Compensation Cafe

The Squeak of the Hamster Wheel

Round and round it goes, where it stops, everyone knows. Lately, I have been wondering what it will really take to change things in the world of compensation. It would seem that we have more than enough motivation to result in real changes to compensation practices that have been ineffective, or worse, seemingly forever. There seem to be enough incentives to create more successful companies and pay people in a way that allows them to have better lives. A large number of Human Resources and Compensation professionals seem engaged enough to give them the push to make materials improvements. But the hamster wheel keeps squeaking.

Recently released data and articles imply that 2021 compensation budgets will look much like 2020 budgets (and those from 2019 and 2018). Those same sources indicate the mix of pay elements at most companies is not expected to change. This is true even though there is plenty of evidence that most of what we have been doing with the basics of base pay, short-term incentives, and equity compensation have had limited impact on employee attraction, motivation, retention, and engagement.

Topics like Diversity, Equity, and Inclusion have been concerns for at least a couple of decades. We still regularly see unintentional bias in both base pay and incentives. Pay data may be generic, but its application continues to be unequal. And yet, the majority of companies have either no plans or no funding to make the often easy changes that would truly improve these problems.

Our new focus on remote-work has given rise to questions about long-held practices regarding the productivity of employees when working away from the office. Evolving remote-work practices have also directly impacted the breadth and depth of talent markets and legacy assumptions about the cost of labor. We continue to apply old school recruiting tactics to an already-changed modern workforce. Companies also apply oddly local geographic differentials to employees who can be hired by companies anywhere while delivering their effort and expertise from anyplace.

The use of equity compensation plans at most companies remains much the same as it was decades ago. This is despite the fact that companies are far larger than ever, and retention has fallen in industries that use equity heavily as a “retention” tool. Most plans have the same vesting, termination, and expiration periods that have existed forever. Nearly all pre-IPO companies still grant early equity as if they plan on going public with 250 employees in five or six years, despite many IPOs having a thousand or more employees. Most investors control pre-IPO dilution like they are aiming to get 20% of a $250-$500 Million company, even though the average tech IPO is north of $1 billion dollars.

I can, of course, go on, but I will stop and offer a few potential solutions.

• What if we started our decision making process by determining what we wanted to accomplish, rather than what the “market data” says?
• What if we acknowledged our past limitations and created approaches to pay that took a path less-traveled, and perhaps more likely to provide better results?
• What if we stopped applying “what we already know” and started figuring out what we should know?

Correcting things will not be easy, but it’s got to be easier than looking back in a few years and realizing we are squeaking along on the same old hamster wheel. In the comments please tell anything you believe compensation does so well that there is no room for real improvement. Also list anything that you passionately believe we can, or must, address in the upcoming year.

Dan Walter is a CECP, CEP, and Fellow of Global Equity (FGE). He is a “Compensation Futurist” who works as Managing Consultant for FutureSense. Dan is also a leading expert on incentive plans and equity compensation issues. He has written several industry resources including the only resource dedicated to Performance-Based Equity Compensation. He has co-authored ”Everything You Do In Compensation is Communication”, “The Decision Makers Guide to Equity Compensation”, “Equity Alternatives” and other books. Connect with Dan on LinkedIn. Or, follow him on Twitter at @DanFutureSense.

Pay Transparency Check-In

Wondering whether there's been any progress on pay transparency? Mercer just compiled research from a number of sources. Their short report is something you'll want to check out. Here are a few highlights that are top of mind.

Are you worried that your company hasn't made enough progress? Only 14% report achieving significant or extreme transparency, so odds are you're in good company. 46% report achieving moderate transparency, which is like being sort of . . . Well, you know . . . but it does indicate that transparency is the goal of about 60% of the study participants. A hefty number that signals employees will start comparing your company's pay transparency practices to your competitors' soon.

The report provides a good working definition of pay transparency: " . . . establishing and communicating pay practices that help employees understand how their salary is set in the context of market and business realities. The goal is to build employee confidence in the fairness of that process." 

Pay attention to that wording -- the definition refers to both "establishing" AND "communicating." To begin any work on pay transparency, you'll want to give your programs an honest assessment. Odds are your program could use some updating to improve alignment with your pay philosophy. Don't let that work stop you cold. Instead get yourself started by recognizing that a program refresh will be stage 1 of your pay transparency project, followed by the communication strategy.

An interesting finding: HR professionals tend to confuse "pay transparency" and "pay equity." Pay equity is studied through metrics that illuminate your practices. The outcome of a pay equity study is an analysis of what causes pay inequities and plans for fixing those identified. So, pay equity work may or may not be part of your preparation for pay transparency improvement, depending on your current status.

The report points out that the only time employees have detailed conversations about their pay is when they are being recruited, and even then there is limited transparency about pay practices. Plus, the rest of the time, it's still just a quick 15-minute, once-a-year chat. A missed opportunity, if not a real trust-buster, given employees' growing expectations about pay transparency. If you want to change these practices at your company, the report offers further research findings plus practical advice.

Ready to get started on communications? Check out this series on Compensation Cafe: What pay transparency means, where to start, how to talk it over with executives, and deciding how far to go.

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. A former Board member for the Bay Area Compensation Association (BACA), Margaret coauthored the popular eBook, Everything You Do (in Compensation) Is Communications, a toolkit that all practitioners can find at https://gumroad.com/l/everythingiscommunication.

The Time is Now. Compensation Pros Must Rise to the Challenge.

Change is hard. While it is inevitable, we prefer if it happens while we aren’t paying attention. It’s kind of like your hair during a more than 2-month lockdown. On day 5 your hair looks like your hair. On day 30 your hair looks like a long version of your hair. On day 70 your hair looks like someone dropped a prop wig on your head and ran away. The change happened, but gradually. For at least a few decades, this has been the way of things in the world of compensation. But now is the time for something new.

Our biggest changes are often those that are forced on us. Few of us thought that our coworkers would see the inside of each other’s houses every day, but here we are, living the video-conference dream. Most of us thought summer vacation would be a long three-months, but here we are experiencing some weird version of a six-month vacation, and we're mostly surviving it pretty well. When change is thrust upon us, we can accomplish amazing things, things that seemed impossible only moments before. Now is just such a time for compensation professionals.

The current crisis has exposed the dusty corners of compensation practices.

When professionals cannot survive for even a few weeks without a paycheck, we have created a system that is hard to defend when things return to whatever we will call normal in the future.

When the vast majority of companies have incentive programs that look very similar, but prospects that look far different, we must consider whether “market data” truly reflects our markets.

Our pay practices have leaned heavily on history, and next year’s history will be now. Will we truly want to base our pay decisions on what we had to do to navigate this period? What will we say when challenged by those making the decisions and those whose lives are inextricably tied to those decisions?

We seldom see the impact of change as quickly as we see the motivation for it. We must start figuring out what that change will look like, even before we have a clear picture of the road ahead. Take a good hard look at your pay programs. (Go ahead, I’ll wait. I’m just sitting in my home office.) Did your approach to compensation properly differentiate those who were essential to either your day-to-day existence or your long-term future? Do your incentive plans promote the decisions, behaviors, and actions that truly define your success? Have you noticed if your recognition program was well suited for recognizing people?

While we may not know exactly what the world beyond the horizon holds, we can be certain it will not be exactly like the past. Our compensation planning must start today if we are going to be ready for whatever is ahead. Now is the time to ask yourself what you will do if your budget is 20% less. Now is the time to make your argument for where it should be 20% more. Now is the time to determine where your adherence to market practices has made your company better, and where it may have hobbled your ability to move forward.

We are not presented with many truly transformative opportunities moments in our careers. I can think of only two or three in my own career. But proactivity is the key to success. Those who leaped ahead of the pack were always those who saw the opportunity and drove the change. Your time is now if you are motivated to make it happen.

Dan Walter is a CECP, CEP, and Fellow of Global Equity (FGE). He is a “Compensation Futurist” who works as Managing Consultant for FutureSense. Dan is also a leading expert on incentive plans and equity compensation issues. He has written several industry resources including the only resource dedicated to Performance-Based Equity Compensation. He has co-authored ”Everything You Do In Compensation is Communication”, “The Decision Makers Guide to Equity Compensation”, “Equity Alternatives” and other books. Connect with Dan on LinkedIn. Or, follow him on Twitter at @DanFutureSense.

The Boat and the Sail, a Story of Equality and Equity

Pay equality and pay equity have been in the news often lately. This is a little story I like to share to explain the difference.

Many years ago, in a world very similar to our own, trees could speak and move. One group of trees lived very near the shoreline of a seemingly vast ocean. Occasionally a brave young tree would bravely dive into the sea with the goal of learning what was on the other side. They never ever returned.

Some believed that these swimmers so loved what they found on the other side of the ocean that they had no desire to return. Other’s believed these trees to be fools who were lost in an endless sea forever. Still, every year a few adventurous individuals jumped into the water to explore.

After one unusually harsh winter, a charismatic tree announced a new plan. Rather than travel alone, he recruited other interested trees to travel the ocean as a group. On a warm spring morning, they gathered at the shore, joined limbs, and clambered into the water.

The tide was high and as it receded, they were pulled away by the currents. They clung together tightly and decided to make up a name for their merry band. After some serious, and not so serious, discussions they decided to call themselves “The Boat.” (there is no record of why they chose this term.)

The Boat floated farther and farther away from shore over many weeks. They passed the occasional small island with a lonely tree or two. They said hello, but did not stop for fear of losing their grip to each other.

Then they stopped. The currents stop pulling and pushing them and they just sat there in the water, getting increasingly wetter.  The tree who convinced them to join together in the first place asked for ideas on how to start moving again. The trees were equally quiet for many days then two younger trees at the very edge spoke up.

“Do you remember how the wind use to make us sway when we were on land? The breezes would push their way through our branches, making us whisper to each other. What if a couple of us climbed on top of you and stood up tall enough to catch the wind?

The leader thought they were crazy and told them they may get blown into the ocean. But he also agreed it may be their only chance to get moving again. The young trees slowly climbed to the middle of the boat and stood tall. The boat was not as stable as the land used to be and standing was scary. But then the wind came by to say hello.

Rather than letting the wind pass through their leaves and branches, the tall young trees grabbed hold of it. They creaked and bent with the effort but before long the boat was moving. In fact, it was moving faster than ever before! The two trees decided to call themselves The Sail (again, there is no explanation).

In just a few days The Boat had made it to a new land on the other side of the great ocean. Everyone hailed The Sail as heroes and let them have the prime spot on the shoreline to dig their roots back into the soil.

The moral of the story. Everyone gets an equal chance to be part of the boat. (Anything less is inequality.) This lets everyone have a better chance of reaching their goal. Equity is the sail. Anyone can choose to be the sail but only some will and can do this. The boat and the sail get to the same goal equally. Those who are the sail equitably receive a bit more.

Equality is easily definable and easy to see. Equity requires a more nuanced perception. A basic rule of thumb is that if your pay programs don’t feel equitable, they aren’t.

Dan Walter is a CECP, CEP, and Fellow of Global Equity (FGE). He works as Managing Consultant for FutureSense. He has three metaphors for every occasion and is a leading expert on incentive plan and equity compensation issues. He has written several industry resources including the only resource dedicated to Performance-Based Equity Compensation. He has co-authored ”Everything You Do In Compensation is Communication”, “The Decision Makers Guide to Equity Compensation”, “Equity Alternatives” and other books. Connect with Dan on LinkedIn. Or, follow him on Twitter at @DanFutureSense.

Thank You for 10, 360 and 180,000 Reasons

This post is about recognition. The recognition of each of you reading this post, and anyone who has ever read a post on the Compensation Café.

Writing for the Comp Café is one of my favorite things. The discipline of finding ideas and turning them into 5 minutes of something that is, hopefully, interesting is both a challenge and a joy. Each article is an addition to a compendium of thoughts and ideas that have been shared by almost twenty regular writers and tons of guest writers over the years. As we dig into both the holiday and busy season, I want to say THANK YOU.

I have been writing posts for about 10 years. Most months I have written three or four posts, meaning I have written somewhere around 360 posts over the years. Luckily my friend and Comp Café Editor, Ann Bares, makes us keep our posts to around 500 words. Using these basic numbers, I have written somewhere around 180,000 words on pay and rewards! That is a heck of a lot of metaphors and stickman images.

I want to thank each and everyone one of you who has taken the time to like, share or even comment on the posts here at the Café. Knowing that someone is actually reading these things makes it far more worthwhile. It would be no fun to think we were just yelling into the wind.

Even more importantly I truly want to thank each of you who have sent me a note, asked me a question or just walked up to me at some industry event and said hi. Every time this happens, I excitedly tell my wife about it before the day is done. Every time it happens, I know that I have contributed, just a bit, to the industry that feeds my curiosity and my family.

I also want to thank Ann Bares for her amazing thought-leadership and keen editing eye. Her attention to detail and amazing writing are the most important aspect of this blog. Every other writer here is also amazing. I read their posts just like you do. I learn from them just as often as you do. I also know how much time they spend crafting their posts to ensure you receive great quality entertainment and information. (It ain’t always easy to make pay and rewards fun, pithy AND interesting.)

While this is a site focused on pay and rewards no one here makes a penny from their contributions. Not the writers, not the commenters, not the readers. So why do we all do it? I think there are a few reasons.

First, I think we all want to be better and perform at our potential. It’s a lofty goal that requires effort that is a reward in itself.

Second, we actually find this stuff interesting. We know that what we do is important to companies and the people that they employ. People’s livelihoods literally depend on us doing a good job.

Lastly, we like to be part of a community. A group of professionals who spend 3 to 5 minutes a day on a common topic, with a common cause, in an increasingly virtual and disconnected world. The Comp Café provides a small thread that ties all of us together brings all of us to the table for a quick sip of caffeinated information. 

Thanks again for stopping by and I hope you will come back and tell when you agree and disagree with our unique perspectives. Have a great Thanksgiving and we will see you after the holiday!

Dan Walter is a CECP, CEP, and Fellow of Global Equity (FGE). He works as Managing Consultant for FutureSense. He has three metaphors for every occasion and is a leading expert on incentive plan and equity compensation issues. He has written several industry resources including the only resource dedicated to Performance-Based Equity Compensation. He has co-authored ”Everything You Do In Compensation is Communication”, “The Decision Makers Guide to Equity Compensation”, “Equity Alternatives” and other books. Connect with Dan on LinkedIn. Or, follow him on Twitter at @DanFutureSense.

Compensation Dentistry – The Orthodontist (part 3)

Even the best efforts to protect your primary teeth may not guarantee the teeth you want or need as you get older. When your secondary teeth have made their total debut it may become clear that your teeth need a little help. Sadly, this usually occurs at the same time you are facing the challenges of adolescence. There is nothing better than going to a new middle school, trying to figure out how to coordinate your newly longer limbs, while learning new skincare routines. Nothing better except adding braces to the mix.

This is where many mid-stage high-growth companies find themselves on a regular basis. They have an innovative product and the core team for future success. The future is just beyond the horizon and the sunrise is just beginning to show. They have a business plan that requires a ton of new hires and a compensation philosophy or structure designed for the company they were a year ago.

Whether they are hiring their first dedicated compensation professional or bringing in their first external compensation consultant, the correction can often feel like painful metal tracks that force your pay programs to behave, while interfering with some favorite treats. Even worse, the process takes far longer and costs much more than hoped. Perhaps the most frustrating aspect of this is when you come to the end of the process and learn it will require a lifetime of vigilance to ensure you don’t need to go through it again as an adult!

Many parents and adolescents choose not to, or cannot afford to, have the braces put in place at the optimal time. While many people do just fine with a crooked smile, it may not be best to as glib about other potential repercussions. A poor bite may lead to poor nutrition and the stress on your jaw can lead to TMJ or headaches.

Companies may also struggle with the choice to “fix” their issues or simply polish them up a bit and hope for the best. The impact of poorly managed and planned compensation can include slow or difficult hiring processes and nonoptimal retention or motivation. Additionally, these issues can compound gender and other pay equity concerns that can lead to expensive lawsuits and negative media coverage. Some companies take the gamble and escape unscathed, many wish they had done the hard work earlier.

No one loves the idea of going to the Orthodontist. In the same way, most companies would rather not go through a pay reinvention process. In the end, most find that getting ahead of the problem early shortens the time of correction and lays the path for a far better adulthood. If your company needs compensation braces I will simply recommend that procrastination is seldom the best course for future success.

Dan Walter is a CECP, CEP, and Fellow of Global Equity (FGE). He works as Managing Consultant for FutureSense. He has three metaphors for every occasion and is a leading expert on incentive plan and equity compensation issues. He has written several industry resources including the only resource dedicated to Performance-Based Equity Compensation. He has co-authored ”Everything You Do In Compensation is Communication”, “The Decision Makers Guide to Equity Compensation”, “Equity Alternatives” and other books. Connect with Dan on LinkedIn. Or, follow him on Twitter at @DanFutureSense.

Take Five: Connecting Reward Practitioners & Research - #2 Employee Perspectives on Pay Communication, Fairness & Transparency

Take Five is a new feature at the Compensation Cafe, in partnership with the Compensation & Benefits Review.  The goal is to connect and open opportunities for collaboration between reward practitioners and academics doing research in the rewards field.  Each Take Five will highlight recent rewards research via a Five Question Interview with a member of the research team on key takeaways and practical lessons from their findings.  In Take Five #2 we spotlight research conducted by Dow Scott, featured recently in a Compensation & Benefits Review article titled Pay Communications and Fairness: An Employee Perspective (link is time limited, active 2 months from publication of this post).  

Research Overview Paragraph

Dr. Dow Scott of Loyola University’s Quinlan School of Business has undertaken and published much-needed research on the relationship of pay communication, pay transparency and pay understanding with employee perceptions of pay fairness.  His research is timely and important given that most previous research on these topics is over a decade old and often limited to experiments with student subjects, samples of employees from a single organization or surveys of compensation professionals.  Data for Dr. Dow’s research was collected from a diverse group of 300 full-time employees across as many organizations.

Our special thanks to Dow Scott for taking time from his busy schedule for this Five Question Interview!

Question 1:  You note in your Introduction that most previous research studies on pay communication and transparency are over a decade old.  Given that pay transparency has been such a hot topic in recent years, this fact seems surprising.  How would you account for what seems like a gap in attention to this subject up until now? 

DS Response: Pay communication remains very limited in many organizations.  There is a major gap between what rewards leaders advocate in terms of pay communications and transparency and what information they share with employees.  It’s also important to note that our attitudes toward pay transparency and pay communication have changed in recent years.  Reasons for this include the availability of so much information (e.g., Salary.com, Monster.com), the fact that employees are increasingly adept at finding and using it, and the belief that pay equity issues will be addressed by more transparency. 

Question 2:  Your findings support earlier research (Adrienne Colella and others) which contends that pay transparency cannot be defined as either open or secret.  In fact, you argue that simply telling employees how much others are paid is not transparent or open.  What would you propose as the definition of pay transparency? 

DS Response: We in the U.S. have a long history of requiring universities and government agencies to publish salaries.  Unfortunately, this information does not help most employees as they have no context in which to assess it (e.g., the organization’s philosophy, the individual’s performance, tenure, career record, etc.).  I maintain that simply telling employees how much others are paid is not transparent or open because that information does not inform the employee why pay differences might exist. What is more helpful to employees is not just information on what people are paid but the why and the how of their pay. There are multiple levels of pay transparency and they should include information like the structure and/or ranges guiding pay decisions, the criteria for merit or performance pay, how to obtain a promotion or increase pay in one’s current position, etc.  

Question 3:  It was interesting to read in your conclusions that employee perceptions about pay communication and pay transparency were strongly related.  Can you tell us what this means – and what its implications are for practitioners trying to decide whether to invest in more communication or push for more transparency?

DS Response: Our findings suggest that companies can enhance pay understanding and perceptions of pay fairness through their communications efforts and not worry about the degree to which employees perceive the pay system as transparent.  In fact, pay communications will enhance employee perceptions of pay transparency.  For this reason, focusing on pay communication may take care of transparency concerns.

Question 4:  You note finding significant relationships between employee demographics and pay communication, pay understanding and pay fairness perceptions.  Can you share an example of a demographic variance in perception that you found particularly noteworthy or interesting? 

DS Response: One example we noted was that women reported less pay communication from their employer, claimed to have less understanding of pay and didn’t report as high a perception of pay fairness as men.  This raises a number of questions.  Are they not hearing the information shared in the same way?  Are there reasons that they believe the information they are receiving is less adequate?  While a gender pay gap has been demonstrated, it is not as high as public information would suggest – is this influencing their perceptions?

Question 5:  In closing, is there a particular lesson or insight from your research you would highlight for the practitioners who follow this blog, that they can take back to their own jobs and workplaces? 

DS Response: Don’t fight transparency.  Embrace it.  Be honest. Fix your salary structure and practices.  Get in front of the concern by explaining to people – truthfully – how your pay system works.  Give them the context they need to understand why and how they are paid what they are.  To resist is futile.

Biography

Dow Scott, PhD is a professor of Human Resources in the Quinlan School of Business at Loyola University Chicago and a management consultant. Dr. Scott teaches graduate classes and seminars for business leaders on compensation, incentive pay, HR management, team performance and other leadership topics.  He has published in more than 125 journals, books, and conference proceedings on a variety of topics including team and productivity improvement, compensation and incentive pay, trust, attendance control and reward program evaluation.

Hey Readers - Interested in Being Involved? 

Take Five Interviews: We'd love to hear from Cafe readers who might wish to join in and take on a Five Question Interview featuring a piece of research that appeals to you personally or professionally.  A great way to exercise your writing chops and explore new ideas in the field!  For more info, email Ann at [email protected]

Compensation & Benefits Review: CBR would love to hear from practitioners who wish to learn more about authoring journal articles. Up front now is a Call for papers for an exciting special issue on the inadvertent consequences of dual-income households from Guest Editors: Ashley Whillans and Allan Schweyer.   Additional information is available here for Sage Publishing overall and here for information specific to CBR.  Finally, CBR Editor-in-Chief Dr. Phil Bryant is generously making himself available for questions and guidance - please reach out to him at [email protected].

Comments, questions, feedback, ideas?  Hit us up in the Comments below!

USWNT – Enough Already, This IS RIDICULOUS!

As an American, I am incredibly proud that our Women’s National Team has, once again, won the World Cup. As a compensation professional, I have had enough. When our country’s (and the world’s) best team in one of the truly international sports cannot be remunerated at least equal to a less-accomplished men’s team, we have the foundation of a problem that seemingly only compensation pros can fix. This article is not about facts and figures (there are links to those at the end).  This is about what it takes to accomplish gender equity (and what that actually means) even after you have the facts.

As I have written before, equity is not about being equal. And as I have covered many, many times before, I am a true proponent of performance-based pay. Call it variable, call it personalized, call it incentive pay. Whatever you call it, I have made the argument that some people should get paid far more than others. This is not about women getting paid "80% of men.” This is not about politics. This is about just rewards being delivered when earned.

We have heard Sheryl Sandberg tell women to Lean In. We have heard Sallie Krawcheck talk about women “owning it” and working hard. We have heard about CEOs who have spent time and money fixing this problem at their companies. Psychologists have opined that women are less aggressive negotiators. Pundits in the media have told women they need to demand better pay. But what happens when you do all of these things and imbalance still exists?

One of the current excuses focuses on the men’s bringing in more revenue. This is true if the period of measurement is properly cherry-picked. It is also not true if the date range is shorter (like an annual incentive plan or salary). But revenue is not the point of a national team. Representing the country honorably and winning as many games as possible is the goal of any national team. So, revenue is out.

Some argue the men receive greater viewership. This cannot be measured without including the fact that many are watching the OTHER team. South American, Asian, European African and even Oceanic teams all have fans around the world.  How many are watching “ours” and how many are watching “theirs?” So, viewing ratings are out.

Lastly, some argue that the gap “isn’t that big.” The size of the gap is not the issue, the existence of the gap is an issue.

I once had a boss who taught me an important phrase: “That’s a great excuse, but a terrible reason.” And excuses are all we have for the pay inequity of the most accomplished international sports team the US has delivered in the past 40 or 50 years. Who cares if they are paid “equally?” There are no legitimate reasons they aren’t paid MORE than the men’s team. And, that’s the real issue for compensation professional. This isn’t about soccer, it’s about pay.

If we cannot expect this team to be paid for their performance, how convincing can we possibly be when we claim that ANYONE is being paid for their performance? (I know, I know, some of you work at companies that have fixed this problem, but you are still the minority.) More importantly, if this is such a difficult thing to fix for a group of fewer than 30 women, how can most companies expect to fix pay issues for much, much larger groups?

OK. Rant over. I recommend fixing this tomorrow and moving forward quickly to ensure it isn’t a problem again. There are no reasons that can’t happen, only excuses.

Some related articles for your reading pleasure:

https://www-marketwatch-com.cdn.ampproject.org/c/s/www.marketwatch.com/amp/story/guid/E22022A0-A180-11E9-A212-0CC1E6F570D9

https://www.youtube.com/watch?v=FvFYQ2sz2pw

https://www.washingtonpost.com/politics/2019/07/08/are-us-womens-soccer-players-really-earning-less-than-men/?utm_term=.646296623c6f

Dan Walter is a CECP, CEP, and Fellow of Global Equity (FGE). He works as Managing Consultant for FutureSense. He is passionately committed to aligning pay with company strategy and culture. Dan is also a leading expert on equity compensation issues and has written several industry resources including the one-of-a-kind Performance-Based Equity Compensation. He has co-authored ”Everything You Do In Compensation is Communication”, “The Decision Makers Guide to Equity Compensation”, “Equity Alternatives” and other books. Connect with Dan on LinkedIn. Or, follow him on Twitter at @DanFutureSense.

Cafe Classic: Women Kick at the Wage Ball

Editor's Note:  With this week's renovation of the EEOC charge filed a few years back and a refreshed lawsuit about "institutionalized gender discrimination" in compensation by the U.S. Women's National Team Players Association, it's a good time to revisit Jim Brennan's Classic coverage of the story and issues.

Gender wage discrimination in American hit the headlines again yesterday.

An EEOC complaint was filed by female football players.  For those unaware of the global term for the most popular sport in the world, that really means "soccer". American football (with some modification) is tolerated in Canada, contorted in Australia and rarely encountered in other nations. Soccer, as we uniquely call it, is different. Soccer-Football is exactly the same game everywhere on earth. Likewise, those who play it professionally are similarly universally subjected to the same historically biased economic terms of employment that have existed since the dawn of time.

The U.S. Women's National Team (USWNT) members protest being paid less than the men despite producing superior outcomes.  “The numbers speak for themselves,” renowned female goalie Hope Solo said. “We are the best in the world, have three World Cup championships, four Olympic championships, and the U.S.M.N.T. get paid more to just show up than we get paid to win major championships.” Their higher-paid male peers support the women's team in their fight. Veteran men's national team goalie Tim Howard agreed, adding, "We certainly know what it feels like. We felt underpaid for a long time. We had to negotiate our way to a settlement."

Attorney for the complaining female team players Jeffrey Kessler, co-chairman of the prestigious law firm Winston & Strawn, told reporters: "The reality is that this team is more valuable to the USSF than the men's team has been. That's what the facts show. And they would be justified in asking for more than the men are receiving. But the first step that they are seeking is equal treatment. That should be an easy step for the USSF to take."

In this case, it appears that the women have beaten the men in money generated and competitive achievements; but the female players still receive less reward in both absolute and proportional terms. The proper response to an impasse in a free economic market system is to quit, to get help to negotiate better terms or to go on strike.  These women are not quitters, so they are fighting.

Unsurprisingly, the status quo situation may be unfair but remains legal. "Fair" means what you want it to mean.  The term has no legal definition binding on parties in court trials. Any formally adjudicated dispute will not be resolved by emotional appeals. But the chances of victory in a contest are truly enhanced by emotional sound bites. Passionate war cries can have important strategic effects, to:

• unify and focus the energy of the combatants,
• activate public support to create pressure on the opposing side,
• undercut the morale of the resistant adversary, and
• increase the likelihood of settlement.

These well funded plaintiffs will not be marginalized or dismissed. They are the premier stars of the most popular sport in the world and one of (if not THE) the most popular sports for the majority of Americans.  The women are backed by their male peers, represented by a top law firm and also have the might of the U.S. EEOC behind them.

The plaintiffs are strong role models for young girls and adult working women. When they strike, they set an example for how serious professionals attain a goal. They will not be kicked around. These women are experts at kicking. Let's see whose posterior gets booted the hardest.

E. James (Jim) Brennan is an independent compensation advisor with extensive total rewards experience in most industries.  After corporate HR posts and consulting CEO roles, he was Senior Associate of pay surveyor ERI before returning to consulting in 2015. A prolific writer (author of the Performance Management Workbook), speaker and frequent expert witness in reasonable executive compensation court cases, Jim also serves on the Advisory Board of the Compensation and Benefits Review.

Empathy Leads to Equity

Equity is a term that has become a keystone in the world of compensation. We use it in a wide-ranging list of topics including stock-based compensation, pay transparency, gender and race. I recently did a presentation about the topic titled “Three Buzzwords and One Truth. The buzzwords being fairness, transparency, and internal equity, the truth is the continued growth in variable (differentiated) pay.

I found the following great image being used on many sites that focused on equity in a far less specific sense.

While doing the presentation I realized that something was missing. All of the examples are drawn from the perspective of someone even more disadvantaged. Of course, a person behind these kids can see the problem they are having. They are experiencing the same problem themselves. The key to fixing things is the people inside the stadium understanding the issue. Imagine something the something like the following.

It is clear that none of these kids are truly getting the best experience. This is where empathy can lead to equity.

Here’s how Merriam-Webster defines empathy.

The action of understanding, being aware of, being sensitive to, and vicariously experiencing the feelings, thoughts, and experience of another of either the past or present without having the feelings, thoughts, and experience fully communicated in an objectively explicit manner.

Equity compensation plans originated with leaders who had recently not been leaders. They understood the imbalance that traditional pay programs created and knew that a sense of ownership could be augmented by a pay program that delivered value to everyone as if they were owners. The best equity plans today keep this ethos. The worst have lost any empathy and look at the plans as just another tool.

Pay equity is similar. Finding the mathematical discrepancies is fairly simple. Determining the best path to correcting those issues requires more than math. The math is simply the “what” of the issue. Empathy provides an understanding of the why and helps define the how. Companies that only fix the math will see the problem arise again. Companies that improve the issue in a more empathic way may fix the immediate issue and find a long-term path to eliminating it altogether.

Understanding the participants' perspective is absolutely essential to the success of any incentive plan. Some refer to this as WIIFM. What’s In It For Me. It sounds a bit crass, but is actually another way of reminding us to look at things from the employee's perspective.

When performed expertly, a company can also use this concept to build a sense of empathy in its employees for each other and for the company. This is when pay programs really hum. This is when culture, strategy and a sense of ownership combine into an equitable workplace.

Dan Walter is a CECP and CEP and works as Managing Consultant for FutureSense. He is passionately committed to aligning pay with company strategy and culture and is considered a leading expert on equity compensation issues. Dan has written several industry resources including an issue brief on Performance-Based Equity Compensation than Dan refers to as informative written Ambien. He has co-authored ”Everything You Do In Compensation is Communication”, “The Decision Makers Guide to Equity Compensation”, “Equity Alternatives” and other books. Connect with Dan on LinkedIn. Or, follow him on Twitter at @DanFutureSense.