Model Practice Annual Employee Pay Analysis
Principle I: Employment and Compensation
Principle VII: Leadership, Transparency, and Accountability
2017 Challenge Submission
Glassdoor, Inc. is a job site with approximately 700 employees and around $200 million in investment where people can find jobs and information about companies and compensation. Glassdoor is dedicated to workplace and salary transparency, both as an employer and as a platform. The company believes that pay transparency is something that helps both job seekers and employers alike, and that companies are the key to eliminating pay gaps. Glassdoor has committed to taking action to close the gender pay gap.
Glassdoor Economic Research studied the gender pay gap in five countries including the United States of America and confirmed it is real and significant. Although the adjusted gender pay gap (5.4% in the U.S.A.) is smaller when controlling for factors such as age, location, and experience, it is still real and often unexplained, and reveals a gender equality issue that needs to be addressed.
"As a woman who has spent my career working in human resources at multi-national companies, I can tell you this is not a common practice...yet. But it should be, and easily can be."
Chief Human Resources Officer
Glassdoor continues to help employers highlight their pay equality commitments to their employees and candidates via a Pay Equality Pledge badge that may be added to their company’s Glassdoor profile page. More than 2,800 employers have already promoted pay equality commitments on Glassdoor.
Glassdoor has made a commitment to conduct the Annual Employee Pay Analysis each year, to ensure it is paying employees fairly. In addition, Glassdoor has committed to helping other employers with their own gender pay analyses. The company recently launched a pilot program to conduct gender pay analyses through independent confidential economic research.
How does this model practice work?
At its Mill Valley, California headquarters, Glassdoor Economic Research conducted the first Annual Employee Pay Analysis. Compensation data was collected from Glassdoor employees globally and analyzed in early 2016. In June 2016, Glassdoor publicly released the internal pay analysis.
Glassdoor’s first Annual Employee Pay Analysis revealed a 20% "unadjusted" pay gap in the average base pay between men and women. But when the researchers looked at similar workers and controlled for age, job title, job level, department, and employee performance scores, the "adjusted" pay gap disappeared.
An important part of the algorithm developed by the Chief Economist to analyze pay data is that it is extremely flexible. Any number of factors can be included in the analysis, and each addition makes the analysis richer. In Glassdoor’s analysis, the team included Glassdoor’s “job seniority levels” which shows the level of responsibility by job title.
The company commits to conduct this analysis for base pay and variable pay at least annually to ensure it prevents unintended bias in its compensation programs. In order to truly work towards eliminating the pay gap, companies must consistently analyze their compensation data over time to make sure they are progressing towards equity or remaining equitable. Further, Glassdoor is committed to continue to focus on efforts to attract, retain and advance women into higher paying leadership roles.
"Talking about salary in both personal and professional settings is still incredibly taboo. For most companies, analyzing salary data is an intellectual and internal exercise. I think we need more companies to be willing to open this up and say, ‘Here’s where we’ve got it right. Here’s where we need to make changes.’"
Head of Employer Brand
How can I adopt this model practice in my workplace?
This practice can absolutely be replicated, and some employers already have analyzed their own compensation data using Glassdoor’s method. Glassdoor’s goal is to make that process approachable for all companies, regardless of size and data science resources.
As a first step, it is important for employers to make the effort to systematically examine their payroll data, using some version of the method created to test for systematic gender bias in compensation. Looking at simple averages alone will not paint a complete picture of gender balance in pay.
Annual employee pay analyses will not only help avoid serious pay equity problems down the line, but can also help improve employer brand—building goodwill with employees through greater transparency about who is earning what, and why.
Here is a link to the blog post with the details of the research and how the pay analysis was conducted.