Kent Plunkett, CEO of Salary.com, on Tackling Pay Equity: What You Need to Know

Pay equity is pay for comparable work that's internally equitable, externally competitive, and transparently communicated. And that's the foundation of the Plunkett pay equity framework. And if you think it through on those three key fronts, you'll be able to understand how you can take a pay equity definition like that, lay it on top of basic market pricing work that you do for your company, already figuring out how much you should pay for different jobs, and take your whole compensation function up a level to fully achieve pay equity.

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Or wherever you love to listen. Let's make every conversation a winning negotiation. Kent, thanks for joining us today.

Thanks for having me on the show, Kwame.

It is our pleasure, my friend. So how would you get us started? By telling us a little bit about yourself and what you do.

Well, first of all, I want to shout out to you and to your audience for putting the time and energy into worthwhile topics and making sure that you're sharing the message with the world that we and they can all do better. So thank you and hats off to you for the work.

Thank you. I appreciate that. That means a lot. Great.

Yeah. I've been running salary.com now for 25 years, which is obviously a long run. We built the business up from basically zero back in 1999 to pretty substantial company with over 1500 employees today. And we've become one of the leaders in providing benchmark market data so that people can price their jobs and figure out how much they should pay people. And also we have and we're very famous for our Salary.com Salary wizard data, which is free to either small businesses that don't want to pay for compensation data or for individuals looking to check.

How am I being paid?

Am I being paid fairly to market? And that goes out to almost 6 million people a month access our free website to get a view. And I think that Sara.com importantly has helped set the table for the conversation around pay transparency. And we have a lot of views on what pay transparency is. It is not publishing everyone's pay for the world to know. I think we've helped set the conversation, the expectation that companies need to have the information in their hands to be able to explain to people how and why they are paid, what they are. And that is in my view, being ready to have that conversation and sharing that information. That is the essence of pay transparency in today's world and it's appropriate. And you'll end up, if you do embrace some levels of pay transparency, you will benefit by more engagement and earning more trust with your people. And it frankly holds your business to a more disciplined and process bound standard which is actually good for having control over what is usually your largest expense item on your P and L. So it works for the employers, it works for the employees.

And you know, in, in a small.

Way, us taking a role in promoting that vision has helped make the world.

A better place to work and live in.

Incredible. And Kent, I feel like probably about 90% of the people who have listened to this show have been to salary.com at one point or another. And it's been an incredible resource for so many people for such a long time and it's such trusted resource. And one of the things that is top of mind for you and the company as a whole is pay equity. And it is something that is at sometimes controversial and many times not well understood. And can you just give us an overview of what pay equity is and why it's so important to you and salary.com sure.

And since you started here, I'm going to start actually with our free website and talk very little about that. Then I'll pivot into answering your your question more directly. The first thing that people don't understand about our website is that by the nature of the math, at least half and as many as two thirds of the people that look up their data number as to how much they should earn on salary.com actually go back to their desk happier and more engaged. Like I'm paid fairly because by the nature of publishing market comparables, the median for the market is going to say that 50 to 70% of the people.

Who look at a number there are.

Going to say wow, I'm in the range. This is good. But they're not going to go tell their boss that they're paid fairly and they don't have to pay them more.

And nor should they. But then there's also those people that feel they're underpaid. And our view has always been that it is far better for that employee to walk in to HR and put.

A piece of paper in front of them and say, hey, is this my job? Is this my job description?

Is this how much I should be getting paid? And this is how much I'm getting paid. Can we have a conversation? That conversation with your boss is far more productive and happier for everyone than.

That employee having the conversation with the market. And so that's that for us is.

Really the first step towards pay equity, is actually leveling the playing field with information so that you can get that conversation happen. It doesn't mean that a company isn't going to say, look, our pay philosophy.

Is to pay at the 25th percentile.

To market and we're okay to pay under market because we have really great training and we hire a lot of people. When you get better, if you get a higher paying job, feel free to move on. Just like in the NFL, if you're in management and you get a higher management level job at another team, you're free to go.

And that's okay.

There are companies that do that and then there's other companies that pay at market that's probably 90% of the companies. And then there's a small cadre of companies like a Netflix then writes books about it, makes a big deal because they do something that most companies can't afford to do, which is they pay in the top 10 to 20% for every job. And they, you know, so they do it differently because they can. Most companies just pay competitively so they can hire and they can retain and they try not to overpay because that would hurt profits too much. And when you hurt profits, eventually the employees pay a price for that with.

Layoffs and lost jobs and things like that.

So there's a balance and like most.

Things, it works out.

So we think our introducing the salary.com free website back in 2000 was really a important moment in the development and really the spawned the whole pay transparency movement and provided really accurate data. And our data has been proven accurate time after time.

And so as you move into pay equity, one of the table stakes for pay equity is that your organization have a commitment to best practices and compensation where you have a pay philosophy. You pay to market. If that's your philosophy and you're doing some work with data to make sure that you understand how much you should Pay people for the jobs they're doing. And if you don't have even your job descriptions in order, then pay equity is not something you're ready to go after. So you got to block and tackle and do the basic best practices around compensation management before you can tackle pay equity in a big and sustained way.

This is great because really what you've done is you have brought some, a high degree of accuracy and clarity to these conversations. And I want to go back to what you said at the beginning, where when people go to the website, two thirds of the people leave happier because they recognize that they're being paid fairly, that their salary band is appropriately labeled for what it is that they're bringing in. And I want to focus in on the word happy because there is a difference between perception and reality. We have to recognize that these emotions are very important in these conversations and there's a difference between facts and feelings. But they feel the same in the moment moments. And then that can cloud the conversations we have subsequently. So for the folks who are at home, who are listening, who they might want to be change makers within their organization, and they might want to be advocates for pay equity, or they might be trying to advocate for themselves in order to achieve personal pay equity. You have to be led by the data because sometimes our emotions will lead us astray and you've given them the tool that they need to do it and you've made it free for everybody. So I think that is just an incredible contribution to this process.

Thank you.

And one of the things I want.

To caution people about is they remember.

When you walk in with a piece.

Of paper with a number on it, you're forcing your employer and your manager to be accountable to you. But it may not be that you've pulled the right number, but they have to explain it to you, and that's okay. And in the past, people used to walk in without a number and without any data, and they were at the mercy of whatever explanation they received. So I do want people to be careful when they do go in to talk to their manager at hr. Not to say, well, you have to pay me this because Sara.com said so.

Sara.com the way I look, interpret it.

This is what it would recommend is the market pay for me and can.

You explain to me why I'm paid the way I'm paid by you? And make them talk. And then the conversation has a chance to go to a really positive place. And that's. I just want to be. I want people to be careful about Just waving a piece of paper, slamming it down the table and saying, I'm angry. I've had enough.

It's not a.

There's an old movie called Network where, you know, the anchor went nuts on air and he was just like, I've had enough. Can't take it anymore. That's not the conversation we want to have. The conversation is, can you explain to me how and why I'm paid as I am? And so with that as a setting, then you get into pay equity. Right? And so one of the things that people struggle with is how do you define pay equity? Like, what is it like?

And so we did some work and we came up with something. I mean, I actually led an effort with a bunch of people internally and did a bunch of thinking, and we came up with a framework for pay equity called the Plunkett Pay Equity Framework. And we intentionally didn't name it after the company because it's. We've put it out in the public domain for use by anybody. Because the point is, is to get the conversation, to have a solid foundation, not necessarily to promote sour.com per se, but pay equity is pay for comparable.

Work that is internally equitable, externally competitive, and transparently communicated. And there's a bunch to unpack out of that because we touch on a lot of themes. I think most people would do a.

Much simpler definition, say, pay for comparable.

Work that's internally equitable.

And they stop there.

That has some elegance to it and simplicity. And it makes sense, you know, if people are doing the same job, if a groundskeeper at a college is in.

The employment pool and they have that job and that job description, and there's a janitor in the science building and they have that job and that job description, those might end up being considered comparable jobs and comparable work. And then you would group those two. So that's.

That makes a lot of sense. Comparable work and then internally equitable, then you're going to want to make sure they're equitable to each other. We kind of push the definition a little bit because we also believe you have to be paying competitively to the external markets. And there's two reasons for that.

One is fundamental fairness.

If you've got someone who's working for your company and you expect them to handle all the switching costs and the risks of switching jobs to get paid an extra $1 an hour more down the street, is that fair? Or are you trapping someone with their paycheck? And let's face it, it's capitalism, and there's a Lot of incentives, especially in the 80s after Jack Welch came along and made everybody grind out an extra 0.1% of profit every quarter that you hammer pay. And so there's a lot of powerful people in positions of power relative to their workers who are driven by the budget. And they just say, I have to give profit to the company, we have to give profit to the shareholders. I have no choice, I have to exercise my power to keep your pay down. Okay, that's out there, that's a thing. But if you're an employee and you're paid at your company less than the market, you may know that better than you know the pay of other people at your company. So you may not be able to get to a view, am I paid internally equitably. But I definitely have a view as to whether how I'm paid relative to opportunities that I have down the street or at competitors. So if you're going to do pay equity work and you're not going to be externally competitive in your pay, then you're missing the opportunity to engage and build trust with your employees. Because your employees view of whether your company pays equitably is if you're going to make me change jobs in order to make more money someplace else. So we think that externally competitive benchmarking is important part of achieving pay equity. It's not just internally equitable, it's also competitive to market. And then the last leg of the stool is transparently communicated pay. And I think we've discussed a little bit about this already, is that the company has to be in a position to bring data to the table and explain to each employee why they're paid, how they're paid. There is a nuance in this definition, which is that by the law, and it's appropriate, you can have differences. And it's called an explainable difference. It can be performance based. Let's say a sales rep sells more product than the next one and therefore they make more money. That's explainable. So when you do your analysis, you can have outliers. And then the work in pay equity is explaining the outliers like, is there a valid reason for this person to make more than the bunch? Is there a valid reason this person makes a lot less than the other folks? And you go after the outliers when you do a pay equity analysis. So summarizing back up, pay equity is pay for comparable work that's internally equitable, externally competitive, and transparently communicated. And that's the foundation of the Plunkett pay equity framework. And if you think it through on those three key fronts, you'll be able to understand how you can take a pay equity definition like that, lay it on top of basic market pricing work that you do for your company, already figuring out how much you should pay for different jobs and take your whole compensation function up a level to fully achieve pay equity.

Hello my friends. Before we get back to today's episode, I want to ask you a question. Have you ever wondered how to elevate your team's negotiation game and how you can help the folks on your team have better, difficult conversations? At the American Negotiation Institute, we offer transformative keynotes and workshops tailored to empower professionals with top tier negotiation and conflict resolution skills. Whether it's a keynote for your next event or hands on training for your team, we've got you covered. Don't just negotiate. Master the art with the American Negotiation Institute. Click the link in the description to find out more. Elevate, negotiate and succeed. What I really love about this is not just the thoughtfulness that went into it and the data, but also the simplicity. One of my favorite quotes from Da Vinci is simplicity is the ultimate sophistication. It takes a very long time to get something that simple right, and I think that makes it more likely for it to be sticky. Within companies. And a lot of times when we talk about pay equity, the reason why these conversations come up is because of some kind of initiative where they recognize there's a challenge as it might relate to race, gender or discrimination, as it relates to age, whatever it happens to be. And so usually people don't come to these discussions about pay equity because everybody's happy and feeling as though they're treated the same right? Or fairly. And so that makes it really difficult because there's an additional layer of sensitivity that goes into these conversations that adds a layer of nuance. So for people who are within companies and they recognize that there might be a pay equity issue, what advice do you have for them as they start to carry those conversations?

So I think if you're able to be in the communication discussion with probably your HR rep more than your manager, most managers are not equipped today to really handle a pay equity discussion. One of the keys is to try to check your emotions at the door and start by asking to have a conversation about the data and say, look, I believe there's some inequities over here. I'm not trying to cause problems, but I think there's a problem that we should solve and how can we get after this and how can we evaluate this? Unfortunately, a lot of times that breaks down into standoffs. Right. And the standoffs sometimes lead to litigation, which is an unfortunate outcome. And there's been a number of significant discrimination lawsuits with 50 to $200 million paydays. However, the truth of it is is that the paydays, even at $200 million by Google. So Google, for example, had a gender gap wage discrimination lawsuit, settled for $118 million, which sounds like a lot of money, but it only ended up being 3 to $5,000 on average per female that was in the class. So how much of a life changer?

It's not a life changer.

Right. So I think it's dangerous water for the company.

And you know, you have to be.

Really careful as an employee how you push that agenda. I think a cleaner way to do it is not to make a discreet.

Accusation, but to just say, what's the company doing about pay equity?

Have you seen this stuff over here?

The things we can be doing?

And I think it would help build trust. And there is some water cooler chatter.

In the hallways that, you know, different groups feel uninformed and maybe an increase in communication about how and why people.

Are paid as they are and how the company feels about pay equity and.

What you're doing about it might be helpful to increase the engagement of those people.

I think that's a far more effective.

Way to walk into the conversation. I don't see so far a significant track record where somebody walks in and they say, we have a problem, Houston.

And they get a check for $2 million.

I have not seen that. I frankly would say we don't see.

It that much on sexual harassment claims and we probably should see more of it.

I think the lawyers are really good at fighting these things off and managing them, and I think that's really unfortunate.

But I think how we can make change is by continuing to.

They continue to press on HR and.

Ask the questions and ask for explanations.

And ask for visibility and transparency. And asking for information is usually viewed as pretty fair.

I like this. This is very eye opening too, because especially when you think about the outcome of those settlements. Yes, the Google got a nice little spanking, but the dividends that were paid were not very significant or life changing.

The company took, you know, billions and billions of dollars worth of hit to its brand value and to its recruiting brand. Both suffered.

Right.

They probably had some turnover issues. They probably had churn. The cost to Google were much, much higher than the settlement amount.

Right.

But the reward for those who were impacted, was not there. So it still has to be a movement, not a stick up.

Yeah, this might be beyond what's publicly available. Did the lawsuit have any significant change in terms of structure and pay equity going forward in Google?

They said they were going to do more and get it right. I don't know what, I don't know what actually happened. Yeah, visibility on what, what they really did. But you know, I, I would assume that they made changes as they said they were going to and that they've lived by that.

No, that's good.

That's good because certainly when the next person raises it and says, I'm seeing it again, because here's the thing about pay equity. It's continuous, so you can get after it once and get it, get it right at one time. But the ebbs and flows of people working in a company and how much they're paid, it's always changing. And so an analysis done on one date might be very different six months later for the same company because promotions happen, people leave, people get hired, and all of a sudden the data changes. And the data can change in just one employee cluster. One of the key things about a pay equity analysis is that you're defining something called similarly situated groups, SSGs. Those are jobs like your groundskeeper and your janitor job in the example, that would be clustered together into single cluster. And you're going to try to cluster all of your jobs. And when you get to US government reporting on EEOC Form 1, which currently applies to basically all federal contractors, and now with the California pay equity laws that have come in, it's going to apply much more broadly to almost every national company that does business in California is going to be impacted. They're going to have to file. We're talking about 10 or 12 clusters, depending upon the report in the state. Illinois has got a law, Massachusetts is passing one, there's a couple others on the books. But a large company might have 75 clusters or 60 clusters. So any one cluster of similar jobs, the government's only asking for 10 to 12 or the government's, you're potentially going have to file in California, in Illinois, in Massachusetts. For the feds, it's going to be a little bit of a patchwork for a while until, until the feds take control. But I don't think the Democrats have it in them to do it now.

And you know, certainly the Republicans don't.

Have it in them at all. So we'll see how active the feds are. But the states are going to win that states are going to win that fight because the urban states are going to push this stuff through as they should. But at the end of the day, you can have a cluster of 1/60 of your company jobs. That cluster can go off and be out of whack. And so if you're not studying and constantly updating and managing those clusters and the data analytics comes out of that cluster, you could easily end up with a pay equity problem in a couple of clusters. You may not have one broad based across the company, but that's one of the steps in our framework is once you've committed to doing pay equity analysis, you basically have to be running it as a continuous business process and update it all the time. And that's a real process. Yeah.

And this, this is an example of good things often do not happen by accident. This is going to take a lot, a lot, a lot of work, a lot of research and continuous conversations. And I think that for the folks who are within these organizations who want to create that change, it might seem quite arduous to have to do this. But the work of promoting equity within companies is inescapably difficult and it takes constant communication. And so when we think about the change makers who are trying to, to push this through and they're trying to create the positive change, what advice do you have for them to continue to be persistent in their advocacy efforts while at the same time managing to stay balanced and getting work done.

So you know, we've got six steps that a company should follow to do to follow the Plunkett pay equity framework and put it in at your company. And we're going to provide materials to viewers the show through the website at the end. So you don't have to write all this down if you don't want to.

But step one is to get a mandate for pay equity. So you start off, you need a senior leadership mandate to achieve pay equity. Second step would be to have a process to. You have to get your job descriptions in order and then be able to group similar jobs, figure out comparable work, figure out then an accountant too and a sales operations analyst are the same, are similar, are actually similar jobs even though they're in different job families. That builds pretty easily on top of traditional compensation work where you're benchmarking jobs based upon job description, not job title, and then model internal equity. That's just the math. There's plenty of tools for that. It's not that hard. You look at the outliers, you study the outliers to see Is it really an outlier or is an explainable difference? And then you take all of those gaps and then you add in a benchmarking against external equity and then you've got your answers and then you can remediate our experience of remediation. And this is something people can use to sell this to upper management. When you're trying to get that incredibly important step done, which is to mandate pay equity, is that about 20% of your annual raise budget at a company? Let's say the average is 3%. So 0.6% of payroll is actually usually.

Enough to close the gaps.

The gaps you get are not, oh My God, it's 20% of my payroll.

Because any company of size is already.

Doing market pricing and so they're already using an outside third party regulated data set to organize and justify their data. And so it is probably likely that it's like 5%, 3% of their workforce is in a protected class that's discriminated against.

And the cost to bring them into range is, you know, it's not usually more than 3 to $8,000. Right.

It aggregates across the whole economy to.

A very significant wage gender gap.

It can be 21% because one of the problems is that compounds right over the years. So if you have a gap and it's 8% this year, next year it's 9%, the next year is 10.

And over 20 years you get a really big gap.

You also aren't trying to solve for the fact that a certain demographic group didn't have access to the right educational resources or they don't have the same years of experience because they took time.

Off from work for this or that. As my partner and co author of the book Get Pay, right. Heather Bussing says, hey Kent, it's really simple.

Women have babies, men don't. And so you can't fix that structural fact. You can have policies around education, provide childcare.

Childcare is a very significant benefit that helps level the playing field. But it's hard when you are trying to say, are you two similar?

And they both have eight years of experience, even though one person is, let's say female, had a couple of kids and has actually been working for 20 years, 20 years out of college. The other person is male, white, 10 years out of college.

They might actually benchmark to the same.

That's not going to show up in the analysis, but it does show up in the high level stats for the gender wage gap.

And it's legit.

We view about a third of the.

Wage Gender gap is actually structural and.

Demographic based and related to causes that.

Are not the fault of the company and of the manager and the company.

In the current person.

And about two thirds is completely curable.

By doing more analytics and more math.

So first we're going after the math.

And hopefully the policymakers and the people that design benefits and competitive benefits will push some of the educational credits and the child care solutions to help solve that.

So I would go after the Plunkett pay equity framework. I'd go after the math first and get the mandate and then I would do the piece. Step five is to communicate transparently. We've talked plenty about that, I think.

But that takes training.

You have to train your managers to be comfortable. They have to role play it, they have to understand, you have to be, you have to give them some data. And then we talked about updating continuously. That's step six. So it takes a bit to be ready to do pay equity and analytics. And you have to decide with your leadership team are you just going to do what you need to do the government filings and call it a day or you're going to make pay equity part of your pay philosophy and you're.

Going to drive it through as a process.

And if you're going to drive it through as a process, you're probably talking about one or two full time heads, you know, in a larger company to run that process all the time. About half the time we see that sitting in the compensation team as comp team members and with the tools where they are, you know, it will become more automatic over time. And I think we're going to see that it's, it's going to be more and more achievable over the next 10 to 15 years. So if you're in senior leadership and you want to sell this in, you're trying to drive change to your company. Adopt a framework so you can show somebody a total solution. Come look at the Plunkett pay equity framework or we haven't really seen any of the frameworks actually. So if you find one, send it to me. But pick your approach and go say here's how we get after it and here's how we can solve it. And to get started, we probably have to do a little more work on our regular compensation processes and then we can roll into this. And at the outcome of this, we're going to end up with higher employee engagement, more ability to attract new candidates, more ability to retain the people we have, more trust and commitment by the people in the seat. To actually perform well. And the studies have shown that when you have a more engaged employee base. Korn Ferry did a big study on this. The results were compelling. Over a decades long study, companies that had engaged employee bases that trusted their company, they grew eight times faster, eight times larger than the companies that didn't. Because people power companies, it's people power, right? And so if you can take care of your power source, you're going to.

Generate more power and more, more action and more, more positive outcomes.

Incredible. Kent, I really appreciate you coming on today to share this framework and how we can work to achieve pay equity within our organizations and listeners. We have links to all of the resources that Kent shared throughout this interview in the description. And Kent, before you go, if there is one thing that you would suggest people do to try to move their company toward a more equitable future as it relates to pay equity, what would be that one action that they can take today to make that happen?

If you are negotiating for something with your boss and they make you an offer, always, always, always ask for one more thing. An extra week's vacation, a couple thousand dollars more in base pay, a little bit higher bonus payout target, you probably can't get three. But in my experience, the way companies run, they always have a little bit in their pocket. And if they don't, if they've already offered it all to you, they will come back and they will tell you that and then you can accept it and be happy. Because as there's a saying in golf, which I don't play but I like, the saying is that if you leave the putt short, it'll never go in the hole. So never up, never in. So make sure when you're negotiating for sour, you putt it a little bit past the hole and if it happens to go in the hole and not go farther, you're done. And if you get a little more, good on you. But I think there are studies that part of the behaviors of individuals in not asking for more then creates an expectation by the bosses that they're not going to get pushed as hard. And that ends up in a negotiation that settles at a lower number than if the boss says, oh, that person is a negotiator, I really better make them a good offer right up front so I can close it out. And so it actually impacts not only the offer that you get, is the attitude you show. And I'm not saying that's the way you get the job, but there's bias in that that you can't take out of the system that easily. And there's bias in people who don't ask for one thing more. And the compounding effect over 20 years of never asking for one thing more is very, very significant and creates part of the wage gap as well.

Incredible. And thank you so much for joining us today. Really appreciate it.

Well, thank you for the great work you're doing and for the great work your audience does out there in the world of HR and or just at work for themselves and with their team members. Every time that we help somebody by not taking advantage of, when they don't ask for more from you and you say, look, if there's one thing more that we could do for you to sweeten this, to close it out, what would it be? That's a great way to kind of indicate there's a little more play.

And we're not going to use our.

Power position to force you to take, you know, to leave it. Just be silent and not talk and wait for you just to say yes. It's okay to give permission for people to ask and then your answer is, geez, I can run that up the flagpole and I'll let you know. If it's yes, it's great. And if it's no, then we'll let you know. But it doesn't mean your offer's off the table.

If you can make it okay for.

People to have the conversation, that's something that we all can do.

What a strong place to end. Kent, incredible interview. I really appreciate you.

Thank you. Great, great to be with you.

Appreciate your mission.

Wait, wait, wait, wait, wait.

Now, before you sign off, I have something to tell you that I've never told you before.

Just kidding.

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I'll catch you.