Opening Up About Comp Isn’t Easy — Here’s How to Get More Transparent

There's more to comp transparency than just sharing everyone's salaries in a spreadsheet. Compaas co-founder and CEO bethanye Blount makes the case for opening up and gives a rundown on the full spectrum of pay transparency options, sharing tips for how startups can find the right setting and communicate them effectively.

CLEARING THE AIR: COMMON COMP TRANSPARENCY MISCONCEPTIONS

To take fear and uncertainty out of the equation, Blount starts conversations with founders by debunking misunderstandings around pay transparency. Here, she level sets on the phrase itself, puts more detail around the road to achieving it and digs deeper into why startups should consider introducing it.

The more nuanced definition and the long journey to achieving it

“When you start talking about pay transparency, the first thing everyone thinks is ‘I’m going to know how much everybody makes.’ I think a better way to frame it is ‘I’m going to understand why I’m paid what I’m paid and how I can increase my comp,’” says Blount. “It’s about making sure employees understand their current reality and see a career development path in front of them.”

Comp transparency isn’t about sharing everyone’s salary in a spreadsheet. It’s about giving people a clear line of sight into why they make what they make.

The right — and wrong — reasons for introducing pay transparency

According to Blount, founders are also often misguided in their thinking on why introducing pay transparency might be a good idea.

“You have to dig deeper to uncover why you’re doing it. Implementing new comp practices is no small feat, and you need to begin with a clear sense of why it matters to your company. It’s not just about what has or hasn’t worked at other places — it’s about how those successes and failures apply to your startup,” says Blount.

Pay transparency isn’t an end in itself — and it’s certainly not something to undertake just because other companies are doing it.

For Blount, the move to introduce comp transparency is usually rooted in a desire to build faith in the company. “Because comp is so foundational, it's one of the best ways that a startup can help instill trust and connection with the company. But you need to figure out who you’re trying to cultivate trust with — what’s your goal?”

And in her experience, that gambit to build trust is usually anchored in the same handful of objectives:

• Boosting recruiting. Startups can rely on pay transparency as a lever to help out in a competitive talent market by making offers more attractive.
• Improving retention. Of course, existing employees also have a vested interest in understanding their pay grade.
• Building a brand. Increasingly, startups are also looking to cultivate a reputation for being exceptionally innovative in processes or culture as a differentiator to set themselves apart from bigger competitors.
• Keeping up with compliance. There’s a minimum level of pay transparency that, depending on your location, has to happen.

THE RUNDOWN: ALL OF THE NOTCHES ALONG THE COMP TRANSPARENCY CONTINUUM

Once a startup has decided to put more of their compensation cards on the table, the conversation quickly turns to what exactly should be revealed — and how much is too much. And from black box to Buffer, there’s a wide range of points along the comp transparency spectrum.

Keep it secretive and flexible (and often arbitrary)

This is the starting block for most small companies. Pay decisions are off-the-cuff and comp is entirely shrouded in mystery. This of course gives founders a lot of wiggle room for key hires, but also can create a culture of fear and a lack of trust.

Put up scaffolding behind the scenes

The first slide up the pay transparency scale comes when those early ad-hoc offers give way to something more formal: levels are acknowledged and associated with salary ranges based on market data.

Unveil individual levels

The next leap forward is when employees learn their own current levels, but not the salary ranges that go along with them.

Share all levels and form rungs on the career ladder

At the next step, employees learn everyone else’s level.

Reveal personal salary ranges

To take it one step further, share with employees not just how much they make and their level, but the salary range that goes along with it.

Paint the full picture — and hint at what’s to come

To go even deeper in the realm of comp transparency, startups can consider putting together total comp statements.

Share (almost) everything

Far out in the deep waters of pay transparency, the levels for every person and the ranges that go along with each level are shared with all employees.

Lay it all on the table

The endpoint on the pay transparency continuum is learning exactly how much everyone in the organization makes.

FINDING YOUR FIT: THE TOOLKIT FOR SETTING A PAY TRANSPARENCY TARGET

Much like an array of subtly different paint swatches, the various shades of pay transparency make it somewhat overwhelming for a fledgling startup to choose the right one.

For early teams trying to decide which end to gravitate towards, Blount recommends taking these considerations into account:

• Remember mission only goes so far.
• Think about functional diversity.
• Carve out flexibility for emerging roles.
• Spend your tokens wisely.

For the teams that aren’t ready to commit one way or another, Blount offers a few essential practices to build a solid foundation that can be a springboard for increasing transparency later on:

• Start with data. Use market data to build your compensation philosophy.
• Sketch out levels and ranges in your diary.
• Set up comp review checkpoints.

CHANGING IT UP: THE GUIDE TO MAKING PAY TRANSPARENCY MOVES

After firming up a targeted pay transparency destination, the next step is getting out there and changing comp practices.

Rising tides lift all boats — and what goes up, can’t come down.

Assembling data will almost certainly uncover lumpy patches in how employees are compensated; the next move is to fix anything that’s broken.

Take it slow and save the numbers for later.

Even if parsing through the data reveals that many people are below range, startups may not have the means or the desire to bump everyone up at once.

COMMUNICATING THE CHANGE AND THE SENSE BEHIND IT

When startups are ready to talk about their endeavors to upgrade pay transparency, communicating clearly — and thoughtfully — is paramount.

Prep managers beforehand — and use this all hands script.

Your team needs to hear about this from you at an all hands, not in an email.

Stay consistent and keep your team updated.

Openly discussing comp isn’t a one-and-done internal comms push, especially if a startup is inching along the pay transparency continuum.

BRINGING IT ALL TOGETHER

Although talking about compensation is never comfortable, startups shouldn't clamp up when it comes to shedding light on how the numbers make their way onto those paychecks. Remember that it's about giving team members a line of sight into why they make what they make, not about posting everyone’s salary on a digital bulletin board. When executed well, it gives employees clarity about their place in the org.