these 16 years, companies have been spewing copious amounts of lip service to narrow the gap.

A recent questionnaire of 500 startup executives by my company, OpenComp, reveals why wage gaps still exist. While 78% of CEOs say pay equality is important and 74% say it is important for hiring and retention, the majority (61%) of their teams lack the resources to address pay equality.

In no other area should CEOs be measured by good intentions — the go-to measure of the advancement of wage earners over the past decade.

How startup CEOs can create pay equality

To achieve pay equality, business leaders can empower their companies, employers and job seekers in five steps.

1. Set up, publish and share payment ranges.

A growing number of states and cities have passed legislation oblige companies to offer wage scales. As legislation grows, it becomes both policy and expectation. It is not enough to ensure that your numbers are publicly available. The numbers should come from a reliable compensation that lets employees know that you set their wages fairly and scientifically.

2. Publish criteria for the extras.

Job seekers and employees should have firm expectations regarding bonuses, promotions, career advancement and benefits.

When we make offers, we share our pay philosophy and then discuss how we’ve used data, technology and science to determine the salary range of the position. Finally, we talk about a candidate’s potential career path and what the pay could look like with future promotions.

3. Shut up about salary history.

Researchers at Boston University recently found that: salary history prohibition laws helped female and black candidates achieve 8% and 13% higher earnings, respectively. More than 20 states have enacted some sort of ban ban employers asking candidates about their salary history.

Even if your jurisdiction isn’t subject to a salary history ban, it’s a good technique for narrowing pay gaps. If you voluntarily adopt the policy, ensure that your executive team applies the policy throughout your organization.

4. Closed negotiation.

The Wall Street Journal a survey flagged last fall, women were more likely to negotiate their earnings than men. The survey also found that employers were twice as likely to reject requests from women as those from men.

When you use pay scales and accurate data, you can share your pay philosophy and salary range without asking applicants to trade for a better deal. By eliminating negotiation, you can reinforce the message that candidates’ compensation is based on science, not whim.

5. Schedule payroll audits and budget to resolve discrepancies.

A pay check is the most recommended practice for pay equality. But it’s not enough to look at your organization and just compare what women are making and what men are making.

The search should compare pay for specific roles and attributes. Do the majority of women only fill junior positions? Do your black sales associates earn 70 cents per dollar made by white salespeople? Be sure to set aside money to settle wage differences right away.

End gender pay gaps

It’s ridiculous that in 2022 there are still huge pay gaps for workers, families and communities. But CEOs have the power to change that. According to our research, lack of leadership buy-in was one of the top three barriers to paying equity progress. Stop giving empty lip service and prove it matters through actions. Business Council is the leading growth and networking organization for entrepreneurs and leaders. Am I eligible?

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