The Agency Pay Parity Toolkit

At TEA, we view pay equity as a balanced distribution of pay across demographic groups, for example in an organization or in a society. There are two main parts to this. Pay Parity and Distribution of highly-paid positions.

Pay Parity.

This is the concept of equal pay for equal or substantially similar work, independent of gender, race, or any other demographics that have nothing to do with the work itself. Work is “substantially similar” when it requires the same level of skill, effort, and responsibility within similar working conditions. Tasks do not have to be exactly the same.

Distribution of highly-paid positions.

Historically, certain lines of work (eg. Creative) have been more valued and therefore higher-paid than others (eg. Business Affairs). These higher-paid lines of work tend to have a lower average number of employees from historically and systematically excluded  groups. We can have a conversation around why that is and who affected those categorizations, but either way it’s not going to be feasible to reevaluate across an entire industry. What we can do though is clear the path for talent from those underrepresented groups to move into these roles and assume those higher salaries.

The second piece to this is the lack of historically excluded talent in (naturally higher-paid) executive positions. The solution is the same: Set goals and explicitly invite talent in (eg. via IN FOR 13).

If we only look at pay parity and pay everyone fairly, we can still end up with an organization in which the average White person is making more than the average Black person. To achieve pay equity, we also need to consider upwards mobility.

Below is an overview of our downloadable guide

Release Date: January 1, 2022

 

At TEA, we focus on pay parity first, as it is the more obvious concept. Your basic pay parity toolkit consists of:

  • Well researched, market-driven salary bands for each role in your agency to reduce subjectivity in determining salaries for new hires and employees. Firm bands will prevent you from setting individual salaries based on inconsistent criteria, taking advantage of candidates who you know are asking for too little, letting your loyal homegrown lag behind new hires etc. (bonus: reliable bands will also help your Account/Operations/Finance teams to use bill rates more effectively and scope more profitably)

  • A shared understanding among decision-makers on how to place talent into your bands based on their job-relevant skills and experience, as well as the role’s responsibilities. Previous external or internal salaries should not be a factor here. Women and people from historically excluded communities suffer disproportionately from the long-term effects of having accepted a lower salary at the beginning of their career (eg. due to not having a network to compare numbers with, not having mentors to advise on negotiation tactics etc). This is why an increasing number of states have banned employers from asking candidates for their salary history.

  • A consistent compensation philosophy that works for your agency in the long run. How much you have to pay to get the right talent in the door depends on a variety of factors. Industry newcomers who need to hire fast might have to set their bands above average to attract talent, leading edge shops that bank on their name and creative opportunities may pay less etc. Think through who your agency is and where you need to come in: Do you want to pay average industry salaries, or above or below market? Make a decision and then stick to it. 

Most of us in agency HR roles encounter historically grown pay structures that don’t necessarily align with the above. Therefore, our next step is to conduct a pay audit. Any potential discrepancies should be possible to explain by looking at job-relevant skills and experience, and the job responsibilities. If we cannot justify differences in pay based on these criteria, we should consider a pay adjustment. Even if we think we can explain all differences on first sight, we still should check our work by running final reports comparing salaries against demographics, to detect any underlying patterns.

So what demographic data do we have to compare to determine whether we are paying fairly? Some categories are dictated by the EEOC, for example gender as male and female, or a certain list of races. Those are legally binding and if we start comparing, they should absolutely be included. However, we can also add new ones to more accurately represent the identities in our agencies, like a non-binary option for gender or an Arab-American one for race.

Lastly, we need our CEO, CFO, legal counsel and other stakeholders on board. It’s important to understand the different perspectives they each have on the business, and to connect our proposal to their goals. A pay audit will likely result in adjustment needs and although it might be “the right thing to do”, neither CEOs nor CFOs will be eager to spend big on surprise additional employment costs. So we have to be ready to demonstrate the costs of turnover of employees who are unhappy with their pay, the effects of fair pay on culture, engagement and ultimately productivity, or the PR (and biz dev) opportunities of a successful audit and culture boost. A legal counsel on the other hand will be concerned with how we communicate the adjustments to our staff, but also consider the reduced overall legal risk of having a fair pay structure.

Taking the initiative on defining pay structure, conducting a pay audit, and dealing with the results can be a daunting task. But first of all, it is pretty much without an alternative. Sooner or later all of our agencies will have to go through this, so let’s do it now while we can still control the process (vs. a few years down the road when new industry standards, public pressure and new labor laws will likely force us anyway).

Secondly, we are a well connected industry, and especially HR professionals in this business have built an even tighter network in the past 18 months. Yes, we are competitors, but we all have shared equity goals we can only reach if we approach them as an industry. So do reach out to your peers in other agencies and exchange insights and data wherever possible. That’s how TEA started in the first place and we want to keep on sharing what we discover so we can all get to pay equity faster, together.