Money Talks: Why Salary Secrets Are Hurting Your Team 6 | 47

Episode at a Glance: The Importance of Pay Transparency

Radical Candor Podcast Checklist: Pay Transparency

1. Tip number one, design a principled compensation system. It’s absolutely crucial not to give managers unilateral authority over salaries, bonuses, stock grants, or other forms of pay. Instead, develop a fair, transparent compensation system that everyone understands and stick to it. This is an important check on the power that individual managers have. And if you can do it, it’ll help you prevent biases of managers or even prejudices from translating into pay discrimination.
2. Tip number two, address disparity with transparency. If you discover significant pay gaps for people with the same experience doing the same job transparently work to correct those issues and be transparent with those people about what’s going on and let them know that you’re fixing it.
   
3. Tip number three, inequity happens in secrecy. Sunlight is a great disinfectant. Put a page on your website that outlines different salaries and compensation for different roles. That solution will save you, your team, and your future candidates a lot of time and emotional energy.

Radical Candor Podcast Resources: Pay Transparency

• 7 Steps for Radical Pay Transparency to Narrow Disparities
• New Laws Force Honesty About Pay. Companies Are Catching Up.
• Designing Fair Compensation Systems
• Pay Transparency: What It Is and How to Do It Right | Built In
• Your Right to Discuss Wages | National Labor Relations Board
• Payscale

The TLDR Radical Candor Podcast Transcript

[00:00:00] Kim Scott: Hello everybody, welcome to the Radical Candor podcast. I’m Kim Scott. 

[00:00:08] Jason Rosoff: And I’m Jason Rosoff. And Amy is traveling today so it’s just Kim and I. Today we’re going to discuss a topic requested by a listener and that topic is pay transparency. So this person wrote to us to say, quote, I would love an episode that addresses, uh discussing salary or pay with peers specifically non leadership and what level of transparency is appropriate. I work as a supervisor for a very big company and the hush hush mentality around this topic expected of my team seems outdated and I’d like to challenge or influence this for the better without causing too much disruption. Okay Kim, what do you think? 

[00:00:45] Kim Scott: So, so it’s, this is a topic around which there are enormous emotions. Uh, so I think my first bit of advice is to buckle your seatbelt. Uh, I have a particular point of view, which I’d love to share. But I also want to answer the question like really quickly, and then we’ll go into more detail. I think that, what I would do if I were in this listener’s shoes, is I would go to my boss and I would say, you know, I think we’re kidding ourselves to think that people don’t talk about their salary with each other.

[00:01:27] And I think telling people that they can’t talk to each other about what their salary is, uh, implies that there’s some reason for that, like that we’ve done something wrong. And so I think it’s a mistake. So that’s kind of where I would start. Um, but before we go too deep on advice for this listener, I want to just sort of put my opinion, I was going to say bias, but this is my belief on the table.

[00:01:54] Uh, I wrote about this, uh, last year after talking to the New York Times about, uh, pay transparency. Because there are more and more companies who are finding that the best way to address, um, pay disparity is to just reveal what, uh, you know, what the expected salaries are, uh, across spans, across roles, across salary bands. So if you’re, uh, if you’re a salesperson and you’re a level two salesperson, like this is the expected salary band. And in fact, there’s a lot, increasingly, there are laws in different states that say you have to, uh, make those bands transparent. And you cannot ask what someone was earning in their previous job, because as we know, there are, there’s a pay discrepancy in the market.

[00:02:46] And if you ask someone what they were paid in their previous job, then you are going to reflect and reinforce that market, um, pay disparity. So that’s my belief, um, the listener could share this article. We’ll put it in the show notes, uh, with their boss if they wanted to. Um, but I don’t know, Jason, what would you do if you were in this, uh, in this listener’s shoes?

[00:03:09] Jason Rosoff: I think there, there’s two parts to this. And I, and that have come up for me before when I was in, uh, when I have been in the role of helping to define what compensation should look like. One part is, what can managers who have some fiduciary responsibility to the company, like, uh. 

[00:03:30] Kim Scott: Yeah.

[00:03:30] Jason Rosoff: Their job, uh, creates some responsibility to the company. What can managers, uh, and leaders say about compensation? And the other thing is what can team members say to each other about compensation? And I wanted to be very clear that most states, it may even be all states, but most states for sure have, uh, a law that make it illegal to prevent people from sharing information about their compensation with one another. 

[00:03:57] Kim Scott: Yes. Which is new.

[00:03:58] Jason Rosoff: Yes, it hasn’t always been, it hasn’t always been the case, but this is like a big push that’s happened in the last decade or so. Um, that you can’t stop someone from sharing their compensation information. And so I think the reason why that’s on my mind is it wasn’t entirely, like I understand what this person is trying to do, but depending on what state they’re operating in, if their company, 

[00:04:18] Kim Scott: Yeah.

[00:04:18] Jason Rosoff: Is dissuading people from talking about this, they might actually be breaking the law. So there might be a real conversation to be had with their team, their manager to say, hey, I am not a lawyer, but I happen to look, like here’s what’s happening and I happen to look this up and I don’t know if this applies to us or doesn’t apply to us. But I’m concerned that we might actually be violating the law by dissuading people from having these conversations, if that’s what’s actually happening.

[00:04:44] Kim Scott: Yeah. And before you go and tell your manager that they may be breaking the law, like again, make sure, uh, that you, you know, take this, because that’s likely to elicit a very emotional response from your, I mean, from your boss. 

[00:04:59] Jason Rosoff: Sure.

[00:05:00] Kim Scott: Even if you say it, and I know you didn’t intend to, but you know, uh, so I would, um, first of all, make sure. 

[00:05:09] Jason Rosoff: You don’t have to make it a you statement. I think the, like, one way to approach it might be actually to say, I’m worried that I, you could say, like, I have been, based on what I’ve understood is our general policy. I’ve been discouraging people from having these conversations and I’m worried that it’s actually like that. 

[00:05:25] Kim Scott: That I will get in trouble with the law because. 

[00:05:28] Jason Rosoff: Yes, yes. 

[00:05:30] Kim Scott: Yes.

[00:05:30] Jason Rosoff: So that might be a, another way to approach it. 

[00:05:32] Kim Scott: Yeah, that would be another way to do it. 

[00:05:33] Jason Rosoff: That takes some of the heat out of it. ‘Cause I, I think to take the sort of like the company side of it for a second. A lot of people are just uncomfortable talking about compensation. 

[00:05:46] Kim Scott: Yeah.

[00:05:46] Jason Rosoff: And that discomfort talking about compensation gets turned into either express or implied policies about what’s okay or not okay to talk about. It has nothing to do, like, it’s not because people are trying to break the law. It’s not because, it’s because people are trying to be comfortable. 

[00:06:02] Kim Scott: Yeah. 

[00:06:03] Jason Rosoff: That’s why these policies get put in place. But being comfortable around compensation is great as long as you don’t have, all your needs are being met. But if you’re in a position where you feel like I need more compensation or to be, uh, in order to be safe and happy and healthy. Now you’re like, I wish other people would be willing to be a little bit uncomfortable about this. 

[00:06:24] Kim Scott: Yeah. 

[00:06:24] Jason Rosoff: Because it’s very uncomfortable for me to live without, you know, all the healthcare that I need. Uh.

[00:06:30] Kim Scott: Yeah. 

[00:06:30] Jason Rosoff: ‘Cause I’m not getting compensated enough. 

[00:06:32] Kim Scott: Yeah. I think that is an excellent point. And I think that, uh, another thing to be aware of is it, what a benefit it is to other people who are being underpaid to be willing to just say what you’re being paid. Uh, and to be willing to share that information. Early in my career, I’ve probably told this story before, but I was working at this financial management firm. And I found out that I was getting paid like twenty-five percent of, not twenty percent, twenty-five percent less, but a quarter of what the men, the other people on my team, all of whom, uh, were men, were getting paid. The men at my level. 

[00:07:13] And when I raised this with my boss, he said, oh, you have to talk to the CEO about this. And I found out by the way, by asking someone who told me, you know. And he took a risk by telling me because if I had said, oh, so and so gets paid this much, like I would’ve got him in trouble. So I was careful not to get him in trouble. But I was very grateful that he was willing to share that information with me. ‘Cause I, otherwise I would have had no way of knowing. So he was a good upstander. So thank you to that guy. 

[00:07:45] And my boss just sort of, uh, gaslit me. He got mad at me for asking. If I paid you that much, you’d be paid as much as my daughter. And his daughter, uh, was a, you know, was a kindergarten teacher and kindergarten teachers deserve to be paid more, a hundred percent. But the solution to paying teachers what they deserve is not to pay women in finance less, you know. Uh, and so he just started yelling at me. And the problem with that is that it kind of worked, like I was scared and I was taken aback. Um, and so that is an example of a reason why it’s so important to make pay more transparent. 

[00:08:31] Now fast forward, you know, the next couple of jobs I also found I was being paid a lot less than the men who worked for me. And then I took a job at a startup and who’s CEO was a woman. And thinking that this wouldn’t happen if my boss was a woman and god damn it, it happened again. It didn’t, and not only that, when I confronted her and I asked her why she was paying this peer of mine, who, uh, who was at my level, uh, and had come during the company after I did, more, a lot more than me, she said to me point blank, well, you don’t have a wife and children to support.

[00:09:14] I was like, I thought my head would explode. Uh, and this was like, not in the, you know, this was not that long ago. Uh, I mean, I’m kind of old, but I’m not that old. And so I think, I think that it is this, these are reasons, the fact that this kind of stuff happens over and over and over again, are reasons just to make the pay transparent. And also if you’re a leader to get proactive about taking a look, uh, at your pay data across different demographics and making sure that it’s being, that it’s fair. 

[00:09:51] Jason Rosoff: Kim, as you’re saying that I think that what’s occurring to me is that making the data, making things transparent has one, uh, benefit, which is like if there’s, if there are inequities in the organization, um, they will become more obvious. 

[00:10:07] Kim Scott: Yes. You’ll hear about it. Which is the reason why I think some leaders make the mistake of saying don’t talk about your pay because they don’t want to hear about pay inequity.

[00:10:18] Jason Rosoff: Yeah. But what I was thinking of is that the solution, to your point, the solution is not to make everybody paid the same, but the solution is to actually have a theory about how you compensate people. 

[00:10:31] Kim Scott: Yes.

[00:10:31] Jason Rosoff: And to apply that theory consistently across people and roles and things like that. So like, there’s another, I think that’s the other thing that maybe is in the way, is that so few people actually have a theory of like what they, how they want to compensate people or how to even think about compensation.

[00:10:53] Kim Scott: Yes. 

[00:10:53] Jason Rosoff: Uh, because I do think when you combine the discomfort with a lack of, you know, we’re in a different, we were as right before we came on, uh, we came on the air or we started the podcast recording. We were talking about the fact that, you know, companies like Payscale exist and Payscale collects, 

[00:11:13] Kim Scott: Yeah.

[00:11:13] Jason Rosoff: Data from hundreds of thousands of people across the country and across the world. And gets self reported data on salaries. So they don’t rely on companies to report out information, they actually collect the information directly from people. And then they collate that information so that anybody can look up, they can put in their own experience and their job title and their responsibilities. And they can look up like what people across the United States on average are making, uh, in their job. Plus they can look up like in their region. So they could say like, I live in California, I live in the Bay area. 

[00:11:51] Kim Scott: Yeah. 

[00:11:51] Jason Rosoff: Like how much do people make? And the fact that that exists is like, is probably a thing that a lot of people aren’t fully aware of. A lot of people who are making compensation decisions aren’t fully aware of, especially at smaller companies or companies that are earlier in their, in, uh, in their, uh, history.

[00:12:09] Kim Scott: Yeah, yeah. And it’s, I mean, given that this, the world has become more transparent and this data is readily available. It’s really hard to understand why someone would decide to pay two people who are doing the same job very different salaries. And yet it happens all the time. So what, what’s going on and what do you, how does it even happen?

[00:12:35] Jason Rosoff: So here’s some things that I’ve observed, uh, in my life. One was that there was not a, uh, a way of even making compensation decisions. There was a company that I worked for that it was basically up to the hiring manager to like come up with a salary. 

[00:12:54] Kim Scott: Oh, so there was no, not only was there no theory, there was no process. It was totally random. 

[00:12:58] Jason Rosoff: Correct. So it was basically like someone would come up with a job description and a number. Um, and then they would go out and try to, uh, find a person for that number, essentially. It was a weird, like reverse fishing expedition. 

[00:13:13] Kim Scott: Yeah. 

[00:13:14] Jason Rosoff: And at the time I was a, uh, I was a manager and I worked for a manager. I, my boss, uh, at the time had worked in other companies that had like real processes. And like, we came up with a process for ourselves of like, how do you find out what the market value is for a job and all this other stuff. Um, but there were teams that were just like making shit up. 

[00:13:36] Kim Scott: Yeah. 

[00:13:36] Jason Rosoff: Like it was literally that bad. Um, and so not only was there not, so there was no theory, there was no process and there was no clearinghouse, right? There was no person who was like looking across all these things and even remotely responsible for saying like, does what we’re doing make sense? Not even, that’s not even about having a theory. It’s about like looking at your expenses and saying, are these rational? 

[00:13:58] Kim Scott: Yeah. 

[00:13:59] Jason Rosoff: Like that was always, that was my question when I left there, I was like, how is this business like survived as long as it has? Because it had been around many years, I spent five years there. 

[00:14:08] Kim Scott: Yeah. 

[00:14:08] Jason Rosoff: It had been around many years before I was there. And it was around several years after I left. 

[00:14:12] Kim Scott: Yeah.

[00:14:13] Jason Rosoff: Like it survived, but it was like some parts of it were like total chaos. 

[00:14:17] Kim Scott: Yeah. Yeah. I mean, and chaos, so I think that’s a big part of it. There was one time I was, um, I was advising the CEO of a fast growing, uh, very famous company that he, the CEO right after he took over, uh, in his role as CEO, he said, he started looking at people’s compensation and he thought his head would explode because what they had done up until he got there was the recruiters extended people’s offers.

[00:14:47] The recruiter would just ask people what their current comp was. And the recruiter was asking how many shares do you have in your, in your, in terms of, instead of asking for a dollar amount, uh, of equity value, they would ask how many shares they, and they would match the number of shares which you know makes no sense. 

[00:15:11] Jason Rosoff: That could be orders of magnitude different. 

[00:15:12] Kim Scott: Orders of magnitude wrong. I mean the compensation, and so it fell to the CEO to fix this sort of absurd situation and then to make it transparent. So I think the other thing that is really important is if you, and sometimes you’re going to inherit a hot mess, where some people are dramatically overpaid and other people are dramatically underpaid and you’ve got to fix it. So the first question is, how do you fix it? The second question is when can you get transparent, um, about what’s going on? 

[00:15:48] Jason Rosoff: So going back to this person’s question, I think they, they need to do a little bit of like, uh, investigating because they, who knows what the situation is. Like there could be a theory and it could be being applied and that like maybe their perception is wrong. Maybe it’s actually okay to have these conversations. 

[00:16:06] Kim Scott: Yeah.

[00:16:07] Jason Rosoff: And their perception is wrong. I think that’s unlikely. 

[00:16:09] Kim Scott: So Jason, before you go on, I want to just for listeners, I think I know what you mean by a theory of compensation. But I’m going to give you some examples of what I think you mean. And then you can tell me if I’m right or I’m wrong. 

[00:16:20] So like one theory is that the highest paid person, like Ben and Jerry’s for a while had a rule that the highest paid company could, person at the company could not, at Ben and Jerry’s, could not be paid more than I think five times more than the lowest paid person or something. And then it was ten times and then they gave up. But like, I think that’s one theory of management, is like, how big should the gap be? And what’s too much. Another theory is that, you know, we never want to, like at Google, there was a rule, we don’t want to lose people for money. When they benchmarked salaries Google paid like at the tippy top of the band. 

[00:17:02] Jason Rosoff: Yep. 

[00:17:03] Kim Scott: Um for what was, for what was out there. Um, is that what you mean by, are those the kinds of? 

[00:17:10] Jason Rosoff: Yeah compensate, like a compensation, like uh, like plan for lack of a better word.

[00:17:16] Kim Scott: Yeah, yeah.

[00:17:16] Jason Rosoff: So I like another way to say this is like, um, many compensation plans start with this idea of, we’re going to gather market data for the roles that we have inside the organization. We’re not just going to rely on our own experience of the history of paying people. We’re actually going to go out and we’re going to get data. And there are, we mentioned Payscale, but there are other firms out there that offer high quality data about how much people get paid for various things. And what is useful about that is that they’ll give you a range. They’ll give you ranges across several dimensions. So one range, they’ll say, you know, the fiftieth percentile, meaning the average person in this role, in this geography, like wherever you are, makes this much.

[00:18:02] And then they’ll tell you the twenty-fifth percentile makes this much, like the bottom end of that band. The seventy-fifth percentile makes this much. And usually they’ll tell you another set, the tenth percentile and the ninetieth percentile. So you get this idea of like what the distribution of salaries for that role are. And then they’ll usually give you another thing, which is the salary distribution across experience. And then if they’re really good, they’ll give you other things that reveal pay and equity. So they’ll tell you salary distribution across gender and across race and these other things. 

[00:18:34] So they actually, the data will actually, that you get back will reveal that the compensation you’re looking at like if you were, because some people still ask that question. I, you said there are companies that said it’s forbidden. You can’t ask what you were making before. Some people some places do get this sort of market data and they still ask that question. And by showing these distributions across different dimensions, you actually get a sense of, I’m talking to a candidate who is likely being, historically, has likely been underpaid for their role because they’re a woman in a male dominated field, for example. 

[00:19:08] Kim Scott: Hopefully when they see, you would expect that when they see that they want to fix it but that is not always the case. Sometimes they’re like, woohoo, we can underpay her. 

[00:19:19] Jason Rosoff: We can get this person for less money. Yeah, that is the unfortunate side effect. 

[00:19:23] Kim Scott: I think like, if going back to the that first job I had out of, uh, out of college. And then, uh, you know, the woman who I worked for underpaid me for the same reason that the man I worked for under, because they could, you know? 

[00:19:37] Jason Rosoff: Yeah, yeah. 

[00:19:38] Kim Scott: And I think that’s not, it’s dumb to do that. Like one of the best, one of the best arguments for this that I heard anyone make to their boss came from, uh, from the first woman engineer at what was then Facebook. And she found out that she was getting paid less than her peers who were men. 

[00:19:59] And she went to Zuckerberg and she said, all I want to do is build great products. All you want me to do is build great products. And if I have in the back of my mind, this sense of injustice because I’m being underpaid, that distracts me from building great products. Why would you allow that distraction to exist? And he thought that was logical and he fixed it.

[00:20:23] Jason Rosoff: Yep. And so, uh, just to take that, so you start with this sort of like market data and then you decide like your particular approach might be, look, we want to pay well. So we don’t want to go with the median. So you don’t want to pay the fiftieth percentile. Um, like we want to pay the ninetieth percentile and that’s what Google was doing, to your point.

[00:20:44] Kim Scott: I think they were at seventy-fifth, but whatever. 

[00:20:46] Jason Rosoff: Yeah. So whatever it is, they’re going to pick a, they’re going to pick something high on that distribution. 

[00:20:52] Kim Scott: Yeah. 

[00:20:52] Jason Rosoff: Uh, and they’re going to say that, that’s, our theory of the game is that to attract the people that we want, like this is the kind of cash compensation that we have to offer. Um, and I will say that, uh, in the last couple of years, uh, I know companies like Payscale have started to include things like the value of stock and bonuses. 

[00:21:10] Kim Scott: Yeah.

[00:21:10] Jason Rosoff: And other things in the total compensation picture. Which is important because one of the ways that, um, pay transparency, like the banding and pay transparency, can give you a false sense of security is that people’s base salaries all look very similar to each other in the band. 

[00:21:27] Kim Scott: Yeah.

[00:21:27] Jason Rosoff: But someone’s getting five million a year in stock and someone else is getting two hundred and fifty thousand dollars a year. 

[00:21:32] Kim Scott: Yeah, yeah. Or bonuses can also be, you know, uh, can do that. 

[00:21:38] Jason Rosoff: But yes, that’s the theory. So like you, and the reason why that is useful is it doesn’t matter what role you’re talking about, you can have a description of how you determine compensation for someone entering that role at a particular level of experience. It’s super helpful. To your point about efficiency? 

[00:21:59] Kim Scott: Yeah.

[00:21:59] Jason Rosoff: Like I will say it was highly inefficient for people to make it up every single time that they went out to post a job offering. 

[00:22:06] Kim Scott: Yeah. 

[00:22:06] Jason Rosoff: Like the company that I was talking about, like people were wasting tremendous amounts of time negotiating and coming up with ideas for salaries and all this other stuff. If we had given them the, you know, the formula to figure out how to compensate, how we compensated for a job, it would have saved them time. Not only, and it would have helped with avoiding inequities. 

[00:22:26] Kim Scott: Yeah, that is really an important point is how inefficient. I mean, why, like, imagine if you had to negotiate for the price of your eggs every time you went to the grocery store. Like it’s exhausting. Uh, it’s really nice to have posted prices. And, uh, but what is, what may not feel efficient in the short term, especially if you’re the leader who has to decide, there’s a bunch of decisions that you have to make that can feel very, these are hard decisions to make. And so I think sometimes people get lazy and don’t make them. I mean, like, for example, one problem with looking at Payscale and benchmarking comps is that, I think that’s sort of how CEO pay gets, I’m not knocking your pay Jason.

[00:23:17] Jason Rosoff: That’s okay. We can have my pay. 

[00:23:19] Kim Scott: But, but that is how CEO pay gets blown. 

[00:23:24] Jason Rosoff: Inflated.

[00:23:26] Kim Scott: Over time, because if you’re bench, like you tend to pay people who are CEOs, you know, a lot. And then if they, if you look across, like everybody, of course says, oh, I’m as good as that person. Like I, and CEOs are off, you’re the exception to all these generalizations. But CEOs are often very competitive with each other. I mean, I’ve sat on, a bit on boards where I sat on the compensation committee. And believe me ,these, this like these CEO’s are like practically in tears because they know somebody who’s paid more than them and they can hardly stand it.

[00:24:10] Jason Rosoff: Yep.

[00:24:11] Kim Scott: And there’s, so there’s a lot of pressure. Yeah. 

[00:24:14] Jason Rosoff: It only works if the market is rational. Like that, that’s the, and that, and meaning like if, 

[00:24:21] Kim Scott: The problem is the, I mean, the market is sub rational. Like it’s not the CEO, 

[00:24:28] Jason Rosoff: It’s not entirely irrational. 

[00:24:29] Kim Scott: Pay is irrationally high.

[00:24:31] Jason Rosoff: Yeah. 

[00:24:31] Kim Scott: But you can always make an argument, you know? You can make some kind of rational case. I think also too many people read Ayn Rand at a tender age when, before they could think. 

[00:24:44] Jason Rosoff: Yeah, so maybe it’s a yes, maybe what we’re saying is it’s a yes and. Like you probably need, you need not just market data, but you need some kind of, some theory that helps make sure that, uh, that it’s internally consistent. That, what, like there’s an internal consistency. Not just external consistency with what’s happening in the market, but an internal consistency with how you compensate people at your company.

[00:25:09] Kim Scott: And you need to have the discipline to say, the market is doing this and we’re not going to do that. We’re not going to do that. 

[00:25:15] Jason Rosoff: Yeah. 

[00:25:15] Kim Scott: We’re not going to pay people at the top one hundred thousand times more than the lowest paid person at the company. 

[00:25:23] Jason Rosoff: What’s so interesting is that if you have this sort of theory of the game in place, if you have a, like a compensation plan in place. By articulating it makes it harder to do that thing that is irrational. Because once you look at it and you say, like, we’re paying this person a hundred thousand, like, here’s our theory of compensation, except for these people who we pay a hundred thousand times more than everybody else.

[00:25:49] Kim Scott: The problem is that even Payscale, I don’t think does this. Rarely do they compare the least paid person to the most, they compare levels. Like what do other CEOs get paid? And that’s the area of comparison. They compare VPs. 

[00:26:02] Jason Rosoff: Yep. 

[00:26:03] Kim Scott: They compare directors, they compare managers, they compare individual contributors in different functions. And they rarely compare the CEO to the individual contributors, and we need to do more of that because that if we looked at that more, it would become more evident. But I mean, it’s ironic. I think Google is a place where the curve of the Payscale, was very steep. The more senior you got, like it practically went straight up by the time you were VP or SVP.

[00:26:34] And it’s ironic because you would, and overall people at Google were paid very well, like, uh, you know. And that was a conscious decision, but at one point when I was advising all these different CEOs, they were, all of them were trying to hire people from Google. And it was really hard. It was impossible to get people out of Google because they, these startups couldn’t afford to pay them that much. And the irony was that my husband was working at Google at the time and Google does all these Google guy surveys and, about how happy people are. And the number one reason for unhappiness was pay. And it wasn’t because people were getting paid too little, but because the inequity was so great at a senior level, everybody was unhappy because they weren’t getting promoted.

[00:27:31] And then also when the pay jumps too much at levels of promotion, then people spend all their time trying to get promoted and not actually doing the work. And you get, the return on politics is greater than the return work. And that hurts, uh, a company over time and yet it happens even at great, I mean, Google was a great company. But it happens over and over and over and over again.

[00:28:06] Jason Rosoff: I have noticed a trend, so, so like going back to the, this person’s question. So like I wonder if they, uh, if this company shares salary ranges in its job recs. I have noticed a trend, uh that more and more, even if the company doesn’t publish all the salary information that, uh, and actually I think LinkedIn is a big factor here. Because LinkedIn strongly encourages you when you post a job on LinkedIn to include a salary range. 

[00:28:35] Kim Scott: Yeah.

[00:28:35] Jason Rosoff: Like it almost harasses you 

[00:28:38] Kim Scott: Yeah. 

[00:28:39] Jason Rosoff: To include a salary range. Um, and that would be interesting too for this person to think about because if the company is willing to post the salary range like that, at least to me indicates, on a new job rack, that at least indicates some willingness to share information about compensation with people. And to say, like, you know, it’s like, it’s hard for me to know how to operate because when a person comes in we’re telling them something about their salary range. But once they’re here, it’s hard for me to talk to them about what, you know, what they might earn if they were to get the next promotion. 

[00:29:16] Kim Scott: Yeah, yeah. 

[00:29:16] Jason Rosoff: Like what salary range they could expect over the course of their career.

[00:29:20] Brandi Neal: I have a question about that. Sorry to interrupt. I’ve always thought it was so bizarre that salary ranges wouldn’t be posted and then it was, everybody would tell me like, well you can’t ask about that because then it’s going to make it seem like you’re not grateful or you don’t, um, you don’t want to work there for the job. So you have to jump through all these hoops and get to like the final interview and then they tell you the salary and then you’re like, oh no, I’m that’s not enough money for me to leave my house or whatever, you know. Like, why not just cut all that crap out because finding candidates is a lot of work. And then if you have to interview all these people who are not going to be interested why would you do that? 

[00:30:04] Kim Scott: Yeah. Once again, it’s a waste of time not to make it public. I think making your salary bands public is so important, for the candidate’s sake, for your own sake. I mean, it’s bad for you, Brandi, if you have to interview and then you wasted your time, but it’s also bad for the company. I mean, they probably had eight people interview you. 

[00:30:24] Brandi Neal: Well, and do they want somebody who’s not going to, it almost feels like some kind of test. Like, oh, if she’s going to ask about salary, she’s going to be a problem. Like, we want somebody who’s not going to make any wave. 

[00:30:36] Kim Scott: Yeah, if you don’t want someone who’s going to not make any waves, don’t hire me.

[00:30:42] Jason Rosoff: I will say, Kim as, when I was at Khan Academy, I was one of the poor saps who was trying to like hire people away from Google as a nonprofit tech startup, we were like doubly in trouble. 

[00:30:55] Kim Scott: Yeah, yeah, yeah. 

[00:30:58] Jason Rosoff: But we, so we actually, we, you know, this is over a decade ago. Now we were doing this, like transparency, like with candidates and internally, we were doing this because we had to, like, we didn’t have a choice. We had to, because we had to tell people right up front, like, look, we’re not going to like, there are no stock options in a nonprofit, number one. Number two, our salaries, while they’re, you know, we try to make them as competitive as possible. You’re going to be, you can earn more if you work for Facebook, you can earn more if you work for Google. It’s just a fact. 

[00:31:29] Kim Scott: Yeah. 

[00:31:29] Jason Rosoff: So here’s what you can expect to be compensated. Um, for the same reason you were describing Brandi, which is like, it’s so time intensive and labor intensive to identify candidates. And we just didn’t want to waste anybody’s time. 

[00:31:43] Kim Scott: Yeah. 

[00:31:43] Jason Rosoff: So we were like, ours are there. So we were just like, look, this is where it is. And I will say that was, maybe a harder one bit of wisdom than it should have been. Like it should have been obvious to us from the beginning that we had to approach this differently. 

[00:31:57] Kim Scott: Yeah.

[00:31:57] Jason Rosoff: But I will say it took us a couple of years of hiring to realize like, we can, we’re going to have to approach this in a different way if we want to be successful.

[00:32:05] Kim Scott: Yeah, yeah, no, it’s hard to do because it’s somehow, I don’t know, I feel like we are about money the way that Victorians were about sex. Like, don’t talk about it. 

[00:32:16] Jason Rosoff: Yeah.

[00:32:17] Kim Scott: But like we, you know, injustice happens, inequity happens, uh, when in secrecy, you know, transparency is, sunlight is a great disinfectant. Um, the other thing about making it public when, so when I was at, when I started Juice, or when I co founded Juice. We, my co founder and I, decided that we were going to publish our own salaries. We’re going to publish what the expected bands were, but we were, we’re also very transparent about what we were paid and our equity. Like we just made it public, everybody knew. And I decided to do that in part, just because I hate to negotiate so much. I was like, if you want this job at this level, here’s the compensation package and it’s there. It’s like, it’s not it’s not changing. And that was very helpful. 

[00:33:13] Jason Rosoff: Makes sense. Before we close, I just want to talk to this to our listener again and say, I think the, all the things that we’re talking about, they’re like fairly complicated. And a totally possible reason that you’re in this position is that your company hasn’t sorted all of this stuff out yet. And so they’re sort of like, they don’t quite know what to say. And so the challenge, like what, I love what they said at the end which is like I’d like to challenge or influence this. And I think the one way that you could influence this and this, is to share information. If you find that the reason why this is happening is because they’re, it’s just not organized yet or they don’t have a very clear picture or answer to how they’re um, uh, they’re making compensation decisions, um, one great step is to actually just share some information about pay transparency and how to come up with compensation plans. 

[00:34:10] That might be a useful step to take. And to volunteer yourself. Because when we came up with, uh, when we were building our compensation plan at Khan Academy, what we did was we took we asked for volunteers, for volunteer managers across the organization to actually help us go and find this information and craft a plan that’d be helpful. So you could just raise your hand and say, I would love to be a part of the solution here. I’d love to help craft a plan so that we can more clearly articulate, uh, our decisions to people and help them understand what their pay path might look like alongside their career path. 

[00:34:48] Kim Scott: Yeah. And if you want to do, if you want to build even more empathy, because it’s easy to think, ah, leadership is they’re a bunch of idiots that they haven’t done this.

[00:34:57] Like sit down and try to write one yourself. What if you were in charge? It’s really hard. I mean you’ve done it for Radical Candor, Jason. I mean what and I would love, um, to the extent you’re comfortable saying, Brandi, like what was your experience with the plan that Jason developed around compensation?

[00:35:16] Brandi Neal: Well, I don’t know if I was aware that you were doing it. I feel like Jason had mentioned it, but it was beneficial to me because I was being underpaid and that was mostly my fault because I didn’t know what I should, you know, I didn’t know about Payscale, or so, I think I threw out a number to Jason when I got hired and he didn’t know either. So it was really a wonderful surprise that somebody would take that time to make sure that I was being compensated properly. 

[00:35:47] Jason Rosoff: Yeah, I think the the way that I’ve explained it is, like we, our goal is fairly simple. Is you know, we’re trying, um, to pay people based on the market compensation for their role and experience. And I think this is really, uh, important, uh, which is there’s a, it’s important to like, when you’re doing this, to give people credit for all their experience. That’s one other thing that I’ve found is, like one way to wind up under leveling people is essentially like discount past experiences and things like that. But to say look our goal is to pay above the, between the fiftieth and seventy fifth percentile. So that’s our range. Um, our band is the fiftieth to seventy fifth percentile, um, uh, for, uh, for each role. Uh, and to give people as much credit as possible for previous experience. 

[00:36:47] Uh, and when I’ve done comp studies and, or people have asked me questions about their comp, I just share the actual results from Payscale with them and talk it through with them. And from my perspective like the, it sometimes creates tension because someone, you know, I won’t talk about Radical Candor for a second because I don’t want to reveal conversations that I’ve had. But sometimes like in Khan Academy, people would be like, but I feel like I should get more because like I’m bringing this experience or that experience. And I’m like I understand, like I understand, but you don’t want me doing this negotiation. Like you don’t actually, it’s not to your benefit if I do this negotiation with everybody, because if you’re less successful at it, then you would make less. 

[00:37:32] And if I am less successful at it, I might, maybe the company winds up paying more than it should for somebody. So it’s like a lose lose situation. Now, if we do it this way, it’s really easy for you and it’s really easy for me. 

[00:37:45] Kim Scott: Yeah. 

[00:37:46] Brandi Neal: Yeah. One of the things that I love about Payscale, Payscale does not sponsor this podcast, but if they would like to advertise, they should reach out because we’re mentioning them a lot, is that you can check for experience. Because we recently brought somebody on full time and there were different tiers of, hey, based on the amount of experience that person had, that never occurred to me before when asking for, or when giving a salary range, when I was in job interviews, I didn’t, also, because I had switched from like journalism to marketing, there’s a huge pay difference. And any pay felt good to me coming from journalism where you make so little. So I didn’t know what I didn’t know and when you just search for rain ranges online, it doesn’t factor in experience like the way Payscale does. So that’s why it’s so great. 

[00:38:44] Jason Rosoff: Correct. It often also doesn’t, like the, these applications, Payscale and others, will also take like responsibility information and whether the person has hiring power whether they manage other people, like there’s lots of factors. Um, and what I’ll say is like the way that I’ve approached this is I’m like, I’m generous, I’m like generous in my assumptions of, uh, experience that people bring. And for this person, for this company, like, uh, the thing I hope they, they take away from this is that, the fact that this person took the time to write us this note is a sign that there’s a cost being paid to the lack of clarity and transparency 

[00:39:28] Kim Scott: Yes.

[00:39:29] Jason Rosoff: Around this. Because if they’re writing to us to talk about this, like that took quite a lot of energy.

[00:39:35] Kim Scott: Yes.

[00:39:35] Jason Rosoff: So like not just talk to their friend at work about it. But to like think about it and to draft a note to us where they were trying to think about, you get they’re asking for help for how to influence this. So If you think this is happening at your company, like Kim said, the decisions are hard, but they pay dividends in the long run. Like you spend a lot less time thinking and worrying about it. 

[00:39:56] Kim Scott: I think also like Brandi, what you said was interesting. I think part of the reason why people don’t want to look is they, that they’re afraid that if they go to someone and say, we’re going to give you a raise ’cause we’ve been underpaying you. That the person will be mad and actually. 

[00:40:15] Brandi Neal: No I mean I’ve always been very happy about it. And I’ve gone back and forth between editorial work and marketing multiple times in my career. And every time I go back to marketing, I’m always just so happy to be making more money that it doesn’t occur to me. 

[00:40:31] Kim Scott: Yeah.

[00:40:31] Brandi Neal: And then when somebody like Jason, or I had a boss in a previous job, was like, hey, by the way, you’re making a lot less than all these other people, we’re going to fix that. I’m like, wow, this is great. Now I can like pay off my credit cards, you know, like it’s a, it’s a welcome thing. And that somebody cared to address it.

[00:40:52] Jason Rosoff: Totally. Yeah. I, it’s interesting because I have had that fear, I’ve done, I’ve had to correct things more than one time in my career. And I’ve had that exact fear and I’ve never gotten that reaction. I’ve had a couple of at bats here and I can say that it’s rarer than your, your, your lizard brain would make you think it is.

[00:41:15] Brandi Neal: Yeah. I mean, it’s worse when you have to, when you realize it and you have to go to bat for yourself and you have a boss that isn’t supportive, which has also happened to me. And I eventually did get the money, but I was made to feel bad about it because, I was a woman sticking up for myself. Yes. 

[00:41:33] Jason Rosoff: Yeah. Yeah. Yeah. If you’re, if you have to stick up for yourself. 

[00:41:37] Brandi Neal: Yeah. That I was seen as aggressive. 

[00:41:39] Jason Rosoff: That’s different. Which is total BS. 

[00:41:42] Brandi Neal: It’s better to have it corrected before you have to ask for it to be corrected. 

[00:41:47] Kim Scott: Much better. Like, ’cause, ’cause when does the resentment come? The resentment comes when you have to go and raise it to your boss. But if your boss proactively comes to you and says, you know, I looked at our pay and we’ve made a mistake. Like I guess occasionally somebody might be resentful, but usually they’re like, thank you for letting me know, you know.

[00:42:09] Brandi Neal: Totally. 

[00:42:10] Jason Rosoff: Yeah.

[00:42:11] Kim Scott: Way better 

[00:42:12] Jason Rosoff: All right. Now it’s time for our Radical Candor checklist tips that you all can use to start putting Radical Candor into practice right now. 

[00:42:20] Kim Scott: Tip number one, design a principled compensation system. It’s absolutely crucial not to give managers unilateral authority over salaries, bonuses, stock grants, or other forms of pay. Instead, develop a fair, transparent compensation system that everyone understands and stick to it. This is an important check on the power that individual managers have. And if you can do it, it’ll help you prevent biases of managers or even prejudices from translating into pay discrimination. 

[00:42:56] Jason Rosoff: Tip number two, address disparity with transparency. If you discover significant pay gaps for people with the same experience doing the same job, transparently work to correct, uh, those issues and be transparent with those people about what’s going on and let them know that you’re fixing it. 

[00:43:13] Kim Scott: Tip number three, inequity happens in secrecy. Sunlight is a great disinfectant. Put a page on your website that outlines different salaries and compensation for different roles. That solution will save you, your team, and your future candidates a lot of time and emotional energy. 

[00:43:33] Jason Rosoff: For more tips, check out our YouTube channel, where you can not only listen to this podcast, but also watch dozens of other Radical Candor videos. To read the show notes for this episode, head to RadicalCandor.com/podcast. Praise in public, criticize in private. If you like what you hear, please rate, review, and subscribe to us wherever you happen to listen to podcasts. If you have criticism, we’d love to get it from you. Email it to us at podcast@RadicalCandor.com. We address as many as we can directly, but we read every one. That’s it. Bye for now. 

[00:44:06] Kim Scott: Take care, everyone. 

[00:44:07] Amy Sandler: The Radical Candor podcast is based on the book Radical Candor: Be a Kick Ass Boss Without Losing Your Humanity by Kim Scott. Episodes are written and produced by Brandi Neal with script editing by me, Amy Sandler. The show features Radical Candor co founders, Kim Scott and Jason Rosoff and is hosted by me, still Amy Sandler. Nick Carissimi is our audio engineer. The Radical Candor podcast theme music was composed by Cliff Goldmacher. Follow us on LinkedIn, Radical Candor the company, and visit us at RadicalCandor.com.

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Episodes are written and produced by Brandi Neal with script editing by Amy Sandler. The show features Radical Candor co-founders Kim Scott and Jason Rosoff and is hosted by Amy Sandler. Nick Carissimi is our audio engineer.

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