My first thought was “Oh sh*t—How do I deal with this?”
When we launched Know Your Worth internally, I experienced the tool in just the same way that many HR professionals are going to experience it - maybe worse. Our entire company was encouraged to log on and try out the tool, which I did. I entered a few basic details about myself and up popped the estimated median base pay I could earn in my local job market.
Before I could even dig into the data, there were knocks on my door. Employees from various teams stood holding printouts of their own estimated market values. Managers came to my office asking how to talk to their teams. We were in the middle of a performance review cycle, and employees even began pasting screenshots of their market estimate into their self-reviews. The conversation was starting whether I liked it or not.
I thought, “I need to really understand this.”
My worry was not really about our pay –we regularly review formal market data and factor that into our compensation packages. However, the questions from employees were a sign that I needed to better understand the Know Your Worth tool, understand the data behind it and think about it in the context of our total compensation and rewards philosophy. And, most importantly, I needed to quickly think through how we wanted to communicate with our employees about pay.
[Related: Check Out Our Know Your Worth Employer Guide]
Glassdoor is in a period of significant growth. With approximately 700 employees in multiple locations, we are much bigger than we were when we started in 2008, but we are still a start-up. We are changing rapidly, and our compensation and rewards philosophy has to evolve to keep pace. I joined Glassdoor in April and was already planning to work with our executive team on a strategy for compensation for the next phase at Glassdoor, but as most HR professionals know, it is a complex and time-consuming challenge to define or redefine a compensation philosophy that will allow for growth and future eventualities. With the pending launch of Know Your Worth launching, I realized I needed to get clarity on our compensation and total rewards strategy in short order.
At its core, Know Your Worth is designed to help people understand their worth in today’s market. They can use it as one factor in evaluating if they are being paid fairly, and help determine if they should attempt to negotiate their pay and/or explore other opportunities. Unlike some other tools that I have seen come and go in the past, the data behind this tool is not only impressive, it’s real time. Know Your Worth uses patent-pending data science and machine learning algorithms that leverage millions of salary reports shared by employees on Glassdoor, while analyzing real-time supply and demand of today’s local labor market. Know Your Worth also factors in typical career transitions of people doing similar work. Each person’s market value, and pay range, is unique to them and private, and will be recalculated weekly and tracked over time.
But it is also challenging if you are the employer.
Much like how employee reviews and CEO approval ratings on Glassdoor disrupted the industry 8 years ago, Know Your Worth is the next iteration of transparency and empowerment. We are in a new world where candidates and employees have access to more information, and the worst thing that I could do as CHRO is to dismiss it...or panic. I realized the best thing I could do is to slow down, learn more about it and put it in context. I also realized Know Your Worth had the potential to help inform our compensation going forward.
[Related: Download Our Salary Negotiation eBook]
I sat down with Robert Hohman, Glassdoor’s co-founder and CEO, to talk about the tool, how we felt it factored into base pay, and how we should communicate about it to our teams. I gave feedback to the engineers and product teams about how the product could be stronger from an HR perspective, and they made changes.
It was clear that as an organization, we had to figure out where this new information fit into our pay structure and we had to help educate not just our managers but also our employees. We are still in that process right now.
The way we are thinking about this is as follows:
- Market Snapshot: Gather information about the market you compete in for talent. For us, this includes participating in formal compensation surveys, analyzing what we are hearing in our recruiting conversations, gathering data from exit interviews, looking at salary data posted on Glassdoor and now we will also use the data from the Know Your Worth tool. All of this combined gives us a market “snapshot.” Know Your Worth is a useful starting point from which to frame conversations.
- Market Positioning: Next, we are considering where we want to position ourselves relative to that market and what our overall compensation philosophy should be. This includes factoring in the locations where we have offices and what those local talent markets look like as well as segmenting our workforce into different talent groups to be sure we are tailoring our approach where we need to and not assuming “one-size-fits-all” when it comes to market positioning.
- Determine Pay Mix: We are also spending time determining the right pay mix, with the correct balance of base, bonus and equity elements, as well as considering where those fit into our overall rewards program. The reality is we don’t typically come out on the high end for base pay because of our other compensation elements. This means in many instances our employee estimated Know Your Worth market values exceed their current base bay. The reality is, many of our employees could likely earn more base pay at another company, but we think Glassdoor’s total compensation package in aggregate is very competitive.
- Communicate: Lastly, and very importantly, we need to think about how we communicate with managers and employees about our total rewards approach so that they understand what that means for them both now and in the future.
We know that base pay is important but it is not the only reason employees want to work for a company. So it is critical to ensure that employees understand the role of compensation and benefits in your overall employment value proposition. The EVP varies by company, and the value that employees place on compensation also varies from one employee to the next.
But in the end, employees want to know that they are being paid fairly, both with respect to their colleagues internally as well as what they can expect to earn elsewhere. So being transparent about your rewards philosophy and compensation practices can really help with that.
Showing your employees that your organization is not afraid of transparency or of employees having more pay information can go a long way. I find most employees do understand that base pay is only one slice of the overall “rewards” pie. The overall pie at Glassdoor consists of base salary, bonus (or commission), equity, benefits, the value of the work we do and the chance to be part of a powerful mission, opportunities for career advancement, formal and informal learning opportunities and the chance to work with amazing people.
At Glassdoor, we want to be sure that the complete pie is taken into account by our employees as they look at their estimated market value through Know Your Worth.
As someone who has been in human resources for over 20 years, I am fully aware of how Know Your Worth will disrupt the industry. Honestly, it took me two or three days to wrap my head around it; two or three days of using the tool, talking to colleagues and thinking about its implications. I am now more than confident.
I, honestly, have now concluded that having Know Your Worth will help make us all better – better employers and better employees. I stood in front of our entire company recently at an all-hands, right after Know Your Worth was launched internally. I wanted to make sure that employees understood our approach to compensation and how the Know Your Worth tool will fit into that approach. I was able to genuinely say that I am excited to have more transparent conversations about pay.
Now, my response to anyone showing up with their Know Your Worth estimate is, “Let’s talk about it– this estimate is a helpful input but it's just one input. Let's talk about where it fits into our overall approach to compensation and rewards.”
The good news is I now have an engaged and more informed person coming to talk to me about compensation. We can discuss their job title, their years of relevant experience and what they input into the Know Your Worth tool versus what we might be factoring into our own calculations. We can discuss the fact that Know Your Worth represents the estimated median base pay, and put that in context of their total compensation and rewards. And perhaps most importantly, we can get to common ground where both the employee and HR have a shared understanding about where they fit in the company. In some cases, these conversations have also illuminated real gaps we needed to fill and that is also important.
Ultimately, Know Your Worth is all about transparency. It is a tool that helps to have an open, healthy conversation with your employees about pay. It’s incumbent upon us as employers to remind people to look at that calculus for themselves. Being afraid of employees getting access to Know Your Worth is a self-defeating proposition.
My personal organizational philosophy is: I don’t want anyone employed here as a hostage. Arming employees with information about the market is useful and empowering. Rather than being concerned by employees who have access to Know Your Worth, I’d challenge my colleagues in HR and management to make sure that you're true to what your employment value proposition is all the time and be open to real conversations. If you want people to be at your company because they want to be there, be transparent. Let’s make sure that we’re being fair, consistent and transparent, and that our employees can feel it.