The need for true equity in equity compensation – ClearTips
I started my career in oracle Has been around the proverbial block since the mid-1980s and has since led several startups, particularly with companies operating in Silicon Valley and with global consulting companies ranging from Fortune 50, including the current SaaS company Are prominent in During my career, I have not only carved out a niche working with technology companies, but have focused on designing and implementing global compensation programs.
In short, if there are two things that I know like the back of my hand, it is technology and how people are paid.
The compensation growth I have seen in these last 35+ years has been dramatic. Among other things, women have been considered and paid, primarily by a fundamentally seismic shift for the better. Some of it, in truth, is window dressing. It is good to say that you are a company with a strong culture focused on diversity, as it helps attract top talent. But the rubber meets the road and gets recruited once hired. When companies don’t do what they say, we see mass exodus and even lawsuits, as has happened recently in Pinterest and Carta.
So with the likes of Intel, Salesforce And Apple is publicly committed to gender pay equity, there’s nothing left to see here, right? Actually, we are not even close. Yes, the glass ceiling is crumbling. But significantly, largely unexplained gaps are relative to the broader scope of long-tail compensation for women, especially in startups, where essential measures of economic reward, such as stock options in companies, are often not even part of the conversation around pay parity. Occur.
As a baseline, while progress is evident, gender pay is an incomplete product to say the least. Recently the US Bureau of Labor Statistics found that white women earn 83.3% compared to their white male counterparts, while African-American women earn 93.7% compared to men of their same race. Asian women made 77.1% and Hispanic women earned 85.1% respectively.
According to PayScale, the average earnings ratio of women to men has decreased by just $ 0.07 since 2015, and in 2020, women make every dollar $ 0.81 for men. In the long run, in calculating estimates given over a 40-year career, women may lose more than $ 900,000 over a career period.
But this is just the tip of the iceberg. Even if we left the gender pay gap only for cash pay inequality, there is Something else to see here. However, to quote a famous pitcher, “But wait, there’s more!” And this more – At least in my mind – far more disturbing.
As innovative startups from Silicon Valley to Silicon Alley of New York and beyond look at business landscapes afresh, guess how most of them are able to captivate bright, entrepreneurial minds? This is definitely not a salary, because while a company has nothing beyond a great idea and probably led by a VC on Sand Hill Road, there is no hefty salary or benefit package offered. Instead, they hang the proverbial carrot of stock / equity compensation.
“Look, we know you can get $ 180,000 per year from Apple But we will give you $ 48,000 per year and 1,000 shares currently at $ 62 per share. Our board – which is packed with studs from the Bay Area – is hoping to climb within two years! Wait ’til we go to the public!
This is the pitch, at least if you’re a promising Male. but Women, Historically, there is a tendency to opt out of this lucrative reward package for different reasons.
How has this happened? Beyond another aspect of the business culture, while legislative steps have been taken to address disparities in public company indemnities and stock spreads, there are no regulations as to how stocks are appreciated or distributed by private companies. And, as we all know, appreciation can possibly be massive.
It makes sense. Many companies and even naive business people consider equity beyond titans / compensation (which goes hand in hand) and as the “third pillar” of compensation. Startup shares are not just top-of-mind – often overlooked or misunderstood – for many who see gender pay disparities, although it may not be more misleading.
A recently published study in the “Journal of Applied Psychology” found a gender gap for equity-based awards ranging from 15% -30% – even women accounting historically for accounting for specific reasons , Including differences in business and length of service. In a company. Keep in mind that many of these companies will go for mass valuations, and for some, lucrative IPOs or acquisitions.
This is a problem I identified long ago, and it is largely because of this that I agreed to lead our Bay Area startup on behalf of our New York-based parent company AST. I found a commitment to a true equal culture generated by a shared moral compass, a belief that companies that care about gender equity perform better and provide better returns, and a conviction that diversity Brings unique perspectives, retains talent, builds a strong culture and aids customer satisfaction.
In speaking with industry colleagues, I know that this is something CEOs, both men and women, are dedicated to addressing. I believe it is necessary to create a comprehensive picture of compensation between startups, global conglomerates and every company. If you are in a leadership position and recognize that this is a challenge for your company to address, here are some steps I would suggest to you:
- Look at the data: Let’s analyze. See if this is really an issue in your company, and if it is, commit to creating a level playing field. There are many experienced consultants who can help you work through remediation strategies.
- Remove content: Hire an independent intermediary to analyze your data, as it removes politics and emotion, as well as bias from the work product.
- Create Compensation Band: Like the GS system of government, there is a pay grade system that includes compensation bands for specific roles. Before hiring a person, decide which band should be assigned the job responsibilities.
- Empower a champion: Identify and empower an internal champion to truly own equality – someone whose performance is judged on the basis of creating equity company-wide. Instead of handing it over to your HR head, create the role of a Chief Diversity Officer to create it. After all, it is bigger than just salary or medical benefits. It is culture and thus the foundation of your company.
- Get your board on board: Educate your board as to why it matters. If your board doesn’t value it, it ultimately won’t matter. Companies have audit committee chairs or enrollment chairs. Identify the “Culture Chair”
The first report we created is a Pay Comparison Report, so there are tools that allow anyone in management to easily review stock grants given to all employees and to ensure equity among people of different ethnicities or genders. Can be used. It’s not hard to see if you care.
When I was graduating from college and Ronald Reagan was in the office, we were talking about the ability for women to break the glass ceiling. Now, after many years, somehow we have managed to develop lights that you can clap off and most of us are walking around with the power of a supercomputer in our hands. Is it really asking too much that we need gender pay equity, including all three compensation pillars (cash, profit and stock), to prioritize?