When it comes to the salaries of our coworkers and people working similar jobs to ours at other companies, should we know what they make? And what about transparency around the entire compensation package, including benefits and culture offerings—should employers be open about it? Jason Nazar, Co-Founder and CEO of Comparably, joins us to discuss how pay transparency can help both employers and employees, and why it’s a rising trend among growing organizations.
In this episode, Jason shares what transparent compensation can do to culture, engagement, how it affects the recruiting & process, and much more!
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Brandon: Welcome to the HR for Small Business Podcast, this is your host Brandon Laws. I’m with Jason Nazar, he is the Co-Founder and CEO of Comparably. Beautifully-written on the website, their mission is to provide the most accurate and comprehensive compensation and culture data to understand employees’ true value and the needs to make work better. Jason, it’s great to have you.
Jason: Thanks, Brandon.
Brandon: So I wanted to structure our conversation today on pay transparency because I’m hearing about it on the HR side quite a bit. Should we be transparent? Should we not be transparent? But Jason, I want to get your opinion. Do you believe that employers, in the current business landscape, are being transparent about how employees are actually paid?
Jason: I think employers are becoming increasingly transparent because they’re understanding that it builds more ownership with the company. Transparency is not just around salary but culture and decision-making and thought process. I think, especially tech companies are becoming a lot more transparent.Brandon: I ran across a TED Talk by David Burkus, I’m sure you’re familiar with it. I loved it and he basically suggested that you should know what your coworkers get paid because he believes that people don’t really understand how people are being paid or what goes into determining the market value of a particular position. Employers end up holding all the information so only people who are really good negotiators will eventually get paid better. What do you think about that sentiment?
Jason: Well, I definitely agree with him and that’s one of the main things that Comparably does to help employees. There are three main things that Comparably does. The first is that we help people understand what their market value is, so how much they should be getting paid. The second is that we give them a transparent look at the company. So they can see how those employees are rating all different facets of an organization. The third is we help you get matched with great companies and find great careers.
To your first point, we don’t necessarily say, Hey, we’re going to tell you what this specific person at your company makes. But what we do is we say, We’re going to make sure that you understand what market is for your position and your market for people working at companies just like yours and for people with a similar amount of experience and background. We believe that helps a lot of folks.
Brandon: So it sounds like your tool, Comparably, is employee-driven? So they’re entering their data and they get to see what similar positions are making and maybe even people in the same company. How do employers use that data as well, assuming that employers actually get access to the same information? How does that all work?
Jason: We have a platform that, for employees, monitors the job market around compensation, culture, and career matching. But then we have an entire set of employer tools that are still free and we have thousands of employers using these. It gives them access to similar tools for employers. So employers get access to all of our compensation data because, believe it or not, a lot of times employers don’t have access to accurate compensation data and they’re guessing, just like employees. They’re trying to understand the market. We give them advanced culture analytics on how their company compares to their competitors. And we give them candidates that want to work at their company. So we have solutions both for employees and employers on the platform.
Brandon: When I think about myself personally and would I or would I not like transparency, would I like to know what other people make, especially executives, a lot of people might think it’s maybe information I don’t need to know. Maybe I would be jealous. But for me, I would love to know what people at the top level are making because it might actually incent me to work even harder, set bigger goals, and know what’s actually expected of me. Do you feel like most people—when we’re talking about transparency and what it can actually do to a culture—do you feel like that’s sort of what’s happening? You’re getting more productivity, more people are setting goals and sort of getting to that next level?Jason: I think that may be part of it, Brandon. I think a bigger part is that nobody should not understand what their full market value is. That doesn’t necessarily mean you’re always going to get paid above it and you can make a choice about the trade-offs. But I think you have a more engaged, active team base when they understand what their compensation should be and when they understand what it’s really like to work at a company and what it’s like to work at other companies. So my belief is that transparency helps both employees and employers because it creates more ownership among everybody. It creates more accountability and a little bit to your point, I think people understand what they could be striving for. So a lot of times, it does bring out that drive to do even more.
Brandon: Do you have a couple of examples of workplaces that are doing this very well, maybe a couple of your clients that have built a transparency around compensation that has impacted their culture in a positive way?
Jason: I think you see this around a lot of companies in Southern California. So we’re an LA tech company this year, I’m the Entrepreneur in Residence for the city of LA. So I work with Mayor Garcetti in his office and a lot of companies. I think you can take a look at a lot of the successful companies in Los Angeles, whether it’s Dollar Shave Club or Honest Company or DogVacay or certainly the last company I had that I sold to Intuit, Docstoc, and a big focus is on being transparent.
That doesn’t always necessarily mean people know exactly what everybody else is getting paid. There are certain companies like Buffer that publish publicly what each employee gets paid. That’s not what we do. We try to make sure people understand what their market value is, so we anonymize the data but I think that’s a company’s decision and there are certainly benefits and some challenges with that also.
But I think the more transparent organization you have—and transparency is not just around culture. Take a start-up for example. A lot of times, employees don’t know whether their company is solvent or not or whether it’s really doing well or not. I think to be open and transparent about the company’s financial performance, to talk about what’s going well and what needs to get improved, the leadership’s thought process and not keep that something that’s just a conversation for executive team members, all those things are just as important.
When you ask folks, “What’s most important to you about work?” they often don’t list comp as the number one thing. So I think our professional careers are made up of a lot of different components and what we get paid is a big part of it, but it’s not the only part.
Brandon: So the trend is definitely there that companies are getting more transparent about how they’re paying, not necessarily publishing who gets paid what and there are probably pros and cons to that, as you suggested. But do you think why companies maybe haven’t gone that route is because they don’t know how to publish it or how to communicate that throughout the organization?
Jason: Well I think making public what every single employee makes at the company is something you probably have to do from the beginning of the company and you also have to do it with the buy-in of everybody during the hiring process. I mean that’s significantly different from the way every other organization works, that I think to do that, you really have to have the buy-in of all of your team members and all of your new team members, right?So I think probably a big part of the hiring process would be letting people know that that’s your culture and making sure that that’s where they want to be. I’m neutral about whether a company should or shouldn’t be doing that. What we basically think is if you’re working in the company and you work in marketing or engineering or sales or product, you shouldn’t be in the dark around what people like you in a very similar situation get paid.
Companies shouldn’t want to keep you in the dark either, because it goes both ways. Sometimes you think like oh, employees are just going to use us to always ask for a raise. Well sometimes they find out they’re actually overall paid above market or at market when they feel like they’re not. So I think everybody understanding levels the playing field.
And by the way, there are always going to be people that have to get paid less than average. There wouldn’t be an average unless everybody got paid the exact same amount, which will never happen. There are always going to be people above or below and sometimes people choose trade-offs. They get paid cash comp below market because they’re getting great benefits or they’re getting career advancement or because they have a title or because they’re just happy with where they’re at and they’re comfortable and they don’t want to move. I think what’s important to understand is that cash comp isn’t and shouldn’t be the only deciding factor.
I will give you the best example. When you start off early in your career—and I give this advice to every young professional I know. When you’re in your early 20’s, in my opinion, one of the biggest mistakes that you can make is optimize for every last dime of salary.
So let’s say you could be making $75,000 somewhere but another organization is offering you $65,000, but it’s a company that you’re going to learn a lot more at, that you’re going to get more responsibility or you’re going to have more opportunity for growth and more opportunity for salary increases over the next two years.
“I think what’s important to understand is that cash comp isn’t and shouldn’t be the only deciding factor.”
It would be pennywise and pound foolish to take the first option because that extra $10,000 a year in many cases—unless there’s some really extraordinary circumstance, like a family part or health condition – really isn’t going to make any meaningful difference in your day to day life.
But if that second opportunity could put you in a position to be making $130,000 in two years and completely change your career trajectory, then you would be really unwise to pass up on it and that’s what I see a lot of people do. So our point of view isn’t that people should always just be getting paid the most or they should only focus on comp. We just believe that by having transparent compensation and transparent cultures, it evens the playing field for both employees and employers and they can mutually make the decisions that are in both of their best interests.
Brandon: I think that’s a great point. People put so much emphasis on just the total cash compensation and stack that up against what other people like them are making, but your point and it sounds like your tool Comparably has a lot of that culture information like professional development and all these other flexible benefits that are not factored into the total cash.
So it sounds like – I mean you’ve had a lot of success and having the culture piece in addition to the cash compensation and people are really evaluating what’s in their best interest.
Jason: Absolutely. Again, what you can do is you go to Comparably.com today as somebody working at a company. You can immediately see how much people like you are getting paid and especially if you work in tech. We can break down that data by the number of years of experience, company size, how much money a company has raised, the gender of the candidate, the ethnicity of the candidate, location, and we even will let you know how much people like you are getting paid in equity compensation, which is ridiculously hard data to find.
Then what you can do is you can also start researching companies. So you can look at your own company. But you can look at other companies in your city and all across the United States and see how those employees are rating their companies. So we have a really thoughtful product experience that focuses around structured data and you can see what the leadership team and how people rate their compensation and perks and benefits and office culture at all these different organizations and also see written revenues about what people think and see how that company benchmarks and compares to other folks.
Then the last thing you can do is whether you’re actively looking for a job or whether you just want to see what might be a great fit for you, you can create an anonymous work profile. Your personal identity is completely protected and you can list what your dream job is on Comparably. It’s a structured data and then we start looking for companies that would want to hire you and make those matches and you can get even more matches by coming in and you don’t actually apply the jobs but you apply to companies.
So you could say, Oh, I would love to work with Google or Snapchat or Dollar Shave Club or PepsiCo, and what we do is we help match those employees to their employers. Employers see your anonymous profile and if they think that they would be a good fit, they get matched with you and then you get an opportunity to come in and meet the company and interview with them. So we think that we’re doing something pretty different and unique to help monitor the job market for tons of folks around the best careers, compensation and culture, and then we help organizations understand compensation in their own culture and finding these great candidates.
Brandon: It really sounds like you’re streamlining a lot of the recruiting and hiring process through this information too. In your experience, is that what employers and candidates are really feeling by using your tool?
Jason: In part, yeah. We think that there is a better way to find your dream career. I think it’s an antiquated, old way of doing things where the only way you can find a job is by combing through job listings. 30 years ago you did it through newspapers and today you do it online. But what you do today online is still primarily based off of a 200, 300-year old model of classifieds and publications. I think they’re just a better, more seamless way to connect great employees and great employers to each other with less hassle, friction and frustration on both sides and to help find the best talent find the best companies. That’s a big part of what we’re going to be solving over the next couple of years.
Brandon: Jason, I imagine with your tool you just have such a unique technology platform that you’re collecting so much data, probably, in some ways, is almost better than the government collects in the census data. We hear about gender pay gaps and all sorts of unique things that are in headlines nowadays. What is some of the data telling you?
Jason: I think you see a lot of confirmation of those stats. Our own data shows that there definitely is a gender pay gap especially in tech. We have a lot of statistically significant data. We can say that there are all sorts of reasons for that. But the data shows that women often in many roles are paid 5, 10, 15, 20% less than their male counterparts.
Now what’s interesting is that we break that data down by departments. We try to look at it at a really specific level. So for example, often women who work in admin roles are actually paid higher than their male counterparts. But if you look at other departments like sales or business development, they’re getting paid meaningfully less. So that’s one.
The other thing is that we do all these culture surveys. So if you go to Comparably.com and click on Culture on our header, you can get access to dozens of surveys we’ve done that thousands and thousands of employees have participated in. So some of the most statistically-significant data on what’s happening around work culture. And for example, we ask, Have you ever been sexually harassed at work? And within the tech industry, you see 20%+ of women saying that they have and only 6% of men. And then we break that data down again by ethnicity and age and what department you’re in.
What we’re really trying to do is just take an empirical look at what’s happening around workplace compensation and culture and make it dramatically more transparent. That’s a big part of what I think that we do to help both employees and employers.
Brandon: If employers are looking to take the next steps in terms of transparency around the pay or around benefits, around the culture, what are some of those next steps they can take, especially if they’re small and not a huge tech industry type of employer and don’t have a ton of resources? What’s kind of a good first step for them?
Jason: Well, I mean that’s why we created our product. You can go to Comparably.com and as an employer get access to all of our free tools. You can get access to our compensation database. You can get access to see how other company cultures rate and how you compare to them. I would say the biggest thing, especially when you’re a smaller company, is just start with communication and start with transparency. Every company will make a decision for what’s best for them, around how transparent they want to be.
But a really important thing for me, and I started my last company Docstoc in 2007. I sold it in 2013 to Intuit. We became the biggest content site for small businesses, we had 50 million registered users when we sold the company to Intuit. I would get together with the team, our entire team, even when we were as big as 70 folks, every Wednesday and we’d talk about how much cash exactly we had in the bank, what our revenue numbers were, what was going well in the company, what wasn’t going well.
They weren’t always easy conversations to have because it’s never fun to talk about things that aren’t going well. But my belief was that if we’re a transparent organization and people always know where we stand and if we hire the right folks, it will build more ownership and accountability, instead of people feeling like oh, I’m just doing these specific tasks. They should all feel responsible and part of the overall goals of the company and especially since everyone in the company had stock options, they were all owners. That was the mentality that we try to build.
I’ve given this talk for a couple of years now and I’ve written an article which is about how at any level you are at the company, come in and think and act like the CEO. If you were the CEO, how would you carry yourself? What kind of decisions would you make? How would you interact with people? That’s both going to make you dramatically more effective at your job but it’s also going to help you understand how you can best help the company overall and give you more understanding and empathy for everybody in the organization.
I think, to your point, smaller companies that don’t necessarily have an HR leader or access to all this training and resources, it’s pretty simple. It starts by over-communicating and being as transparent as possible about the things in your company that are going great and about the things that need to improve.
“It starts by over-communicating and being as transparent as possible about the things in your company that are going great and about the things that need to improve.”
Brandon: Well, I think you’re in a great space. Everything I hear is that people are struggling with compensation, they want to learn how to develop their culture and I think you brought up a really good point a second ago—providing information and data around comp, culture, benefits, it gives employees a sense of ownership in their role and I think they’re more likely to develop. So I love what you’re doing.
If you’re going to look at your business and the landscape of the sector you’re in, where do you see this going in the next two to three years?
Jason: Our goal is to be the brand and product that monitors the job market for millions of employees around finding them the best careers, giving them access to great data around compensation and seeing what it’s like to work at different companies. And then we’ll really build a business around offering paid solutions to employers, which today are 100% free.
So I think if we’re successful at continuing to do what we’ve done over the first year, which is engaging tons of employees and tons of employers and providing them with really unique insights and helping them get connected to each other, then I think we will be achieving our goals over the next 2 or 3 years.
Brandon: Jason Nazar, the CEO of Comparably, thank you so much for joining the podcast. Really appreciate the wisdom you have. This is very, very good information. We really appreciate it.
Jason: Thanks for having me, Brandon. Keep up the great work.