How Changing Salary Structures Can Build Organizational Equity

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Posted by Matt Fagaly - 27 April, 2018

The publishing industry has been under fire lately for employee hiring and compensation practices—and for good cause. We’ve known since 1994 that our industry lacks diversity and that compensation is extremely low compared to other industries. And nearly 25 years later, not much has changed.

Most recently, The Guardian reported on the gender pay gap in the publishing industry. Unsurprisingly, it is alive and well. Even though women comprise 78% of the entire industry, men are generally paid more and hold most of the upper-level positions. This disparity is staggering in many large publishers, ranging from 10.41% to 24.71%

The gender pay gap is even worse when you factor in racial differences, workers with disabilities, and gender variance. Due to unconscious bias which reflects larger institutional structures, women of color, gender nonconforming staff, and staff with disabilities face heightened workplace disenfranchisement.

So how does all this relate to Berrett-Koehler?

The problem.

Well, BK has taken pains to create a compensation structure that challenges industry norms: it’s intentionally designed to be fair to all employees. We have an open list of compensation objectives (as written by our President and Publisher Steve Piersanti) and a transparent salary structure—that is, all staff can see who makes how much, anytime.

Avoiding a class system and promoting equitability is a top priority. Of course, this system offers different salary levels by experience, expertise, responsibility, and performance—but it is by far a much flatter structure than the industry norm, or that of other industries. Compared to most industries—where CEOs make 140 times more than the average worker—at BK our president only makes 3 times more than the lowest paid employee.

The only problem? Berrett-Koehler is located in the Bay Area. You may have heard that Bay Area rent prices are incredibly high, and it’s no joke. Here, even people with six-figure salaries can be considered low income. As of 2017, the low-income limit for a single person living in the East Bay (Oakland, Berkeley Emeryville, Concord, Walnut Creek, etc.) was at a staggering $56,300, and with Bay Area rent prices still rising now in 2018, that number will likely continue to rise.

Now consider this: the entry-level salary for Berrett-Koehler’s lowest paid employee (at the assistant level) begins at $38,577, while the second tier (the associate level) starts at around $49,000. Both tiers do not provide sustainable wages for a single person—let alone a couple, or a family—living in the Bay Area. The bottom end of salary structure—though designed to combat the rampant issues of wage disparity in our industry—hasn’t kept up with the rising cost of living in the Bay Area.

 

The meeting.

Every year the Berrett-Koehler management team proposes a company-wide increase to match employee salaries with cost-of-living increases while balancing our yearly revenue goals and organizational expenses. This year, they brought it to a vote it in our February staff meeting.

Their proposal was simple: a 3% increase across the board for all staff members. BK is a mission-driven organization that is substantially more conscious and intentional about creating equity in our organization and our industry. This felt like a big opportunity for us to walk our talk.

 

The challenge.

A 3% raise across the board sounds pretty nice, right? Except this method was disproportionately disadvantaging lower level and entry level employees—and providing them with far less to go towards the rising costs of living in the Bay area. In other words: the lower your salary, the lower your raise—and the greater your struggle to keep up with soaring rent prices.

It struck me: Berrett-Koehler can do better.

So I challenged the management’s team proposal by asking a question: 

Had they considered how a flat across-the-board salary increase unfairly disadvantages employees with lower salary levels, while giving an unfair advantage to employees with higher salary levels?  

I knew that BK could reward the years of hard work, expertise, and professionalism of our more experienced team members while still giving BK staff at the first and second pay grades a much-needed salary increase to match the Bay Area's cost of living.

 

The response.

I was more than a bit nervous to bring it up—who wants to rock the boat when it comes to salaries, after all?—but I was relieved to find the staff and management team's response was very thoughtful.

The management team hadn’t considered the disproportionate effect of a flat percentage increase. Flat percentage increases were simply the way cost-of-living increases had always been done. So we opened up the floor to discussion.

Front desk office coordinator Anders Renee articulated in great depth the need to distribute a salary increase based on different pay grades due the demands of cost of living in the Bay Area. In response, a couple upper-level employees pointed out other aspects of the salary structure that need tweaking. They noted that BK employees who have been with the company long-term top out too quickly, which means their salaries don’t rise relative to inflation after a certain point. This also increases pressure to make promotions and can have a negative effect on long-term retention.

The outcome? We decided to create a task force to look deeper into our salary increases over the past few years and to consider how we could make the increase more equitable for all of our employees. The task force consisted of myself (an associate level staff member), Anders Renee (our front desk office coordinator, also an associate level staff member), Kristen Frantz (VP of Sales & Marketing), and Steve Piersanti (Publisher and President of Berrett-Koehler).

 

The process.

Together, the task force wrote a thorough salary proposal with the intent of creating more equity in our organization.

I did research on GlassDoor.com to find the average Bay Area salary for employees in each of their respective positions. Anders charted different proposed salary structure modifications and analyzed their costs. Steve and Kristen worked together on digging into the costs and business goals for the year, and on how to balance our larger organizational objectives with the concrete sales figures and the capital at our company's disposal.

With the help of the entire team, Steve drafted the proposal to raise salaries substantially at the lower levels, remedy a problem in BK's salary structure to prevent staff from maxing out too quickly at each pay grade, and to keep the amount of added salary costs within acceptable organizational limits.

 

The result.

We presented our new salary proposal at the subsequent staff meeting.

Staff brought up justifiable concerns about how much BK can afford, how the revised proposal fits in with our strategic aims, and whether it truly considered the needs of the entire staff. A couple employees in lower salary brackets shared their personal stories about how difficult it is to live in the Bay Area, even with the generous salaries and benefits provided by BK. They voiced in depth how much the new proposal would greatly improve their financial well-being and sense of monetary stability. At different points, the conversation drifted to whether the new proposal properly compensated BK’s top organizational talent, and if it took into account the organizational peril of spending more than 30% of company revenue on staff costs.

Eventually, after much-needed deliberation, the staff voted in favor of our task force's proposition and the salary increase went into effect in April!

 

The power of change.

BK strives to create a workplace where all employees are heard, valued, and respected as individuals. From the moment I raised the issue to the acceptance of the revised salary structure by the staff, the entire process was a heartening display of BK's democratic and ethical concern for all. This process showed me that it is possible to reward employees without consciously favoring one department or set of employees over others. It is possible for an organization to listen to dissenting voices, and to truly hear when employees—especially those who might not hold the same organizational clout—express concern for their needs.

Front desk coordinator Anders Renee had this to say about his experience:

It isn't easy to talk about money so openly and candidly.


I'm grateful that BK's culture supports these kinds of difficult discussions amongst staff.

Berrett-Koehler president and publisher Steve Piersanti displayed true leadership by directly addressing the needs of lower paid staff. Of the process, he said:

I am very happy that Matt, Anders, and others spoke up in our staff meeting and that we were able to collaboratively make changes that raised our entry-level salary by almost 26 percent while also meeting other employee and company needs.  These changes will help BK attract and retain talented employees and grow our company—and they are entirely consistent with our longstanding commitments stated in our compensation system objectives.

These win-win outcomes are what an organization can achieve when empathy, cooperation, and listening is valued throughout the entire company culture.

Topics: Your Organization, Book Publishing, inequity, Diversity & Inclusion, gender pay gap, Staff Retention Strategies, equity

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