My guest this week, David Buckmaster, has a ton of experience working for corporate compensation teams. Needless to say, he has some very knowledgeable and compelling ideas about everything that goes into employee compensation and what we can do to achieve fair pay. He’s a prolific writer and is the author of the new book “Fair Pay: How to Get a Raise, Close the Wage Gap, and Build Stronger Businesses.” In it, he takes on the crisis of income inequality, the problems with our current compensation models, as well as demystifying pay practices.
In this episode, David breaks down those concepts and provides actionable items for HR to take a more active role in fighting for equity. Listen in to hear David’s solutions on providing employees with full transparency, the role that negotiation has in fair pay and HR’s role in closing the racial and gender pay gaps once and for all.
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How Do We Define Fair Pay?
What makes it so difficult to have productive conversations about the concept of fair pay is that the idea of compensation has different meanings for corporate managers than it does for restaurant workers. The former may be seeking compensation for work that’s relative to their peers, while the latter may be mostly concerned about simply earning a living wage. When we ask for people to be paid fairly, it can often feel like we’re shouting past each other.
What can help is defining these terms in clear language so that everyone is on the same page. “I try to stay away from saying ‘fair’ means X amount of dollars,” David explains. “There’s the absolute value of fair pay, and then there’s relative values. If you’re low on the wage scale, the absolute number matters a lot because you can’t pay your bills. When you get a few more clicks up there, the relative value starts to matter more.” He adds that the common thread in both concepts is the idea that fair pay is non-negotiable and that it’s also honest and fairly evaluated across the organization.
The P’s of Fair Pay
We can feel surprised when we find out that the total compensation package for executives includes some perks that we didn’t know existed. The problem here is that we don’t talk about this enough. When we discover that these perks exist, it can feel unfair and random. David discusses the existence of these compensation packages and what we can learn from them across all levels of the organization. He uses what he calls the Fair Pay Mix P’s. They are:
- Priority. David says that compensation committees prioritize executives because it legally has to stay on the agenda.
- Permission. While some of us may fear asking for benefits, executives find themselves in a position to just ask for it.
- Process. “One of the things I think we can learn from the executive pay ecosystem is [that] this stuff is fully transparent,” David says. There’s a process in place where organizations must report on these perks.
- Power. Executives have the proximity to power that allows them to force the conversation about pay. He says that this is why executive pay can keep growing while compensation remains stagnant at the lower parts of the organization.
Having knowledge about why and how these aspects of compensation are run can help HR leaders understand how the conversation about equal pay — to everyone, at all levels — can be kept on the company agenda.
Closing the Wage Gap
When I think of ways that the wage gap could be fixed, my gut feeling is that it’s simple: Just raise pay. What I’m learning from the conversation with David is that the clearest and easiest system may not be the right solution. We have to consider the types of jobs and the role that a specific person plays in the organization. Plus we have systemic issues like racism and sexism that are deeply embedded in the way that everything is run. So maybe simply saying “pay everyone more” isn’t the answer.
“I think HR needs to take a much more integrated approach to solving the issue,” David says. He adds that the compensation team alone doesn’t have the leverage to handle who is being hired and promoted, as well as eliminating all systemic biases. Working to close the wage gap and achieve fair pay falls partially on HR leaders, too. “Oftentimes, HR leaders are kind of afraid to go into comp because what we hear is, ‘Well, I’m not a math person. I can’t touch this,’” he says. “I do really hope that changes, because if you really want to be seen as a strategic business partner, you’ve got to know how to manage your payroll and your budget — and to preempt some of those challenges that your business leaders are going to see.”
[bctt tweet=”‘I do not believe that fixing pay is a hopeless endeavor. I think we’re on the path to doing it. I think the best companies of the future will start taking this seriously.’ ~ David Buckmaster (@dbuckmstr). Hear more on Punk Rock HR!” via=”no”]