How to Explain Pay Decisions at Work

[00:00:00] We don't need to be in a box anymore, and we never should have been, in my opinion. We need to be really clear about the decisions that we make, why we make them, and that they are vetted really well from the C-suite on down and explained through management to the employee. Don't conduct your analysis in isolation because data is so incredibly powerful. Not defending just the tribe, but defending the organization.

[00:00:29] Those creative people that you really want to keep empowered, keep excited, keep motivated, keep thinking. Good experience pays dividends down the line. Curious like a potential breakdown on proximity. Welcome to We're Only Human, a podcast about human resources, business, technology, and the workplace. My name is Ben Eubanks, your host, and I'm so glad you're here.

[00:00:55] Hey everyone, welcome to We're Only Human. I am Ben Eubanks, your host. I'm so glad you're here with us. Today, we're going to be talking about compensation. We're talking about pay. We're talking about how we influence people's behaviors at work, all those sorts of things. I'm so excited to be here with Sherry from Jera Compensation Consulting. We met recently, had a great conversation about some of the stuff happening in the world of comps, the trends, things that she's watching. And I said, hold on, this conversation is too good for us to have separately. Let's bring it on the podcast. And she said, yes. So Sherry, welcome. Glad you're here.

[00:01:25] Hey, I'm so excited to be here. I love talking to you. It's super fun. Yeah, well, we're going to have a blast here. You and I were chatting before we even started recording. I'm like, oh gosh, see, this is gold. We need to get this here. We're talking about how both of us are in that role of leader of organizations. And both of us are sort of the, I like to build things. I like to try new things. I like to sample a hundred things, like just want to do a little bit of everything. And how it's hard sometimes. And you were talking about the bus. What was the metaphor for that?

[00:01:52] I like to build the bus, but I don't want to drive it. I don't want to have the wheels on the bus. By the time the wheels are on the bus, I usually like to be on to the next bus. Yes. I'm with you on that one. I'm with you on that one. All my head's flashing through my, the wheels on the bus for my, my four-year-old is playing through my head right now. So I'm not going to, everyone listening has got that stuck in your head as well. Round and round and round and round. Yes. Until Sherry gives us something better, we're going to go with that.

[00:02:20] So before we get into some of the fun stuff we're going to talk about today around comp and some of the things that we're both seeing in that world, take a minute and tell the audience more about who you are and what you do, please. Okay. So I've been in kind of the compensation career development world for about 20 years. I hate to like count them at this point. But I went into consulting for compensation specifically five years ago and I've been loving it ever since. So I'm up in the Pacific Northwest. So. Right.

[00:02:50] I have my coffee with me already. Got your coffee rolling. I mean, it's, it's going to be a good day. That's how you can tell. Okay. So of all the things that you could have done, walk up. You know, it's the same, the same answer. Every single HR person will ever tell you, no matter what group in HR they're in. They're like, I don't know. I accidentally fell into it. I started working at just part-time jobs after my kids were born, fell into a part-time job at REI,

[00:03:19] which is this awesome outdoor retailer company up here in Seattle, was just taking calls, ended up doing a part-time stint in their legal department, filling in for somebody. And they said, you know what? You're not going back to the call center. What do you want to do? And I said, oh, maybe I'll do what that person did that just explained the benefits to me. That seemed fine. You know, it was so early in my career. And now I look back on that. I'm like, thank God I didn't go into benefits.

[00:03:47] Not anything against benefits, but oh my gosh, not my cup of tea. So I went into HR, just kind of a generalist lookout for what we really wanted to do. They were really focused on internal mobility. And the comp manager came over and just asked me, hey, you seem like you'd be great in comp. Want to give it a try? I said yes. And then I cried for three years because I did not understand it. But after that, I started to kind of get it.

[00:04:16] And I started to really love it. Those first three years, man, those were awful. Okay. Was it grasping like the fundamental, like the science of comp, like some of those sorts of things? How the pieces fit together? Where data comes from? Was it about the more soft side of it? About how do you talk about these things and elaborate on them and make this make sense to other people? There were so many things that went into it besides what I understood as an employee. You had a pay grade. You knew where you were in the pay grade.

[00:04:45] They were relatively transparent there at the time. But what I didn't understand was all the nuance, right? Like the incredible nuance that went into this. And then like, of course, like learning Excel and how to become an analyst, just learning how to think. And I had the most incredible manager who really taught me how to think.

[00:05:08] And, you know, over time, I get so frustrated because I would think I had thought of all the different things that went into this one question I was trying to answer. And she'd be like, that's great. But did you consider X? And then I would just feel defeated because I hadn't. And it seemed so obvious. So she just taught me really carefully how to think about all the different angles and bring it all together. And that was the frustrating part.

[00:05:37] But that is now the part that I love the most. I feel like you told me when we were taught before that that's now your superpower because you learn that so well. You use that as a core of so much of how you do consulting and work with comp teams, things like that. Yeah. The learning how to think piece is actually really interesting. I have, we were talking a minute ago, your kids are now adults. But my kids, my oldest kids are 15 years old. And so they're doing a lot of schoolwork now where they're having to do a lot of big thinking and how to convey ideas and everything else.

[00:06:06] And what's weird is they're taught all these things that are very linear and specific. Like you have a right answer, wrong answer. And they get to this stage where, well, there's a lot of right answers. How do you figure out what's the best right answer? And you realize you're like, oh gosh, the way I learned this other stuff didn't help me, prepared me for how to figure this other stuff out. And so that, to me, landed in a personal way, not just a professional way. Because I was thinking about learning how to learn. Learning how to think is a thing that we assume people are going to have when we hire them or even move them into a role. They knew you.

[00:06:36] They liked you. They said, hey, she's capable. Let's bring her into this other place. And you still were like, oh gosh, there's so much I don't even know. Right. Yeah. It's crazy. And just learning from the different perspective of trying to step out and take away your biases and look at it. While I was going through this, one of my daughters was just going into high school. And they had this project where here on the coast of Washington, they had just opened up whaling to one of the tribes.

[00:07:06] And it was very controversial. Right. They were going to go out and whale, get a whale with a harpoon. And this was going to be a big thing. And so they assigned everybody in the class, in her class, like you are the Greenpeace captain of the boat and you are the tribal captain or the tribal head. You are, you know, the person interviewing everyone. And everybody had to take a side and argue their points.

[00:07:32] And then the next week they switched everybody to a completely different role and they had to argue their point from that side. And I remember having this huge aha moment that that's kind of what I do in my work. Before I ever come with a recommendation or an idea to somebody, I try to see it from all the different sides.

[00:07:53] And it's so powerful because when you have to say it out loud and make a case for it, you realize that all the cases have merit. And that can really change how you approach a problem. Yes. Yes. Okay. So I didn't plan on like taking a detour for a few minutes, but that was, that was, no, that was my, I started this, I think down that path and you just kept your foot on the accelerator until we finished it.

[00:08:19] So I really wanted to explore that a little bit because I feel like we get caught up in the, we're going to talk for a few minutes about some of the specific things, right? The very specific, tangible, tactical, practical things that comp teams are doing and HR teams are doing or managers are doing as a detention of comp when they have to answer the question from the employee or the candidate, like those sorts of things. We're going to talk about that, but that all comes back to that's philosophy, the big picture, the vision.

[00:08:43] If you don't have those things rooted, then every one of those conversations is going to be a one-off roll the dice. Who has any clue what's going to come out of their mouth? Anybody listening? Yes. Yes. Yes. Oh goodness. Okay. So let's jump into some of the more specific comp stuff now that we've cast a broader net over this. So one of the things that it's very, very clear in our data is that comp is changing in a lot of different ways from the data sources we're using to who has to be responsible for those conversations.

[00:09:13] Like I just mentioned, all kinds of things are changing in that world. What are your thoughts on some of the things that are changing as you're seeing and interacting with clients on a day-to-day basis? At a really high level, it's moving from like, I never really loved how tech-to-day, technical it was in the beginning anyway. But it's becoming so much more social and emotional than it used to be. Comp's always emotional, right?

[00:09:37] But the fact that transparency, pay transparency laws are going into effect and people are getting information, but in my opinion, they're not getting enough or they don't know the questions to ask around the information they're getting. But they have just enough information to then create an idea or a false idea about what that information is telling them. So we're kind of stuck in this technical like, well, we've done this data.

[00:10:05] We know what the pay range should be and we're going to post this and everything should be fine. But most people are not addressing that human need for more information. Why is that fine? Why is that the range? Where did you get that? What is comp? What is this person over here even doing and why are they here? We need to just tell the whole story. And I've been wanting to do this forever. And where I started was a very, very transparent company anyway.

[00:10:35] So that kind of set me on the transparency, trust, you know, trajectory. Yeah. Yes. We don't need to be in a box anymore. And we never should have been, in my opinion. We need to be really clear about the decisions that we make, why we make them, and that they are vetted really well from the C-suite on down and explained through management to the employee. Ultra transparency.

[00:11:04] Not necessarily everybody's pay, but like, how do we get there and why? Yes. That philosophy, the idea behind it. The picture of what good looks like. We need to be sharing all those things. HR and CEOs, right? But everybody needs to know. Everybody needs to know. The thing that gets me is there are, I've talked to HR teams in the last few years about this. And like, yeah, well, you know, if someone asks though, they'll just make sure that we get that question or it gets to us.

[00:11:30] When we ask in our research, we ask candidates, people who are just out there looking for work, who most often talks to you about pay. Hiring managers talk to you about pay twice as often as recruiters do. And so that's one example of that. And amplify that across all of your people, across all of your business. And you realize, that's why I go back a minute ago. It's like, roll the dice. Let's see what happens. Because if you haven't given them a vision or equipped them somehow to have that conversation, then you're going to struggle with that.

[00:11:54] We did have a great conversation with Kathy White here on the podcast before around, she's from Habitat for Humanity Philadelphia, around some of the things they did around pay transparency. And she admitted, listen, we, she said, I got this old phrase, be in my bonnet. Like I got this thing that was bugging me and I knew that we had to do something about it. And she said, we went a little bit too far and then had to reel it back in a little. But she said, I learned a really important lesson about where that line was and what people could tolerate.

[00:12:21] And she said, I realized we couldn't go faster than the comfort level of smart leaders or it created some weird discomfort for all of us. But she said, the thing we're always pushing for is to be more transparent. Like you were saying, Sherry, it's so important not to just hold to what we've always shared, but where can we be a little more open, a little more open about how promotions happened here? Or what skills these people need to be developing so they can achieve that next level of career success or whatever else we're going to be sharing. It doesn't just have to be about a specific dollars and cents thing, although it can be.

[00:12:51] There's other pieces too. Well, and, you know, a lot of times my clients call me and they're like, we need to just find out we're paying competitively. And I'm like, oh, loaded question, right? So what ends up happening is typically, you know, we talk about, do you have a defined comp philosophy? And typically they don't at the smaller companies sizes, which is fine.

[00:13:11] But also like, I like to tee them up with the understanding that if you want to move from a kind of ad hoc or reactive pay approach to a structured pay approach and more transparency, this is easily a three to five year process. Not with me in the consultancy, but them as a company. And we sit down and we talk about where are your pay transparency?

[00:13:39] Where do you sit right now in pay transparency? Where do you want to be? And where do you see the steps? And then we put that on hold. We go through some analysis and then we talk about it again. Because often where they see, like they might expect that they're really far away from market and they have a lot of catching up to do. They might find out they're doing okay and not as bad as they think. So they could accelerate the transparency.

[00:14:05] But also a huge thing that I do a lot of times is I meet with like, or I have a partner that does leadership effectiveness. And, you know, it's like, are your leaders working together? Well, number one, how do they deal with conflict? How do they deal with ideas that they don't necessarily agree with?

[00:14:25] How do we make sure that everybody is on the same page using the same terminology and the same definitions and the same processes before we roll this out? And that is a huge piece that I think a lot of places miss is you can build the most amazing compensation program in the entire world. But if you don't have people trained or on board with it, it will fall flat the minute I walk out the door.

[00:14:55] So it's so important to think about all of these things. Pay transparency, leadership effectiveness, ability for the company to move forward with transparency with the changes that are needed. All of those. Okay. So that sort of leads me to this next question I want to ask you about. And if you, again, you have the benefit of helping to build a lot of buses for these clients. We're going to go out to that metaphor earlier, right?

[00:15:21] Lots of the whole bus building graveyard out here, whatever the bus shipyards out here. Yeah, we're working through that. But when you look across these different organizations that you're seeing, what is one thing you think that comp teams should stop doing if they want to be more effective in their work and their relationships and their impact on the people? Stop valuing technical skill over communication.

[00:16:16] Stop valuing technical skill over communication. The same page. Communication is so huge. One of the main things I do every single time when I start with a client is usually I'm in a meeting with the C-suite of some sort and someone or two from HR. And I will ask them all to go around the room and define promotion. And they will confidently define promotion in wildly different ways. Right?

[00:16:46] And then they will all look around and kind of laugh and then feel a little uncomfortable. And that right there is the absolute perfect way for me to start because it shows this is not necessarily a data problem. It's a misalignment problem and a communication problem. So I am a huge fan of define, define, define. What is promotion? When can it happen? Who approves it? What's the process?

[00:17:16] Down to, you know, all sorts of different pay changes. And you would think that's not necessarily what they need me for. Right? They want a comp structure that works. Well, unless you have everything defined, your comp structure is not going to work anyway. So that's usually where we start is defining that. And, man, it's all communication what I do. It's very, very little of analysis and numbers.

[00:17:44] I was looking for it really quickly as you share on that. There's a hard quote recently that struck me. And I was trying to figure it out because it was around alignment, around unity. It's like apathy is never a path to unity. Like someone's just lack of caring about that or lack of attention to detail around that is never going to lead to unity on it. And that's sort of how I felt about that. These leaders are like taking it for granted that everyone feels it and sees it the same way they do. And when they vocalize it and you see the looks on their faces, like, uh-oh. Yeah, exactly.

[00:18:13] This is Baskin-Robbins 31 Flavors of Promotion here. How do we got to figure out if this is for us and we're the ones to have a shared vision for this, what's it like for our people? And that creates a great conversation point for them. So I like that. I love the theme for this one so far feels like to me is compensation is technical already. It has to be because of some of the things we do. But that's the back office stuff. Anything employee facing can't be that way.

[00:18:40] Anything with our leadership even, when we're trying to translate this, it can't be that way. Or we're going to not have the impact, not have the results, not have the outcomes we're trying to really shoot for. We're going to end up falling short of that because we are speaking in our own lingo and throwing these things around. Well, and like you can't sit there and just show them a dashboard or show them a chart of some sort and talk about comp ratio.

[00:19:11] Everybody just glazes over. They don't care. Tell them a story. Tell them something that is relatable that they'll remember. You know, like I think, you know, I have created all these weird stories around different scenarios that really I see work with almost all of my clients where they go from like just nodding and saying, uh-huh, to going, oh. And then I hear them pick up on this story later and use it over and over again.

[00:19:41] So like storytelling and like looking at things from a different perspective or through a different lens is so important. This stuff's kind of dry and boring until you like get it into a story that like engages people. Any tips or advice for people that are like, okay, that sounds great, but I'm not, you know, Dr. Seuss or Stephen King.

[00:20:06] Like most stories would not be Stephen Kingish at work, but what's, what would, what kind of storytelling, what's the way to start that? Is there a, hey, listen, the first time I did it, here's what, how it went terribly. And here's what I learned. Anything you would give them on advice around the storytelling piece? Because I hear that. I share that. I saw a post the other day that a number of Fortune 500 companies are hiring for storytellers, actual job titles named storytellers for the same reason you're talking about here, because they need to convey important ideas, not with data and charts and stuff. Even though I'm an analyst, I love that.

[00:20:36] It has to come down to a message and a story. Anything you'd share practical on that side to help people get better at that or build that skill themselves. Well, I feel like, think about it from like, put yourself, like I said, in those different roles. Like if I'm an employee hearing this, what hits and what doesn't and give real world examples. Like one of my very, very favorite ones. And this is the one I hear my clients repeat all the time.

[00:21:02] Every now and then I get somebody that doesn't like it because I am comparing people to cars. But bear with me and know, just it's no pun intended, but it's a vehicle to get there, right? As a CEO, let's say you are setting your employee salary budget and you know that you're going to be hiring a software engineer for next year. So think about that in a car.

[00:21:29] The CEO wants to buy a car and they know generally what they can afford and they know generally what they want in that car. They don't necessarily need like a Lamborghini with all the bells and whistles, but they don't want a beater car that's going to break down in a year either. So they hand you over $65,000. Okay, that's not a good number for a software engineer, but let's pretend. $65,000 to go buy a car.

[00:21:59] If you are the recruiter and the hiring manager and you walk onto the Lamborghini lot knowing you have a $65,000 budget, that is a misalignment and misunderstanding. You're shopping for a car way above your budget. And the CEO is like, we can't handle that. So you need to understand there are incredible candidates out there that you can't afford, just like an incredible car.

[00:22:28] But if you walk onto, say, a Honda lot, maybe you'll get something. Maybe you'll get something really good and you can make a pretty good deal there. Or if you walked onto a used car lot, maybe you could get something with a lot of bells and whistles that you wouldn't have ever imagined that you could get. So know what your budget is, you know, and understand where that's coming from. That's the comp philosophy and budgeting piece of pay ranges. That's the CEO telling you what kind of car they can afford.

[00:22:58] Now, when employees hear that, if they say, you know, I know that somebody in my job is, they're a car and they're worth $500,000 and I should be worth $500,000. Maybe, maybe you are, but you're just talking to the wrong company. Maybe, maybe you aren't. And you're just a high level Honda Accord. And, but get the most out of that, you know, be your best used car salesman that you possibly can. Right?

[00:23:27] Like, it is, it's really, to take the emotion out of it, I try to talk about car shopping, right? Like, car shopping is emotional in itself, but, you know, you have to really understand, I think, especially from a recruiting and hiring manager standpoint. I hear hiring managers all the time saying, we cannot get a commercial real estate person for this much money. And I'm like, you're trying to get the very best one in the area.

[00:23:57] This CEO saying they don't want to spend that much. So now what are you going to do? You're going to go to another car lot. Right? Yeah. I love that. I really do. That didn't really answer your question. It was just another story. It was a story. That's an example, though. That's what I do. I don't know how to tell people how to. Well, I want someone to hear that, though, and say, hey, listen, that's a, you used a metaphor that all of us can identify with. There's examples in that.

[00:24:23] And when you say, hey, by the way, that's how it feels when you're, we're an employee negotiating that. All of us can make that connection. That's the same exact thing that I do when I speak. I look for a story, an example, something that makes me laugh or makes me go, oh, well, that was really powerful. Okay. Now what parallel does that have back to the work that our friends in HR and comp are doing every day? Here's a tie-in. And when I tell that story, one of the important things you said at the beginning, and you just kind of breezed over this, I want the audience to go back and hear this really well. Well, you watch what lands and you watch what doesn't.

[00:24:51] Because if you say this story 10 times and people just go on about their day, they don't remember it, they don't connect to it, then find a different story. But this one you've used and people are like, oh, I like, I get that one. I can understand that one. Great. Use it. Reuse it over and over again. We used to have what I call it our, like culture was a big priority for us when I was an HR manager at this one company. We had, like culture was a key part of how we operated. It was our fundamental differentiator for other companies in our space based on our leadership perspective.

[00:25:20] And so one of the things that we always did is we would emphasize this value during all hands, during onboarding, during hiring. And one of the things that I did is I would look for examples of employees who did that really well. And they became what I called our, our legends. Basically, I would tell a story of when Bo took care of this customer in this really powerful way without his leader even knowing about it until after the fact. And then us being able to reward him for that because he was just doing the right thing in the moment.

[00:25:49] And we said, hey, every time that moment comes up, keep doing that right thing because we saw that great job. Right. And that story, every one of our new hires heard that after that happened. And they knew what our expectation was of them when it came to those values, not just, oh, integrity is good most of the time, sometimes when it's easy. No, integrity is hard, but you do it even when it's uncomfortable and it's going to lead to better things for all of us in the long run, not just a short-term win. So I think you create some really good points there.

[00:26:16] Well, and, you know, with managers that are, you know, they don't want another change, right? They're tired of change. They just don't want one more. What I notice is like, you'll, you'll find out what is the pain points of this particular manager or this particular company. And you can speak to, you know how it feels when you go to hire a person and you don't have a job description written and you don't know how much it's going to pay.

[00:26:42] And you have to go to the CFO and ask for money, but you're not really sure how much it's going to cost. And it turns into this like three week back and forth thing. And it's just wasting all of your time. Imagine if you had a career development track of job descriptions written for every level of this job. And you could hire an entry level and mid-level or a solid subject matter expert. You'd know exactly what the pay range was already.

[00:27:10] You just have to pick up the phone, talk to HR, talk to the CFO, get approval, and it would be posted within a day or two. Imagine how that would feel. And all of a sudden, that pain point, all of that wasted time, you're not giving them more red tape with this structure. You are giving them an answer and a relief to a problem. But if you just tell them this is going to be better, you're going to love it, right?

[00:27:38] You're not getting that emotional connection. And I think that's what we in compensation sometimes miss just because of the type of people that we are that do this job. We are technical. We are logical. We don't really tap into the emotion of the employee, the CEO, the hiring manager, the recruiter, and really say, I know this part is terrible. I know change is irritating.

[00:28:07] But here's what it's going to feel like when we're done. And that's huge. Goodness. I've written down so many notes over here that it's going to be hard for me to go back through and pick a favorite one from this one. I've got so many good ideas. I love the storytelling piece and some really great ideas there. I love your focus on the technical stuff matters, and it's important. You have to have those foundations. But if that's all you ever rely on, then you're never going to be amazing at this. You're just going to be competent at this, I would say. So there's that one.

[00:28:36] And then you talked about some of the other pieces early on about even being able to answer a question within your team around what are people, how do people see internal ability and promotions and advancement? Like, how do they feel about those? How do they see those things? Because you'll find out that everyone's got a different perspective, different idea on what good looks like. And it's up to us to create the framework for what that actually is, to give them something to hook into for their answers, not just whatever's off the top of their head. But let's tie back to what Sherry was telling us the other day.

[00:29:05] This is the answer to that. Even if I don't know the exact one, I know where to find it. And we can get that for you and be able to have a more cohesive set of responses from our leaders. So good. If someone wants to connect to you, wants to follow you, wants to learn more about some of the things you're sharing on this run or says, hey, listen, we need some of that good stuff at our company. You okay with it if they reach out to you on LinkedIn? Absolutely.

[00:29:27] So you can connect with my company, Jera, J-E-R-A, Compensation Consulting out there, or me directly, Sherry Calstead on LinkedIn. Also, my website is Jera Comp Consulting. So anywhere, everywhere. All the places. I like to talk, as you can tell. I mean, well, I'm still learning from you. So I'm going to keep letting you talk. But I know we've got a time limit to meet.

[00:29:54] So thank you again for taking the time to join me, for sharing your passion, your expertise here with us, and giving us a – calling us to a higher standard as comp practitioners. I really appreciate that. No, it's been fun. It's always fun talking to you. Excellent. Excellent. All right. To everybody else out there, thank you so much for joining us today. We're Only Human. We'll catch you again next time. Until then, think about your stories. Tell them well. And make sure comp is a priority, not just for you, but for your team, for your people.

[00:30:22] And how you share on that matters deeply. Thank you again to Sherry, and we'll catch you again next time. Thank you so much for joining me on the show today. I'm honored to have you as a listener. If you enjoyed this episode, please take 10 seconds to rate it on iTunes, Stitcher, or wherever you listen to your podcast. Also, if you know a friend that could benefit from today's conversation, please pass it their way. After all, a rising tide lifts all ships.

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