Why most startups are unprepared for payment transparency laws

Not ready for payment transparency

Most startups are unprepared for the pay transparency laws that will take effect in the coming months, according to compensation experts. The first step for many is setting up internal pay bands — a task that isn’t at the top of most startup leaders’ to-do lists.

• The California law, which takes effect Jan. 1, applies to companies that employ 15 or more workers. But few early-stage startups that cross that 15-head threshold have an HR function, and many don’t define their salary ranges.
• Matt Schulman, founder and CEO of compensation technology startup Pave, estimates that only one in four startups will be transparent about salary ranges by January — and most early-stage startups haven’t established ranges yet of salary. “I bet, like, 95% of 20-year-old startups have no idea of ​​compensation bands at this point,” Schulman said.
• “Many companies, surprisingly, don’t always know if these laws apply to them,” said Kaitlyn Knopp, founder and CEO of compensation software maker Pequity. Companies typically establish pay bands when they reach 40 or 50 employees — around the time they start hiring middle managers, Knopp said.

A big part of standardizing pay: employee communication. Heather Sullivan, who took over as Astranis Space Technologies’ first permanent chief executive in July, is just now setting up pay scales at the company, which has about 270 employees.

• “It’s a ton of work,” Sullivan said. Much of that work is internal change management and communication around pay transparency, he said. “So if they see a number or a set of numbers on the website, they’re not, like, ‘Hey, what?’”
• In addition to developing salary ranges and training leaders on how to talk to employees about progressing through a range, Sullivan said, part of the job is defining a philosophy around pay.
• There will “always” be an incremental salary adjustment when setting up salary ranges for the first time, Knopp said. “That’s healthy, because the market is always moving,” Knopp said. “You give raises, which are celebrated.”

Standardizing pay as soon as possible can help companies know how they measure up to competitors and prevent pay inequities from building up, Knopp said. Differences in pay result from inconsistent skills.

• Pay differences are “almost harmless,” and often the result of non-systematics, according to Knopp. “It’s usually people who have the best intentions, where they’re like, ‘I’m really going to swing hard for this candidate — I’m going to do everything because they deserve it,'” he said.
• Plus, the sooner companies set up pay bands, the easier it is to do. “It doesn’t take a deep job architecture process to have a general scope that you pay for the role,” says Maria Colacurcio, CEO of fair pay software maker Syndio.
• And starting early can avoid gaps that will be more expensive to fix later, Colacurcio said: “The risks are compounded over time, and those risks get bigger and bigger.”

Not meeting expectations

For most people leaders, some part of the performance review process needs improvement. For Protocol’s latest Braintrust, research editor Kevin McAllister asked HR leaders from companies like ServiceNow, HubSpot, and Qualtrics about their least favorite parts of the performance review process.

What he learned: Reviews shouldn’t contain surprises, the “how” of performance can be just as important as the “what,” and why a fintech leader shouldn’t use performance reviews at any company he has been working since 2009.

Read the full story.

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Leaving soon?

Job-hopping is not just for junior employees. According to LinkedIn data, one-year job attrition rates are rising fastest among VPs, directors, and managers.

• In February 2022, managers jopped 20% more often than last year. As recently as two months ago, managers were still changing jobs over the course of a year 11% more than they did in August 2021.
• Early this year, VPs were jopping 16% more than in early 2021. By August, they were doing 13% more than last year.
• Meanwhile, entry-level workers’ work-hopping habits have remained more stable since September 2021, with rates rising 5% or less over the previous year.

Two possible explanations for the changes, according to LinkedIn: “unusually fragmented” remote hiring processes in 2021 that mean candidates have a less personal feel for new roles before accepting these, and high levels of stress among leaders and managers.

Managers find themselves “caught between the demands of top executives who want to rush change – and the family stresses or mental health challenges that weigh on their subordinates every day,” wrote LinkedIn editor George Anders.

Some staff news

Anyone else have a bad case of the Great Resignation whiplash? It’s hard to keep up with which tech companies are growing, shrinking, floating, or sinking. We are here to help.

⬇️ Salesforce is pausing hiring through January and terminating contracts with several temporary recruiters, Protocol learned Wednesday.

⬇️ Thousands of job cuts are coming to Intel and could be announced this month, according to Bloomberg.

⬇️ Noom has let go about 500 workers — mostly coaches — in a layoff affecting 10% of the company, TechCrunch reported.

⬇️ Brex has laid off 11% of its workforce, affecting 136 employees, as the corporate spending management company restructures.

For more news on acquisitions, layoffs, and rewiring, check out our tech company tracker.

Around the internet

A roundup of workplace news from the furthest corners of the internet.

The labor shortage is forcing employers to hold onto workers, which could help stave off a recession. (The New York Times)