Another compensation story hit the global media today. It happened in the U.K., but it could just as easily have happened here. And its particular set of events should give Compensation Cafe readers a lot to think about and discuss, given the Executive Pay Ratio work that has most everyone scrambling right now.
Carrie Gracie of the British Broadcasting Corporation (BBC) resigned her position as China editor last week to protest pay inequality within her organization. The fact that she did it in an open letter, even though "Speaking out carries the risk of disciplinary measures of even dismissal . . ." is not the sign of a peevish employee whose emotions have gotten the better of her. Ms. Gracie, a 30 year BBC veteran who is fluent in Mandarin, had been urged by the BBC to take the China editor position. "She is widely regarded as one of the BBC's most talented journalists," reported the Guardian. She has apparently tried to work this through channels.
The U.K. has an Equality Act 2010, which the media summarizes as, "men and women doing equal work must receive equal pay." (Many of you know far more about this legislation and odds are you don't find it that simple in practice.)The BBC has been hounded by pay allegations for years--overpaying stars, underpaying women, poor cost management and so on.
While this is clearly a different legislative and cultural issue than the Executive Pay Ratio, there are valuable things to learn from this dust up. Here are a few to keep in mind as you work on Executive Pay Ratio implementation:
If somebody seems "overpaid," odds are it will be easy to spot those who are "underpaid." I think it's unreasonable to believe that you are paying everyone equitably -- especially if you don't have the staff, resources and culture of, say, Google or Johnson & Johnson. As we have talked in many Compensation Cafe articles, people use numbers as "anchors" for comparative purposes. You can expect the Executive Pay Ratio and Median Employee to be used as anchors for comparison. In other words, they will automatically raise questions -- even among executives, as the Carrie Gracie story illustrates.
Don't kid yourself, most of these are good questions and odds are you have answers, but you have to be prepared. As I've suggested before, once you begin to catch sight of the size of the Ratio and the salary of the Median Employee, start looking at the jobs in a wide band above and below -- these employees will consider those numbers as anchors. What story do the titles and pay histories of these employees tell? Factor these insights into your communication strategy and consider making compensation adjustments that are warranted.
Trying to massage the message is bad mojo. In July 2017, the BBC published the salaries of its highest paid "stars," showing those paid £150,000 and over. Ms. Gracie did not make the list because of her £135,000 salary, but was clued into the size of the pay disparity compared to others in similar positions when, for example, the BBC's North America editor's salary was shown to be £200,000 to £249,000. (And why didn't they think she'd have questions?)
The salary announcement followed a much lauded salary audit and report, which included charts comparing pay for men and women -- except the audit didn't include all BBC employees. Move forward a few months, and you can read a British politician's comments, "The BBC cynically manipulated its equal pay audit in an attempt to hide its discrimination against women such as Carrie. . ."
The lesson? If you have tough messages to give, do the work, tell the truth, no matter how tough it will be for employees to swallow. And don't think your Steering Committee should be the only set of advisors you'll need to help you get it right. You'll benefit from a broader audience, too. Do a draft, run it by "virgin" ears. Listen to the candid feedback and identification of sore points, and have the courage to address what they've identified. Test the next draft, too.
Transparency is a talent issue as much as a compensation issue. Ms. Gracie states that the BBC is "not living up to its stated values of trust, honesty and accountability." Expect your employees to hold you to your company's Values, too. Be sure that you think deeply about how they apply in the Executive Pay Ratio situation, and how you are going to demonstrate them in your roll out. I'd even say, go so far as developing a matrix that itemizes the actions that you take that align with each Value. If you don't take your Values seriously, expect candid rebukes from employees.
Note that Ms. Gracie wants to return to her old post in the BBC newsroom, "where I expect to be paid equally." In other words, if you're only going to pay me that much, BBC, then I'll work at a level where that pay is equitable. It's sort of a balanced quid pro quo, I guess, but not one that many American employees would pursue. In this job climate, U.S. employees would just move on as soon as they could.
Margaret O'Hanlon, CCP brings deep expertise to discussions on employee pay, performance management, career development and communications at the Café. Her firm, re:Think Consulting, provides market pay information and designs base salary structures, incentive plans, career paths and their implementation plans. Earlier, she was a Principal at Willis Towers Watson. Margaret is a Board member of the Bay Area Compensation Association (BACA). She coauthored the popular eBook, Everything You Do (in Compensation) Is Communications, a toolkit that all practitioners can find at https://gumroad.com/l/everythingiscommunication.