By Kate Reichert, HR Business Partner, Trüpp.
Imagine a world without salary negotiations
As I sit in a conference room with my team discussing the implications of the new Pay Equity Act that was recently signed into law in the state of Oregon by Governor Kate Brown, it began to occur to me just how far reaching the many facets of this new law and its potential effects could be. One of the brightest light bulbs that went off in my head was the realization that negotiating is likely to become a thing of the past. And not just with salaries: think PTO, benefits, and 401k matches. All of it, off the table! Even something like asking for a raise may become obsolete; after all, if employers are making these kinds of out-of-cycle pay decisions, how would they justify it?
No longer will it be reasonable for an organization to offer just a little more PTO to a top talent candidate to seal the deal, or pay a little more than current employees are getting paid to ensure the offer gets accepted. Nope. With the new trend toward pay equity legislation that is sweeping the nation, negotiating during the hiring process is quickly becoming taboo.
Pay equity laws make sense though, right?
Men are much more likely to negotiate their pay than women. In fact, when they do negotiate, they are 3 times more likely to be successful than women are, according to a survey conducted by Glassdoor in 2016.
If we eliminate negotiating, counteroffers, and requests for out-of-cycle pay increases, and instead instill solid and consistent pay practices in organizations that are based on a clearly defined compensation program, then it makes sense that we will lessen, hopefully even eliminate, the wage gap over time. Strong practices like these will also build trust in our workforce and eventually, employees would stop wondering about whether they are being paid fairly and equitably and instead, simply assume they are. And it’d be true! Isn’t that the kind of culture and organization we want to build anyway?
Although this shift we’re seeing in the compensation landscape may feel like a hard pill to swallow at first, it’s also quite comforting to know that soon there won’t be a need to negotiate these things; we’ll all be treated fairly and equitably. I strongly believe organizations will see significant benefits. For one, manager’s will have an easier time managing pay situations; they’ll have a compensation policy they can point to, helping them explain why out-of-cycle pay requests won’t be reviewed, and they’ll be able to put their best foot forward the first time around when making job offers to candidates. Avoiding out-of-cycle reviews or new hire negotiations will also allow the department to better maintain their budget, permitting the organization to be more fiscally responsible. Moreover, the long-term effects pay equity legislation is likely to have on organizations and their ability to build strong cultures where there is mutual trust seem innumerable.
Equal pay laws level up the playing field for all employers
One final thought I wanted to share was that as I researched further to write this post, I came across many naysayers who believe pay inequality to be an uncommon occurrence, committed by few employers in actuality. Even if that is true—and I’m not convinced it is—aren’t all laws in place to combat the poor decisions of few rather than the right decisions of many? The fact remains: women are paid about $0.80 to every dollar a man is paid for comparable work. Reliable research has shown repeatedly that implicit biases are alive and well in the workplace. So my ask of every employer is this: do your due diligence. I truly believe we all want the same thing at the end of the day, and that is to do the right thing.