Salary Transparency: One Organization’s Story

“Transparent Cut.” Credit: Nico Cavallotto

 

Mimi Kravetz of Hillel International talks with NPQ’s Jeanne Bell about designing a transparent compensation system to drive salary equity and deepen employee trust in management.

Mimi Kravetz: For Hillel International, this is part of a larger strategy around talent, and the idea of our talent strategy is that the very best way to make sure that we are achieving our mission of enriching the lives of students is to make sure that we have a culture that engages and enriches the life of the staff members who work for Hillel. And so our work and salary transparency are part of a larger set of work that we’ve done over the last six years on talent and culture.

What we know about pay transparency, specifically, is that having more information about compensation builds employee loyalty and engagement through building trust in management and people having a larger context on something that’s so critical to their workplace satisfaction.

It’s certainly not a cure-all on creating a great culture, but pay is so important to people. It matters in their everyday lives and their abilities to support their lifestyle and their family. And it’s a key concern when we think about diversity, equity, and inclusion as well to make sure that there’s fair and equitable pay. And transparency helps a lot with that because people are able to trust the system when they have equal information to other people, and they’re also able to advocate for themselves better.

We started with a particular set—about half of the local Hillels that we were providing a service for by processing their payroll—so we had the data and just needed the permission to use the data in this way that was totally anonymized. Nobody’s individual salary was being released.

We took the data, and we did an analysis and looked at people of particular levels, and we had to create salary bands. It wasn’t something that existed, so we had to build salary bands and say, “People within about this many years of experience who have this title and this kind of experience are part of such-and-such salary band.” So we made sense of the data that we had.

We benchmarked it against two different external salary reports, and then we made recommendations or guidelines around where we thought the compensation should be. So there were some organizations where you would look, and you would see that employees were paid a lot less than what somebody should have been paid. And there were other ones that were very highly paid, and it wasn’t correlated with the factors that you might expect it to be correlated with. So somebody might say, “Of course, that’s because some organizations are in the middle of New York City, and some are in the middle of Kansas City, so it’s about geography.” But those weren’t the factors at first that were making the difference. It was much more that people didn’t have access to information. So it was according to what seemed right to a particular executive director and a particular board.

We made a decision to release the data, and we were very lucky that when we did it, we also had a few tools to support local Hillels in making change. When we released the data, at first, we only released it to executive directors, essentially the CEO of each local organization. We didn’t at first release it to board or to all staff because the leaders needed time to process this information and decide how they were going to handle it. Pay transparency is so important, and a lot of people who advocate for it think if you just were to go immediately to total transparency, it would solve the problem and drive employee engagement. But, in fact, without careful change management, you might have the opposite effect because you would release information that leadership hasn’t had a chance to grapple with, and people might end up feeling like things are very unfair.

So we released it just to executive directors. We did training for executive directors, and we were able to release it along with a set of grants so that these directors could apply for matching support to make changes, if they wanted, to address the compensation of people who are under the bands.

Jeanne Bell: That’s really helpful. I think most executive directors inherit, you know, obviously, an existing salary structure. And it’s very challenging to figure out, even if I have these values, how do I go about rectifying historical inequities in the system? It’s not obvious how to do that. And what I’m hearing you say is that having this data and these well-articulated factors gives people a path to advocate for themselves but also to look honestly at the structure that’s in place.

Mimi: Yes, and that is why we started with executive directors, so that they could look at the data, digest it, look honestly at how their own systems set these bands and make some decisions along with their boards and how they wanted to address it. Often, they couldn’t address it right away, or they could only address it in a small way or incrementally or over time, and that was okay as long as they were using the data to make smart decisions and had an explanation.

Conversations around pay are never easy. They’re always tough because it’s so personal for people. The data help support better conversation. It doesn’t take away the challenge of saying to somebody, “I’m sorry, but as an organization, given our resources, I can’t get you where you want to be.” But it helps a lot to say, “Here’s why we’ve decided to place your compensation, where it is. Here’s how that fits within our pay scheme and our set of values around pay.” Then, even to open up a conversation around, “Based on this data, here’s where we want you to be over time and what it would take to get there.”

Jeanne: Yeah. I was an executive director, and when we redid our compensation and did something pretty similar, in the sense that we collapsed the levels and made the bands clear, I felt liberated. I didn’t realize how much psychic energy being in secret relationship with people about their compensation…not that we called it that, but that’s what it was, right? Everything was confidential, confidential, confidential; and it’s a burden to try to manage that on an individual level instead of actually creating a system that you can teach people. And that people can interrogate and ask questions about and get the same answers from everybody, you know?

Mimi: Yes. I really like hearing you say that. That there’s something burdensome about keeping things so confidential, and that transparency can also create alignment among leadership. For a small local organization, it means that the board, the executive director, and the assistant director are all able to answer questions in the same way about compensation decisions. I love that. It should free people up to feel good about the decisions they make—again, even if it’s not always what somebody wants. It isn’t always going to mean that somebody feels that they’re paid what they think they should be paid, but, at least, it helps them understand and make sense of it.

I would start with doing the analysis. Knowledge is power, and I think people are sometimes afraid to look at the data because of what it might say. I would start by learning, understanding where you are, and then making a decision from a place of knowledge. That’s where we started. We first did the analysis. We agreed to meet with a committee about it.

Actually, that brings me to another piece of advice, which is, you don’t want to go it alone from an HR perspective. This shouldn’t be happening behind closed doors within an HR department. I think from minute one, you want leadership involvement, and then, with that leadership group and from a place of knowledge, I would encourage people to actively move towards pay transparency, understanding that it may take time to get where you want to go.

I don’t think blowing open the doors from minute one is smart, but I do think an intention to get to a place of greater transparency over time is important and will build that trust.