Talent optimization and the agile leader

How leaders can ensure equal pay for employees

April 26, 2019
6 minute read
Last updated May 2, 2019

If you’re a hiring manager, salary discussions are a necessary part of your role. Whether you’re hiring new team members, discussing promotions, or granting raises, compensation is an important matter to discuss to make sure team members feel satisfied and valued in their roles.

It’s also important to regularly discuss your team members’ salaries due to the pervasiveness of gender pay inequality. On average, women in the United States earn $0.80 for every dollar their male counterparts earn for doing the same work. There are a variety of different reasons and factors that impact this inequality. In fact, a recent study by Owl Labs found that, although working remotely generally increases earnings for both men and women, men who work remotely are still 25% more likely to earn higher salaries than women. 

In this post, we’ll discuss actionable ways to address pay inequality on your team, as well as ways you can prevent pay inequality in the first place.

5 ways leaders can ensure equal pay on their team

As a team manager working with direct reports every day, you play a crucial role in recognizing and rectifying pay gaps on your team. Here are five ways you can ensure equal pay on your team:

1. Prevent salary disparities before making new hires.

Hiring for new team members can create salary inequality before their first day on the job, but there are several steps you can take to make sure your hiring and recruiting process is fair to new hires and the rest of your existing team members.

First, disclose the salary range for the position on the job listing. Set this range based on the salaries of your current team members so new hires aren’t paid significantly more or less than their peers. This will also help prospective applicants decide if the opening is right for them based on their salary goals.

Then, when you’re interviewing candidates for the position, be sure to avoid questions about their current or previous salary. In many states, the law forbids you from doing so, but even if it’s not against the law where you work, asking that question in job interviews can perpetuate salary inequality.

Instead, by setting a salary range and disclosing it from the beginning, you and the candidate will be able to negotiate compensation that’s fair to your existing team members while still taking into consideration the candidate’s experience.

How leaders can ensure equal pay for employees The Predictive Index

2. Review employee compensation on a regular basis.

Build a compensation review cycle to conduct with your HR and finance teams, and then with your team members, at least once per year.

Work with your partners in finance and HR to determine change in the cost of living in your location, as well as competitive salary ranges for the positions of your team members. It’s likely that changes to either of those numbers will call for an annual salary bump. Tools like the Glassdoor salary calculator and PayScale can help you benchmark what fair compensation looks like for a given role.

By setting aside intentional time to discuss current and desired salary with your employees, they’ll be able to come to the negotiation prepared to advocate for themselves, and you’ll be prepared for the conversation knowing how much flexibility you have in your budget to ensure pay equality amongst your team members.

3. Separate compensation reviews from performance reviews.

The compensation review schedule you set up shouldn’t coincide with performance reviews you’re already running. This distinction will help ensure equal pay among your employees by helping standardize when and why they’re receiving a bump in pay.

Performance reviews should be just that: discussions of past and present performance in a role, career goals, and advancement. While performance reviews can set the stage for a promotion, which often leads to an increase in compensation, you’ll better serve your employees by decoupling performance and compensation so each conversation is thorough and complete.

With this system in place, all employees will be able to negotiate salary during compensation review periods and when negotiating a salary increase after a promotion or role change, leaving less room for pay inequality when employees aren’t eligible for raises or unplanned bonuses on a more frequent basis.

With this system, everyone on your team will have the same yearly opportunity to discuss compensation, as well as the motivation to achieve great results to discuss in performance reviews they can use as reasons for promotion.

4. Disclose salary ranges for different positions and levels.

Buffer sets an extreme example in transparency about how they pay their employees. Buffer created a formula for calculating salary that they share internally and externally to model what salary transparency looks like at Buffer. This kind of transparency may help in diminishing pay gaps.

But even if your HR and finance teams aren’t comfortable disclosing details like a salary formula, you can still work with them to set salary ranges for different positions and levels at your company—and stick to them.

For example, depending on your department and what your team looks like, you could set salary ranges based on levels (associate, senior associate, manager, senior manager, director, VP, etc.) or based on specific positions (SDR/BDR, account manager, account executive, sales manager, sales director, VP of sales, etc.). These ranges could span $10K to $20K in compensation to create the flexibility to award raises during compensation conversations and so your employees are empowered to know where they sit within their range.

You could also tell an employee that their current compensation is at 50% of their salary range, but that the raise you awarded them during their compensation review brings them to 75% of their salary range. This gives them an idea of where they stand for future negotiations.

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5. Advocate for your people.

If you’re a manager and leader who’s eager to lessen pay inequality on your team, you need to be willing to advocate for your team members to make that happen. If you know a team member is underpaid, tell them to do some salary research so they can ask for a suitable compensation bump during your next review conversation. In this way, you’ll push them to learn more about their value to the organization based on their experience and results, but you’ll still be starting the conversation and letting them know that they can—and should—discuss compensation with you.

Read the results of the full report on equal pay here.

Sophia is the Content Marketing Manager at Owl Labs, a video conferencing company and creator of the Meeting Owl, a 360° smart video conferencing camera. She lives in Boston and loves doing yoga and baking in her free time, and you can follow her on Twitter.