by Kate Evert | Jul 29, 2020 | Diversity, Equity, Inclusion, Executive Compensation
“All I Want Is What’s Coming to Me.” – Sally Brown, Peanuts
A few weeks ago, an article in The Economist touched the third rail of American capitalism: it stated that CEO pay in America was “out of whack.” It even justified its headline by starting off with a quote by the current patron saint of American Capitalism—Warren Buffett.
Of course The Economist backed up this blasphemous claim with several quantitative studies. This compensation consultant had to swallow extra hard because the article not only featured compensation consultants, but found compensation consultants from some of the largest firms that admitted to their culpability in the exorbitant rise of CEO pay.
But, after 25 years in compensation consulting, I knew these inequities of pay did not just happen. I knew of missing variables that influenced the regression line that these authors were desperately trying to draw.
We must go back in time. In one of my first labor economic courses, the professor drew a diagram on the board. The graph and the curves represented a person’s productivity curve intersecting with their compensation curve over time. This graph demonstrated a key concept in labor economics: the back loading of wages. Longevity with a firm was commonplace, and pensions were the reward for such service. Executives were rewarded on the way out with the gold watch, and a lifetime of some earnings held back and now delivered in the form of a defined benefit plan, aka a pension.
Then, almost 30 years ago, pensions began to disappear. The key retention tool for CEOs became Long-Term Incentives (LTIs). But “long term” was a relative term, and generally such incentives were only held back three to five years. Like a 401(k), these “long term” rewards were portable once exercised. The retention value was limited.
So not only was lifetime employment gone, so was the incentives for it. How would companies recruit and retain top executives? The competition for top talent became more intense, higher wages were demanded. The quarterly call for greater shareholder value shortened the execution runway for executives, further pressing wage demands higher. Do better; earn more. However, the data shows the correlation between pay and performance is weak, if non-existent.
Companies need to acknowledge that the long journey from the days of back-loaded wages to today’s “obscene” incentive packages for executives has had little influence on company performance. Perhaps that guy down the hall with the 30 year pin was the missing variable all along. Read More Here
by Kate Evert | Jul 22, 2020 | Compensation, Diversity, Equity, Inclusion
By Lisa Aggarwal
Have you watched the Hamilton movie? How many times? I’m on my third time already; getting the most out of my Disney + subscription this month, thank you! I cannot get enough of this masterpiece, which I consider the most important Broadway musical of my lifetime. Leslie Odom Jr. earning a Tony for his role as Aaron Burr was a no-brainer. His talent extends beyond the stage, however. He has also been a powerful voice for the theater community in earning their worth. When you think about it, the story of Alexander Hamilton is about money and the creation of our treasury system, one of the many “systems” that exist today.
In a Los Angeles Times article published in late June, Odom Jr. reflects on how the theater industry has historically been devoid of persons of color and how “Hamilton” is quite the exception. Also exceptional is the theater industry itself, which unlike film and TV, has not historically provided residual pay for enduring classics such as this one. He seeks to build generational wealth for himself and castmates by revising that antiquated pay system.
PayScale Inc., which analyzes compensation data, found in its Raise Anatomy Report in 2018 that of the 37 percent of people who have asked for a raise, white men were the most likely to receive one. Reasons vary, but there are steps that you can take to better prepare yourself.
Systemic issues are being brought to light in so many aspects of society, and I’m optimistic that equitable pay for women and persons of color will also be a priority. In the meantime, be sure to advocate for yourself and understand how your job is valued in the external marketplace. Do research on your role and understand how pay is determined. Internet resources are not foolproof but can be a good starting point. If you are changing jobs, negotiating your starting pay will establish your baseline for years to come. Many states, in an attempt to rectify historical pay discrimination/underpayment, have laws that prohibit an employer from asking for previous salary information. It is crucial to ask for what you believe your experience warrants in terms of pay. It really does start with you, because we don’t get what we don’t ask for. After all, Hamilton “got a lot farther by working a lot harder, by being a lot smarter, by being a self-starter.”
by Kate Evert | Jun 24, 2020 | Diversity, Equity, Inclusion, Wage Increases
By Margaret Jungels
If we’ve learned anything the past few months, it’s that many of our lowest-paid workers are essential to keeping not only the overall economy, but also our individual households running. We rely on grocery store clerks, delivery drivers, caregivers, and cleaners in stores, hospitals, and nursing homes to keep our families fed and safe. And yet, in many states, these essential workers are paid at rates so low they could work full-time and still qualify for SNAP benefits. The federal minimum wage is $7.25 an hour and hasn’t increased since 2009. In our gut, most of us understand that the minimum wage should be increased for reasons of fairness.
But there are reasons beyond fairness to increase the pay of these essential workers. A review of nursing home data shows that higher minimum wages lead to better quality of care, and even reduced mortality rates. “It appears that with better pay, jobs in nursing homes became more attractive, so employee turnover decreased. Patients benefited from more continuity in their care.” Studies also indicate that, across industries, employee performance improves as wages rise. Increased quality, reduced turnover, and better performance? So, it seems that not only is increasing low wages the fair thing to do, it’s the right business decision as well. Read More Here
by Kate Evert | Jun 12, 2020 | Diversity, Equity, Inclusion, Leadership, Work Place
Obviously that it’s hard.
It all starts with understanding. And understanding begins with listening. We’ve been doing a lot of listening, a lot of reading, a lot of absorbing. There is a lot of listening, reading, and absorbing still to do before this country reaches better understanding.
Here are three articles that we think might be helpful.
The first is from a managing director at Goldman Sachs who has opened up about his experiences as a black man; perhaps because he feels like people are finally listening. In 2011, Frederick Baba had an incident with the police because he “matched the description of an individual who had reportedly stolen from a residence in the area. The description was of a black male in shorts and a T-shirt, with no other details. No color for either article of clothing, and in a city with just under one million black people, I was obviously the culprit.”
The second is an article from the Harvard Business Review about what makes a good listener. Jack Zenger and Joseph Folkman describe good listeners being more like trampolines rather than sponges. “[Good listeners] are someone you can bounce ideas off of — and rather than absorbing your ideas and energy, they amplify, energize, and clarify your thinking. They make you feel better not merely passively absorbing, but by actively supporting. This lets you gain energy and height, just like someone jumping on a trampoline.”
The third is a letter from Tim Ryan, US chair and Senior Partner at PwC, outlining the firm’s continued steps to addressing the injustices that too often occur to Black Americans. Ryan states, “It is my responsibility as a leader to not only stand with [Black colleagues] against racism to condemn these killings, but to use my privilege to be a part of the solution and take action – to help dismantle the racism and injustice that has become so pervasive in our society.” From the time Mr. Ryan co-founded the CEO Action for Diversity and Inclusion, PwC lost an employee, Botham Jean, to mistaken identity and police violence, PwC has gone way beyond a fancy ad campaign and is committing their people and hours—and applying peer pressure to other corporations to do the same.
I can’t help but think of the lyrics to the Nick Lowe song that Elvis Costello made famous. The song asks, “So where are the strong and who are the trusted? And where is this harmony, sweet harmony?” Perhaps if we all do our homework, we can be strong and the trusted for one another and bring some of the much-needed harmony to one another, our workplaces, and our world. Read More Here
by Kate Evert | Jun 10, 2020 | Diversity, Equity, Inclusion, Leadership, Work Place
Imagine running a marathon. After crossing the finish line, you’re expected to go straight to the office for the day and lead a meeting or present a new proposal to your company. You’d be exhausted—physically and mentally drained. It sounds crazy not to be able to rest and catch your breath after such a daunting and strenuous task.
And yet, this is exactly what many companies are asking of their Black employees. Already overwhelmed and emotionally exhausted, many are often asked to lead the charge against racism. In a recent Fortune commentary, Najoh Tita-Reid, a senior executive of marketing reinvention at Logitech, urges that “while this is indeed a unique moment, the responsibility of dismantling systemic racism must not be placed solely on black employees by asking them to fully lead diversity and antiracism efforts.”
Tita-Reid encourages non-Black leaders to accept responsibility to lead the charge, rather than asking Black employees and leaders—who might already be burnt out. She suggests a few ideas to protect the emotional wellbeing of Black peers, while actively tackling racism in the workplace. Don’t expect Black co-workers to teach you all about race issues; they carry this burden every day. It is your job, as their coworker/boss/peer, to do some emotional heavy lifting, educating yourself on these issues and how to best become a good ally.
Equally important is being respectful of Black colleagues who don’t want to discuss race issues. Once you’ve completed your marathon for the day, you may have no interest in talking about running for a while. Are you suggesting another 5K at the end of the day, or are you handing out Gatorade at the finish line? Read More Here
by Kate Evert | May 20, 2020 | Competencies, Diversity, Equity, Inclusion, Economy, Human Capital, Productivity
As the world begins to reopen and summer approaches, parents are still left juggling work and children. A (welcomed) end may be in sight for remote learning, but most daycares, summer camps, and kids’ programs are closed, leaving children perpetually home for the summer. How can America be open for business when so many parents need to remain home to care for children?
The federal government has tried to help parents during this time, implementing the Families First Coronavirus Response Act (FFCRA), but the measures put in place really only benefit some parents. A recent Time article addresses this same concern. “Businesses with more than 500 employees are excluded from the mandate, and firms with fewer than 50 can ask for an exemption. That’s left more than 59 million Americans… uncovered by those government leave provisions.” Without the option to work from home, some parents are forced to resign in order to care for children.
Like the other structural flaws that Covid-19 has exposed, it’s abundantly clear that there’s a bigger problem with our current childcare system. Elliot Haspel, author of Crawling Behind: America’s Child Care Crisis and How to Fix It, says, “I think that the crisis calls for a complete re-envisioning of the American childcare system.” Hopefully, we will take what we’ve learned during these times to create solutions that work for all families. Until we do, this will limit the labor supply of those 20 to 45, which are typically key earning years. Read More Here
