Do you want to advocate for higher wages for yourself or your colleagues but don’t know where to start? Do you know if your organization is compensating employees equitably? Do you feel there’s an air to secrecy about salaries at your organization?
Pay transparency is an essential strategy in empowering lower-level workers and creating equity in the workplace and is increasingly popular for organizations in the US.
In the 1930s, management at Vanity Fair requested that employees not share information about their salaries with each other. In response, Dorothy Parker, Robert Benchley and Robert Sherwood painted their wages onto signs and wore them around their necks. While technology has changed our methods (660 arts professionals shared their salaries on this spreadsheet), tactics to encourage radical transparency are still used by employees in multiple sectors.
Whether through radical or incremental moves, the push toward organizational transparency typically comes from the bottom. Managers are unlikely to speak frankly with staff about salaries for any number of reasons. If you’re going to push for transparency from the bottom, it’s important to be knowledgeable about what you’re asking for. Compensation is part of a complex strategy to maintain stability and sustain the work of your organization. But the closer you and your colleagues are to the financial information of the organization, the better positioned you are in to advocate for any changes in compensation.
This piece is meant to help you understand the factors at play that your manager is considering. It is also meant to prepare you to effectively advocate for pay transparency, a specific policy change that will move your organization in the right direction.
First, I’ll define what pay transparency is and why it’s a good first step toward addressing compensation at your organization. I’ll outline the resistance you’re likely to encounter as you advocate for a pay transparency policy and provide you with tools to make a values based argument. Then I’ll provide you with some human resource (HR) tools and resources that you might not have direct access to at your organization, or know where to find online.
HR Primer for the non HR person
What is pay transparency?
Pay transparency is a set of policies and practices that determines how publicly available an organization will make information about compensation. Pay transparency can mean your organization’s compensation data is available to internal audiences, external audiences, or both. Pay transparency exists on a spectrum from little or none to full transparency. Examples of little or no transparency means that an employee learns what they earn when they get their pay check and there is little opportunity for conversation about compensation with your direct supervisor. Further down the spectrum, an organization would use market data to determine salary ranges, they might make salary ranges for particular roles public. Further, an organization might train managers to discuss compensation with employees. At the end of the spectrum would be an organization that publishes salaries of individuals to internal and external audiences.
Have you seen a salary range listed on a job announcement? Has it helped you determine if you’ll apply for the job?
You’ve seen one practice of pay transparency in action!
What is a compensation strategy?
A compensation strategy helps organizations make decisions about how to best pay their employees. Compensation strategies help organizations create compensation plans that determine what an organization pays, how it pays, and why it pays the way it does. It answers questions like:
- Where does the organization get data to compare salaries to?
- Does the organization want to pay below midpoint, at midpoint, or above midpoint in comparison to its peers?
- What can the organization afford?
- Does the organization want to tie compensation to performance (merit based raises), loyalty (tenure based raises), specific skills or certifications?
Your employer may or may not have a compensation strategy. Regardless of a formal strategy, employers seek to retain employees by compensating them- through base pay, combined with merit pay, productivity-based pay, or skills-based pay.
Factors that employers consider when raising pay might include cost-of-living adjustments, general pay increases based on local competitive markets, seniority increases, lump-sum and performance bonuses, incentive pay, and differential pay (increasing pay for less-desirable or emergency shifts, holidays, hazard pay, etc.).
These different factors help organizations maintain both internal equity and external equity.
- External equity means that organizations are using reliable survey data about similar positions to set staff salaries. Local survey data is often available to nonprofit organizations through memberships with a local nonprofit association, the United Way, or local agencies that provide human resource services.
- Internal equity occurs when organizations know what people are paid and have taken the time to compare an employee’s skills, education, and experience to that of their peers. This doesn’t mean people are paid the same, it means that employees are paid fairly for their work based on the education, experience and skills they bring to the table.
Compensation strategies help employers design their pay to reflect the characteristics of their organization, and attract and retain top employees. One step toward pay transparency is making the compensation strategy public and sharing factors taking into consideration in pay decisions.
Class Action Report: Staffing the Mission, Improving Jobs in the Nonprofit Sector
What’s the law?
HR professionals are nothing if not concerned about following the rules. Make sure you know the laws in your state that protect you or your employer.
No matter which state you are in, you can talk to other employees about your salary and encourage other employees to do the same. It is illegal for an employer to impose pay secrecy rules or punish employees for discussing salaries. Many employees still don’t realize their legal rights to discuss salaries. The National Labor Relations Act of 1935 made talking about pay legal in the workplace. The only time it may be illegal to discuss wages is if an employee in charge or wage and payroll information discloses information without permission.
Many states have put equal pay laws in place that are meant to increase pay transparency. These often reinforce existing national law, but might add additional measures such as prohibiting asking job applications about salary history.
Pay Transparency is Important
Wage transparency is a key factor that supports compensation equity. Because- knowledge is power and information privileges the informed!
Most nonprofits lack channels for staff input on and dissemination of compensation information. As troubling as nonprofit wages themselves are, communication about those wages seem to be just as troubling. Wage transparency practices can lead to a number of benefits for organizations including reducing pay disparity and employee stress concerning salary negotiations.
Society for Human Resource Management holds that employers should be encouraged to share with applicants or employees the compensation for a given position, total compensation philosophy, pay structure, the pay range and the factors taken into consideration in pay decisions. They also hold that employees should be free to discuss pay and pay practices without fear of retaliation. These are two of eleven public policy principles SHRM advocates for in ensuring compensation equity.
Additionally, a study of the British Workplace Employment Relations Survey, done by Jack Rosenfeld and Patrick Denice, have shown that when financial information about an organization is shared, it shifts power dynamics within workplaces, including increasing workers’ wages. Access to financial information is contested territory. But as you consider advocating for pay transparency, keep in mind that it is one element of financial transparency that can help workers establish an equitable workplace. You could also advocate for staff training on financial documents, updates on the organization’s budget, to either be present at board meetings or presented with the same high-level information the board receives. When you have the relevant financial information, you can understand whether your actual or potential wage demands are plausible. If you understand your organization’s finances and your contribution to the organization, you’re in a better place to advocate for yourself.
Pay Transparency is Controversial
In the US, our culture tells us that people are rich because they work hard and being poor is a matter of bad choices. Checking in with reality again, we know that resources are distributed in unfair ways that disadvantage people based on race, religion, national origin or ancestry, sex, gender, ability, sexual orientation, age, and citizenship status. We also know that class exists in a way that intersects with all of these identities: people can be poor or working class; lower or upper middle class; wealthy or owning class.
Because of our cultural belief that wealth or lack of wealth is a result of an individual’s hard work, and because talking about money is taboo, advocating for pay transparency runs counter to our broader cultural norms.
Understanding how people have internalized dominant society’s beliefs and attitudes about poor and working class people as well as middle class and wealthy people will help you understand why there might be resistance to the idea of wage transparency. Sometimes people have internalized the message that they are ‘self-made.’ Sometimes they don’t believe they should earn more. And sometimes they have an inflated sense of what they should be earning. People’s concepts of scarcity and excess are rooted in their class experience growing up.
While not everyone in the nonprofit sector does work to create economic justice, it is highly possible that you can find a hint of some economic justice concepts in your organizational values. You can ask if people are interested in learning more about how class impacts your organization, both internally with staff dynamics and externally in helping your constituents.
Even if your organization isn’t interested in deepening their analysis around class and classism, you can sort through your own relationship to class and come to discussions of pay equity with more clarity and self-awareness.
How does classism shape our understanding about financial advice and personal responsibility?
Listen to the thought provoking podcast “Frugality Fables and Poor-Shaming Grift of Financial Advice Journalism” by Citations Needed.
Managers are concerned that disclosing salaries could lead to a drop in morale. Studies show that if you, as an employee, find out you are making the median or more, that your job satisfaction will not change. But, if you find out you’re making less than the median, your job satisfaction will take a nose-dive, you might put a little less effort into your work, and your organization’s leadership might be concerned that you’ll immediately start looking for a different job.
This concept is worth digging into a little bit. When you research salaries for your role, the salary range reflects the experience a particular employee brings to the role. For example, if you are hired as a development manager, the average salary in Montana is $72,000. If your organization is paying you less than $72,000, it doesn’t necessarily mean you’re being underpaid.
What is important to understand about the median salary for your particular position is that it takes into account your level of experience and likely your job performance. People are notoriously bad at assessing their own job performance. If you don’t have an accurate picture of your job performance, your manager could be shocked when you advocate for a raise.
A 2017 study found that when employees knew the salary of someone who was several tiers above them, that they often worked a little harder.
If you FEEL underpaid, you’re more likely to quite. Even if you’re paid market rate. This is a key place where knowledge is power. Being informed on what market rate for a position like yours will let you know for sure. Unfortunately, as workers, few of us know what the ‘average rate’ for our position is. Having your employer share salary reports and what criteria is considered when setting compensation is likely to increase trust in the workplace.
If you find out that you are making less than your peers at your organization, employers are concerned that those in a ‘protected class’ (link to definition of protected class) will interpret the difference as discrimination. This is referring to the internal equity concept mentioned above.
The reality is, lots of HR experts advocate for pay transparency as a way to reduce discriminatory pay practices and unconscious bias. And while some lawsuits can be frivolous, this concern doesn’t outweigh the benefits pay transparency brings to organizations.
To address some of these concerns, some HR associations are advocating for public policies that create ‘safe harbors’ so that companies and organizations can self-evaluate pay and correct improper disparities in compensation.
The argument here is that employees who negotiated salaries in good faith and with the expectation of privacy have a reasonable expectation to maintain that privacy. If your organization is particularly concerned about privacy, you can still advocate for pay transparency practices. You can advocate for that the process of determining pay should be public, but not each individual’s salary.
You can also suggest a process by which employees agree to pay transparency. This is a delicate consensus building process, but can be done in small organizations with a culture of trust.
Change is scary for lots of people. The first, second, and third times you inquire about establishing a pay transparency policy, you might experience some knee-jerk reactions of ‘no.’ Experts in strategic planning and organizational change say that strong leadership and psychological safety need to be in place for organizations to implement change effectively.
Psychological safety is the belief that you won’t be punished if you make a mistake. If your organization has established a sense of psychological safety for employees, it will feel safer to take the moderate risk involved in pay transparency, among other risks. Consider the dynamic in your organization and if you would say that people feel like they won’t be retaliated against if they take a risk.
Understand your proximity to power and identify your allies. It’s been said that the squeaky wheel gets the grease, but sometimes, the squeaky wheel doesn’t get promoted or is seen as ‘troublesome.’ It’s important to understand how, and how far, you can advocate for yourself and your colleagues when your access to decision makers is limited.
If you work at an organization with a compensation strategy that states the goal of paying at or above the median for all positions, and does it’s best to ensure internal equity, then pay transparency holds little risk to management. It is a natural next step in the organization’s work toward equity.
If you have no idea if your organization has a compensation strategy, it’s ok to ask. Here are a few things to consider as you refine your ask and some tools to guide you along the way.
What to Understand Before You Advocate for Pay Transparency
Understand your organizational culture and values.
Organizational culture is a set of shared assumptions that guide how you act within your organization. Your organization’s culture is based on values that come from assumptions about human nature, the organization’s relationship to its environment, which emotions are appropriate or encouraged, and how the organization defines effectiveness.
Organizational culture can be strong and effective, or weak and ineffective. A strong and clear organizational culture is what leads to effective teams, where an ineffective culture can lead to disengaged employees, high turnover, and bad service provision. Organizational culture may be made explicit through mission, vision, and values statements, but it is more likely to be undefined in your organization.
Some commonly used terms for describing cultures include aggressive, constituent-focused, innovation, fun, ethical, research-driven, hierarchical, risk-taking, progressive, collaborative.
In asking for pay transparency, if you have an organizational culture that aligns with equity, trust, and transparency, then you’re in a good place to make a request for pay transparency. If your organizational culture aligns with excellence and being the top in their field, you might also be in a good place to make a request for pay transparency.
If your organizational culture tends toward secrecy, hierarchy, pessimism (though these are unlikely to be explicitly stated, you’d be able to feel this culture at your organization), advocating for pay transparency is going to be an uphill battle. Consider how you can work with leaders to develop a more effective organizational culture.
Understand some basics of human resources.
A good manager sees the bigger picture and the context your organization is operating in. A good manager will help you draw boundaries around your job so you can do it effectively- this means making decisions about what information is useful to you and what is information overload. Sharing the ins and outs of what work is happening in the organization’s human resource department (even if your organization doesn’t have a formally defined department) is often seen as irrelevant to your ability to do your job.
This means educating yourself is often an endeavor you’ll have to pursue on your own. Read a few blogs about budgeting and finance and some basic HR policies and practices. Keep in mind that policy change at an organization can move slowly as there are many moving parts to consider.
Resource: Strategic Human Resource Management
Understand political context.
If you find yourself on the more political side of this argument, where you understand wage transparency is about racial and gender justice, then it might be important for you to understand where your organization locates itself on the political spectrum. Does leadership have a power analysis? Does leadership take steps toward understanding how privilege and oppression operate within the organization? Does leadership have a critique of the nonprofit sector and mainstream philanthropy? You could consider asking your organization to build a sharper analysis around how to uphold values related to equity.
The market helps determine your salary. Best practices suggest that organizations compare themselves against the ‘market rate’ for a particular role. We know the market isn’t fair. If you’d like some radical writings on the nature of the nonprofit industrial complex, please read The Revolution Will Not Be Funded. The essays in this book provide a solid analysis on how nonprofits support systems of oppression, and case studies about how nonprofits have acted within the system to create social change.
The reality is, you work in the nonprofit industrial complex. You can change it, it’s ok to push for change, but change in large systems is incremental.
Resources for You and Your Organization
- Class Action: Class Action provides a dynamic framework and analysis, as well as a safe space, for people of all backgrounds to identify and address issues of class and classism. We do this through powerful interactive trainings, workshops, presentations, organizational consulting, and public education.
- Vu Le’s Nonprofit as F**k blog. Vu Le (“voo lay”) is a writer, speaker, vegan, Pisces, and the former Executive Director of RVC, a nonprofit in Seattle that promotes social justice by developing leaders of color, strengthening organizations led by communities of color, and fostering collaboration between diverse communities.
- Local Nonprofit Association Guidebooks: This example is from Montana Nonprofit Association. MNA Practices, Principles, and Tools (or your local nonprofit association) Principles and Practices for Nonprofit Excellence in Montana is a comprehensive guide that sets forth principles, as well as legally required and organizationally recommended practices for all aspects of nonprofit leadership and management.
- The Management Center: We want to see more social change in this country. We know that producing it is hard. Disparities in money and power mean that social justice advocates need to fight not just as effectively as their opponents, but more effectively. That’s where The Management Center comes in: we help social justice leaders learn how to build and run more effective organizations so that they can get better results.
- Society for Human Resource Management: The Society for Human Resource Management creates better workplaces where employers and employees thrive together. As the voice of all things work, workers and the workplace, SHRM is the foremost expert, convener and thought leader on issues impacting today’s evolving workplaces.
- Industry Specific Compensation Reports: This example is dated, but you can get access to reports like these that are tailored to your industry and region if you a member of an association. Through the collaboration of RoadMap, the Data Center and the National Organizers Alliance (NOA), we are pleased to present the results of our 2012 National Compensation Survey of community-based organizing and advocacy groups. The study focused on salary and benefits information, as well as how social justice organizations build on their values in creating just compensation packages and thriving workplaces.
- Report from Payscale: Compensation Best Practices: Paying the right way, getting paid what you’re worth — it’s complicated, and it matters. Compensation used to be a dark art. Not anymore. PayScale helps employers and their employees understand the right pay for every position and effectively communicate about compensation.