If you share a few details about your job with a compensation specialist like David Buckmaster, he could probably tell you more or less exactly what you earn.
That might come as a surprise to some people—who imagine there is wide variability among employers and the unique circumstances of any given worker. But, as Buckmaster explains in his new book Fair Pay, most companies of any size use industry salary survey data—collected to a very detailed level and aggregated across employers—to align compensation levels for any given role.
Such surveys are among the entrenched practices that make it hard to overhaul what people are paid to make it fairer. Roles that were traditionally staffed by women such as human resources staff, for example, tend to still have lower salaries than male-dominated areas like finance or technology—and the salary surveys just reflect back those biases. They also contribute to an imbalance of information in the labor market that gives employers more power over workers.
We at Charter have repeatedly argued that if companies just paid their lowest-wage workers more, it could quickly reduce economic inequality and gender and race pay gaps, while ultimately producing better business results. We’ve examined different approaches to making pay fairer, including involving companies’ compensation committees and adopting transparent pay. (Paying a living wage is among the practices we’ve committed to in our own charter for businesses.)
So it’s excellent to see Buckmaster, director of global retail compensation for Nike and former compensation leader at Starbucks and Yum! Brands, provide an expert, insider guide to the structural reasons why pay is often unfair, and how to address them. (A quick summary of how pay is unfair, for those not following the issue: low-end wages are too low to live on, women and people of color are paid less, pay hasn’t kept pace with productivity gains, executive compensation has become untethered from that of other employees, and very few people think they’re fairly paid.)
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Alongside macro historical and economic context, Fair Pay provides both high-level and specific recommendations for how to reform compensation—which is useful reading especially as companies are deploying pay to recruit and retain an increasingly empowered workforce.
But it arrives at an odd time, given that many workers are seeing significant improvements in their pay amid labor shortages in certain sectors of the economy, and employers are increasingly publicly disclosing compensation for specific positions. Such labor momentum surely hasn’t wiped away the problems and made pay more fair across the board—but it significantly changes the context for some of Buckmaster’s arguments.
He mostly eschews delving into specific formulas for fair pay, and instead recommends that managers adopt an approach rooted in sincerity around compensation: “Pay sincerity is a way of working that relentlessly pursues equitable and transparent pay, provides for the essentials of a decent life, and helps people seek the full reward of their contribution and potential.” (p. 41)
The highlights of the book include the sections that rely on Buckmaster’s own expertise in setting compensation, and his specific recommendations are helpful. As he puts it, most companies are geared toward providing the “minimum viable pay” they can to recruit and retain you. He offers tactical suggestions for individuals such as not disclosing pay expectations to recruiters, having a conversation about your career with your manager first before broaching a raise, making specific arguments for pay increases, and doing so at the six-month mark from normal, companywide raises. Buckmaster provides on page 179 a helpful list of questions that employees or job candidates can ask, such as what the usual pay progression is from one job to the next. (For his advice on how to get a raise, you can read this recent opinion piece he wrote around the book’s release.)
A series of bullet-pointed items on page 269 also provides solid tactics for managers to start with. Among them:
- Share pay ranges with staff so they can see where they fit.
- Disclose not just pay-equity numbers (how people are paid for equivalent roles and experience, by race and gender) but organizational pay-gap numbers (how average pay compares across race and gender, not weighted by roles.) Pay-gap numbers look worse for many companies, and importantly highlight how they need more women and people of color in better-compensated positions.
- Get rid of prohibitions on employees’ disclosing their pay to others.
- Fund pay adjustments for fairness through a central pool rather than having it contingent on the magnanimity of individual managers.
Other recommendations include having companies disclose not just their top-five employees in terms of compensation, but their lowest-five as well, and making corporate compensation committees responsible for ensuring fairness. Buckmaster argues that organizations should define pay ranges for broader categories of work, rather than setting them for each very specific role—one way to reduce biases and increase workplace flexibility.
Ultimately, Buckmaster believes that current pay systems can be fixed, and that compensation is unfair because of inertia rather than an evil plan. “It’s the middling analysts, pounding away at Excel spreadsheets, answering the angry emails from employees who feel underpaid, and Googling what other companies are doing, who end up deciding so much of what happens to people’s pay over time,” Buckmaster writes. (p. 28) He believes that business leaders need to set a vision for fair pay and workers need to demand more from employers.
To be sure:
- It would be great to know whether Buckmaster would update his arguments amid the current surge in wages benefiting even low-paid workers.
- Buckmaster provides little to no guidance on one of the hot questions for companies today amid remote work, how to fairly account for where someone lives—and the cost of living there—in setting or re-setting their compensation.
- Shareholder pressure on executives not to raise wages, and incentives for executives to keep pay down, are significant—and Buckmaster could have focused more on how to navigate those.
- Nike, Buckmaster’s employer, has come under fire for its compensation policies after Olympic champion Allyson Felix said it reduced the endorsement fees it was willing to pay her once she became pregnant.
- Fair Pay is impressively ambitious in what it covers, from labor history to corporate budgeting to how to best pursue a raise. That also means it’s speaking to different audiences, from CEOs to front-line managers and employees—and the risk is that it’s not focused enough for any of those groups.
Memorable facts and anecdotes:
- About 2 million people in the US are paid at or below the federal minimum wage of $7.25, and more than half of them are over age 25.
- Using public company data, Buckmaster calculates that each $1 increase in Starbucks baristas’ salaries costs it $165 million annually.
- The modern salary survey was invented in the 1940s by William R. Basset, an American business leader who felt that corporate executives were underpaid and sought data across companies to prove that.
- Starbucks calls the coffee farmers the “first 10 feet” and the baristas working in outlets the “last 10 feet.” Buckmaster says those ends of the employment chain are where the risks of unfair pay are highest.
- “Pay design at the world’s largest companies is done by a small group of people who are well connected to each other, and who use the same proprietary data sets. You can think of us as the world’s least-interesting Illuminati. Our field is not well known, and that becomes an advantage we have over you.” (p. 9)
- “Retention is too indirect a measure to assess fairness or equity, because it gives employees no yardstick to measure themselves against. If a company views ‘not quitting’ the same as ‘treated fairly,’ they may want to revisit their employee survey data to see how their people really feel about pay.” (p. 92)
- “Yes, managers, it’s your responsibility, not HR’s, to make sure your team is paid fairly.” (p. 272)
The bottom line is that Fair Pay is an important, insider perspective on the principles and tactics needed for more equitable and dynamic organizations. There has been too much inertia around compensation practices, and this current moment of progress on worker wages hopefully also creates an opening for Buckmaster’s recommendations.
You can order Fair Pay at Bookshop.org or Amazon. (We may make a commission when you buy a book.) All page numbers referenced above are for the hardcover edition.
You can read all of our book briefings here.