Is It Ok To Be Paid Inequitably During A Recession?
Welcome to my weekly Q&A feature. (Scroll down to find the Q&A.)
If this is your first time here, welcome. I spend a fair amount of time speaking at events and conferences. At the end of my presentations, I leave space for audience members to ask questions—tough questions, brave questions, you name it. The level of candor and curiosity always inspires me, and I want to share that sentiment with you. Each week I pick one question that I believe others would find most instructive and publish my response to it here.
The purpose of this weekly tradition is transparency and inclusion.
Transparency: a behind-the-scenes look at my day-to-day.
Inclusion: bringing others along on the journey.
Pay Equity During A Recession
How do you address a raise/salary adjustment when you know the company is going through a rough period financially? How do you push through it and demand what you deserve even if they use the rough period as an excuse to put your raise on hold?
Curious about something? Ask your question here for a chance to have it answered in an upcoming edition of Brave Souls®.
You deserve to be paid equitably. Full stop, no disclaimers. If you’re generating value for the firm, then they need to reciprocate the exchange by valuing you. A company’s financial hardships are a poor excuse to not be paid what you’re worth.
Valuing you = paying you fair wages.
“Valuing you” can also look like company-sponsored health insurance, paid leave, retirement plans, vacation time, recognition in meetings, and opportunities for career advancement.
To be clear, however, we live in a market economy where value is denominated in dollars (and euros, rupees, reais, etc). So if the dollar value of your compensation isn’t equitable, there’s a problem.
You seem to already know, or at least have an idea, of what you should be paid. Unfortunately, many employees don’t due to information asymmetries. That’s hurdle #1 to overcome. (There are two hurdles.)
Hurdle #1: Information Asymmetries
How is pay determined? How are bonuses distributed? Are colleagues with fewer credentials or less experience paid more than you?
Many companies keep these decisions opaque, trapping people into compliance. In fact, fewer than 20% of private companies practice pay transparency. This makes it difficult for people to prove they are being paid what they deserve.
Hurdle #2: Retaliation
Once you figure out what you should be paid, you now have to make the pitch to your boss. And herein lies hurdle #2: You have to hope that your request for equitable pay will be well-received and not result in retaliation.
When I realized I was receiving inequitable wages after the birth of my daughter, I notified my manager and HR about the pay discrepancy. Simply by speaking up for myself, I put our family’s economic security on the line. I could have been retaliated against, demoted, or de facto fired for causing ruckus. (And I was.)
Who Is Responsible For Pay Equity?
Hurdles like information asymmetry and retaliation coax underrepresented employees into thinking they are the problem that needs fixing.
If only I learn how to negotiate better… If only I become more confident… If only I change my intonation so I don’t come across as arrogant… If only I deliver my pitch in just the right way so not to ruffle any feathers…
Here’s an idea. Instead of asking employees to break down the barriers they didn’t erect, what if we ask companies to fix the system that’s inequitable? It goes back to first principles:
Who should hold responsibility for pay equity: the employee or the employer?
There's still a fair amount of "legacy inequity" trapped inside the companies that dominate many industries. In fact, 94% of occupations have a gender pay gap. I believe it's not on you—the individual—to carry the burden of inequity. Instead of asking people to change themselves, we should require leaders to change the system and make it more equitable. And that means paying people like yourself equitable wages in good times and in bad.
Valuing Employees Is Always A Viable Business Strategy
Savvy leaders know that under-paying employees—their most valuable asset—is not a sustainable business practice, regardless of exogenous factors (e.g. a recession). Research shows that inclusion and equity can actually help organizations weather economic downturns and bounce back stronger.
Curious about something? Ask your question here for a chance to have it answered in an upcoming edition of this newsletter.
© 2022 Katica Roy™, Inc.