Quirky HR
Quirky HR
Ep 82 | Future of Fair Compensation: Pay Equity, Transparency, and Thriving Wages with Sally Loftis
HR virtuoso Sally Loftis from Loftis Partners shares the "Secret Sauce" of fair compensation and the evolving landscape of pay equity. Our enriching conversation transitions from understanding the nuances of pay equity, pay parity, and pay transparency to the societal shifts in discussing compensation. We dissect what fair compensation really means in today's workforce, emphasizing the importance of living wages and the implications of thriving wages in a post-pandemic era.
As we navigate the tricky terrains of pay transparency and legislation, you'll uncover how state laws affect employers with multi-state workforces. Sally and I reveal why establishing objective pay structures can build trust and foster a transparent workplace culture. Our insights will guide you through leveraging employee feedback and demographic understanding to craft equitable pay strategies that bolster engagement and minimize turnover. This discussion is a treasure trove for any business looking to adapt and thrive amid the complexities of modern compensation laws.
Wrapping up, we tackle the hot-button issues of compensation negotiation and the necessity for HR professionals to stay vigilant against bias and cultural influences. With a sneak peek into Sally's upcoming book on pay equity for nonprofits. Tune in for a groundbreaking episode that's as informative as it is transformative, while we look beyond the dollars and cents of compensation.
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Dana Dowdell - Boss Consulting - @bossconsultinghr - @hrfanatic
This episode is brought to you by Boss Consulting HR and our Downloadable Products. We launched Downloadable Products in 2023, and I'm excited to share them with you through the Quirky HR podcast. If you head over to Boss Consulting HR and navigate to the Downloadable section, we'll, of course, make sure that it's linked in the podcast description. There you can find resources for small business owners, hr departments of one, new business owners who are not quite sure where to go to get started, all for a purchase. Our goal is to provide all the resources and tools for small business owners so that you can make sure that you are doing right by your employees and running your HR function appropriately. So, with that, check them out over on Boss Consulting HR and we'll get right into the show. Hey there, welcome back to Quirky HR. We are joined today by Sally Loftis. She is the founder and managing director at Loftis Partners, which is a 100% women-owned human resources consulting firm located in the I've never been, but I imagine they're beautiful Blue Ridge Mountains in North Carolina.
Sally Loftis:They're pretty amazing.
Dana Dowdell:Pretty amazing, Sally. Welcome to Quirky HR.
Sally Loftis:Thank you. I'm excited to be here and to talk with you today.
Dana Dowdell:Likewise Very excited to have you. So I get the question all the time how did you start your consulting company? What? How did you start your consulting company? What prompted you to start the consulting company? So do you want to tell us a little bit about your story in the HR industry and moving into consulting?
Sally Loftis:Yeah, definitely. So kind of how I got into HR. Funny story I started in college as a marine biology major because I wanted to work at SeaWorld and swim with the whales which totally don't feel that way anymore after watching Blackfish, right. But you know, I was like, wow, I'm going to a landlocked state and maybe this is the best idea. So I started taking a business class and was like gosh, I really, like you, know all the business stuff and really liked working with people. So that's how I got into HR Fast forward 25 years and started my own consulting firm in 2020, after working in HR for a long time and really wanted to focus in on pay, because that was something that had kind of become a specialty of mine and also had done my graduate thesis research on it.
Sally Loftis:And so, you know, I started getting into pay equity and then, all of a sudden, the pandemic and things that happened really flamed to that conversation into the greater society. So it's really been, you know, fun to kind of have a topic you're really passionate about and be like, oh well, everybody's talking about it. It's not fun when you see how little some people get paid, but it's definitely a topic that more people are talking about now.
Dana Dowdell:Amazing and I'm very excited to talk about it, because I practice in a state that just passed pay equity legislation and a lot of that is happening right now, so maybe we can start from kind of the front end of definition. So when we're talking about what pay equity is, what are we talking about?
Sally Loftis:Yeah, thank you for asking that, because there are a lot of definitions, right, and I use pay equity as kind of an umbrella term. So if you kind of think of, like you know this big umbrella and underneath it there's a lot of stuff, so there's pay parity, there's equal pay, there's pay transparency, there's cost of living, there's a lot of kind of HR components under pay equity. So I typically am talking about all the things in that umbrella and typically the conversations I'm having, like when I do presentations, I'm talking about base pay. There's certainly conversations about incentives, bonuses and things like that, but it's usually really looking at base pay as the starting point.
Dana Dowdell:And I think it's important to call out like pay equity versus fairness and pay. I remember I had a student once and he worked as a commercial cleaner and when we were having the conversations about compensation and total rewards and compensation statements, he said distinctly one day he's like I feel like I get paid really well for what I do and I was like that's a great thing. And then the next class he came in because they had a really big job the night before. That, I think, was really not a pretty job and was a lot of hard work. And then he said his perception was that I don't get paid enough. So I think that's part of it too is like pay equity from the lens that we look at it in an HR standpoint is different than this concept of fairness with pay.
Sally Loftis:Yeah, I mean, I appreciate that example because you're thinking about even like living wage versus thriving wage, right? Those are terms that are out there. And one thing that I find in a lot of the work I do because it's always employee-focused and centered. So I do a lot of focus groups interviews and I will ask people like how do you know you're being paid enough? And it's always interesting to see how people measure that and most of the time it is I want to be able to pay my bills and live a decent life. You know, there's certainly the anomalies where they're like I would like to make $4 billion in this job, frontline job, but most people are just like I just want to pay my bills, do meaningful work and have some security in my life, which seems fairly simple, but it doesn't happen all the time.
Dana Dowdell:No, and to that point, pay equity has a huge history in our labor law system and I don't know if we really want to get too granular in the law unless you're comfortable going there. Yeah, I am not a lawyer, but I can play one on TV as needed with labor and employment maybe Okay, Well, let's talk a little bit about kind of the history of pay equity, the laws that are involved and kind of the lens that we look at it from Hr.
Sally Loftis:Yeah, that's not a question I get asked a lot, thank you. I think there's kind of three. When you're thinking about the United States, there are three laws that really dictate a lot, that really dictate a lot, and one of them not everybody has. So the first law is going to be minimum wage, right? So the government typically sets standards, and I say minimum wage, knowing that tipping, you know roles get different, but typically our compensation models are based on the entry level pay. Is this minimum wage?
Sally Loftis:Now, because that's driven by the states mostly you have 50 different experiences. Well, I guess we have 56 states and territories, 56 different states, territories and jurisdictional councils that have experiences. So, for instance, fast food workers in California just got bumped up to $20 an hour. Well, the minimum wage in North Carolina is $7.25. So if you're basing your compensation model, let's say you have a remote workforce and you have more entry-level workers, of course you're not going to be working remotely with fast food, at least not this year, maybe next, but they're having different experiences. Um, but you know there's, they're having different experiences.
Sally Loftis:So geographic location makes a difference, kind of the other law that's on the books is the Fair Labor Standards Act, right, and so that's really talking through classification and exemption status, like if you can be, you know, exempt salary, whether or not you qualify for overtime. So those are two pieces that really drive our compensation models. And then the third one is the pay transparency laws that are coming out and kind of coming down the road is something called human capital reporting, which I think you had a podcast on that, and so the pay transparency laws are really about trying to get people to put out there what the real ranges are, so there's not such a bait and switch in the hiring process and we can talk more about this. But pay transparency is so much more than legal compliance and there's a lot of work around that.
Dana Dowdell:I think it's important to mention too, that the pay equity component. I think it often gets looked at as like gender-based pay equity issues, but it's a broader lens.
Sally Loftis:Yeah, absolutely, and you know, thinking about, like the Civil Rights Act, right, there's protections around there.
Sally Loftis:Whenever I do pay equity assessments with organizations, one of the things we do is we take the pay data and then start sorting it by demographic identities so it is gender, it is age, it is race and ethnicity, it's tenure, it's what department people are in and things like that. Because when you really get down into that, you know, a lot of times I'm working with organizations who maybe are updating their job descriptions or really updating their pay grids. They're like, you know what? We wanted everybody in this position to have a master's and we're going to pay them $50,000 a year and I'm like, well, that's sweet, but I hate to tell you that that's not going to work. But you know, I mean it's really going back, it's. You know, we're kind of in this stage, kind of post-pandemic. Whatever stage we are now is like updating a lot of our internal assumptions, because a lot of things we thought were true in 2019 are not true anymore in 2024 or whatever you know, and so a lot of HR stuff needs updating.
Dana Dowdell:So these pay transparency laws so I'm in Connecticut, we have one. I do work in Rhode Island. Rhode Island just passed one as well. Can you speak about some of the trends that you're seeing, what you're seeing states pass in terms of requirements on employers?
Sally Loftis:Yeah, yeah. Well, one thing I will point out is that every page transparency law is different. So you know, for instance, if you have a, you know, a workforce that's in multiple states, those laws are not going to be the same, so you need to really look at that. So sometimes it's, you know, one state you got to have 15 employees to have to do this. Another state it may be 50 employees, it's Some, some are, you know, have requirements, regulations around what you have to post, but typically it's posting the salary range in an open job, and so the trends I'm seeing are, you know, the biggest one is about having a conversation internally before you post it externally, because sometimes people will do legal compliance right and be like we're going to post this and then their employees are looking online for jobs because that's what employees do, and they're like, oh, my god, they've posted for this position.
Sally Loftis:It pays 20 percent more than what I'm getting paid, and then that starts like a whole kind of, you know, avalanche of collective disturbance, because it's then, well, you know, somebody's getting paid more than me and why are they getting paid more? And then, can you answer that? Can you not answer that? You know, is it because maybe you put the full range on there and you've never revealed the full range before to the internal employees. I mean, like there's so many things that the biggest piece is really being very strategic about pay transparency implementation and it not just be a legal compliance project. Does that make sense?
Dana Dowdell:Yeah, it's not just check the box because you have to. I have a lot of clients that will say well, we'll put a really broad range. They're uncomfortable having those conversations not only internally amongst themselves but also with their team members who might see those postings. So they want to have a broad range because they want that flexibility. But that doesn't really serve the intention of these pay transparency laws or help with recruiting.
Sally Loftis:Oh yeah, absolutely. I mean I tell people all the time pay equity and pay transparency, laws or help with recruiting oh yeah, absolutely. I mean I tell people all the time pay equity and pay transparency are trust building actions and ones that hit really close to the heart. Right, it's really hits close to your wallet. But you know, as an HR person, there's so many times how many of you've been sitting in your office or on a Zoom call and somebody's telling you a story You're like like we really need to help them. But I'm kind of strapped here. You know of we should offer this benefit. Or you know this person paid more and, yeah, we just really need to kind of be more intentional about how we do these things to build trust, because regaining trust is very difficult to do.
Dana Dowdell:I find a lot of employers in the small business market because those are the playgrounds that we hang out on. They kind of beat around the bush so much that it has the adverse effect on what these laws are intending to do.
Sally Loftis:Oh yeah, totally Well, and a lot of times I'm working with clients on building kind of what we would call a pay grid where it's like the salary ranges and then it's basically like you know, kind of think like a four square box or three by three or so.
Sally Loftis:You know where it's dependent, you know the different levels of organization and then how you can you know if you're in the first quartile right of the salary range and how can you move to the second quartile, and it's really just putting out objective criteria as much as you can, right, so that somebody can be like, oh, they can look at that grid and be like there's a clear path for me, rather than I'm waiting on my supervisor's opinion of me, I'm waiting on a performance rating that you know I'll use a real professional term as poo-poo. You know like I'm not a performance rating fan, and so you know, waiting on these subjective things, and so there's a lot of uncertainty for the person which then is going to start driving them to look at other places or not be as invested or engaged. And so if you can kind of give people these clear pathways of how to increase their pay over time, then that decreases your work and increases trust.
Dana Dowdell:So I don't want to give away your secret sauce, but if you're comfortable, maybe, speaking a little bit about, like, where do we start? So, if we're really intentional about taking an honest look at pay equity within our organizations, where do you recommend HR practitioners, leaders, start?
Sally Loftis:Yeah, definately will share the secret sauce. So there's really kind of four phases I see around pay equity a kind of preparation, assessment, leadership, buy-in and implementation. So, if you look at preparation, one is you're going to have to manage your expectations, because pay equity takes longer than you want it to, because it requires a series of strategic conversations that need to happen. The second piece is going to be talk to your employees. I mean that needs to be. Number one is you need to go listen to your employees. A lot of times I'll work with clients and they'll be like we have no way of getting feedback from our employees on a regular basis, right, and I'm like no, and so that might be the starting point. But focus groups, interviews, surveys, talk to you know, as HR people. You're talking to people all the time, hopefully you know, and so have conversations with people about what their needs are, what they're saying, exit interviews, and then it's really starting to kind of understand your demographics of your people, right.
Sally Loftis:So, looking at where are people located, what's the cost of living where we're located? Are there any kind of different factors that are out there that we're not considering? It's almost like doing a SWOT analysis on you know the locations of your people of basically being. You know what are some threats. So, for instance, I live in an area that's rural and remote. We have very few options for childcare. I live in an area that's rural and remote. We have very few options for childcare. So people who live in very few options for housing over like one or two bedrooms that's affordable. So when somebody it's very difficult to get people to move here and to live here. So then you get into people commuting and or working remote and then it's like, okay, do we set pay based on where we're headquartered? Do we set pay based on where that person is five hours away? So really you're trying to kind of understand who's working for you where. What are some of the things going on there?
Dana Dowdell:And is it also setting your strategy Like where for your organization? Where you want to go, the type of talent you want to attract? Where do you want to go, the type of talent you want to attract? Where do you have to sit in the market? Do you want to pay based on this location? Do you want to lead the market? Lag the market, meet the market? Right there's. I think that's a little bit of that leadership. Buy-in, too is like getting what's our strategy.
Sally Loftis:I think you just read my mind and that was great.
Sally Loftis:Thank you, yeah, absolutely. There's a piece of and that's a conversation I have all the time with clients is you've got to figure out the talent market you want to compete in, and it used to be that it was typically the geographic market, right, but now as more people are working across you know people are growing across the nation, across the world, or remote work you've really got to kind of figure out what's our pay strategy and where can we compete. So your example of small businesses a lot of times they'll be like I can't compete with you know Amazon down the street or you know tech companies and you don't have to, right. But it's being clear about who you're willing to compete with. Who are your people going to work for when they leave you? If you're in a growth phase, who are the you know organizations or businesses that you want to be like, and what are those people being paid? So to your point yeah, it's really kind of looking at your data and adding points that are more relevant than maybe they have been in the past.
Dana Dowdell:So to the point of data, I have a couple of, like you know, websites that I keep in my back pocket for reliable data, because I'm not, you know, I'm not necessarily a fan of the Indeed wage ranges, or, you know. Do you have any tools or resources For those who can't?
Sally Loftis:see my head is down in my chest about yeah, I had.
Dana Dowdell:I had an employee come wanting a higher rate of pay and all she had was, like, indeed, job postings where the ranges were just, you know, like 50 from start to the high end, to the low end. So, um, and I think, yeah, you don't have to purchase a crazy compensation study or wage salary study in order to get good data.
Sally Loftis:Yeah, yes, oh, my goodness, we could talk for hours about data and you know this because you work in HR. I think my couple of things are be wary of surveys in that they're typically a year behind, you know, by the time people have done the data. Have a real issue with self-source data, not from the employee but from websites where people will be like, hey, if you put your salary in, we'll give you comparable stuff. Well, I would put in a million dollars. How can you trust what people are self-opting into? So what I tell people is to what we talked about a second ago to figure out who your peer market is, your peer talent market is. You might want to build some community with your peers and ask them what they're doing. You can use surveys. Absolutely. I wouldn't let that be your only source and then just go on.
Sally Loftis:You know industry websites, places where job postings are linked in. You know there are things like on Indeed and Glassdoor places like that, where it is actually pulled from the job description of that and you know, use a mixture of. You know, for instance, I work with nonprofits. I always tell people put it in their mixture of government and for-profit. Like you know, people don't just stay in kind of one lane anymore, like they're going to a lot of places. So it's you've got to have a rich sense and I try to get eight to 10 data points per position if possible, cause then I start kind of doing like eighth grade math around the median, if possible. Because then I start kind of doing like eighth grade math around the median the mode, you know the mean those things and start you know kind of doing some statistical analysis on it.
Dana Dowdell:Yeah, I'm definitely on the same page of be wary of what data is visible on, indeed, how it's posted. Don't just pull the range. Look specifically on what the range looks like. Does it look like it makes sense?
Sally Loftis:versus an.
Dana Dowdell:AI-generated rate of pay.
Sally Loftis:Yes, AI. It will be the death in the future of us. One day I do hope we get an AI-type thing that could search for us. That would be amazing. I'm sure somebody's developing it somewhere, but I'm sure they're working on it.
Dana Dowdell:Can we talk a little bit about having those hard conversations with staff around compensation when we can't give an increase or we can't provide a counter offer? How do we navigate those?
Sally Loftis:Yeah, I think one is you know, think about let's just go with the first example you gave of, like you know, we can't raise your pay. So, as a supervisor, what's the conversation you're having, you know, and is it a conversation that you can be informed by your organization's policies and processes around pay and be able to give you the information to have that conversation? So I think that's a gap. I see supervisors are having to become experts in pay and benefits and recruitment, which most of us didn't get even in HR right, like I'm sure I took a compensation class in college, but you know like we don't get ongoing training around that. So I think one is lean into the support. If you have HR support, lean in there. Or if you have some kind of advisory service, something like that, resources. I think two is assume that your employee probably is going to know a lot more about the market than you do.
Sally Loftis:What I'm finding I would be curious if you're finding this too, dana is that the younger generations coming into the workforce are so well-versed in this, in the pay conversations and benchmarking and things like that, that you need to kind of figure out if they come in and have benchmark salaries, then it's a good benchmarking Be like okay, you know, either I've got to go have some conversations or this is where we are. You know, I think again, it's kind of understanding what your organizational piece is there, and I think every supervisor needs to understand what the clear value proposition is of somebody working there. Right, so you may not get paid as much as a peer organization, but you may have a really amazing culture, right, that supports a flexible schedule and supports you taking time off, and you know so there's a lot more than pay that is involved in somebody staying. So really understanding the value you can bring on top of pay is important as well.
Dana Dowdell:I find. So I would absolutely agree that the workforce is far more informed than ever before about compensation, and there is just so much content around that topic, whether it's accurate or not accurate or inflated and they're not looking at it through all the lens that we look at it. They still have that data, and so it's appropriate. It's important that we know how to respond, but I also I'm a big fan of kind of putting the ball in their court in terms of what do you feel, you know, what do you feel is a fair rate of pay for this? Or what do you need to earn in order to be comfortable with this job? Or, to the point of that value proposition, what would it take to seal the deal? Maybe it is more flex time, maybe it is a hybrid work environment and you don't have to move on compensation and they're just looking for something else.
Sally Loftis:Yes, absolutely. I think we lose our creativity a lot of times in innovative selves because we are burned out from the pandemic and people are running out of speed. That, yeah, I mean to your point, just sitting down and having a conversation and trying to kind of create an environment in the ways that you can, is so powerful. And a lot of times people come in and say it's pay and it may be a different issue, right, right.
Dana Dowdell:Yeah, come in and say it's pay, and it may be a different issue, right, right, yeah, I, I have a very I feel like HR is in a very interesting position, and I find myself in this a lot, being a woman, in that obviously I'm working for clients and we want to, you know, have a compensation structure that meets budget goals.
Dana Dowdell:But, then there's this sliver of me that I'm going to create the space for people to feel comfortable to negotiate. Do you find that in your practice that we have to kind of play this dual role?
Sally Loftis:Yeah, I am very pro-employee and so you know, and it's interesting when you talk about negotiation I probably have about 50% of my clients that negotiate, 50% that don't, and I can kind of go either way on that. I think if I was in a business I might have like a clear stance on that, because there's a lot of research around, there's bias, cultural factors in negotiation, right, but then you know that's what gets rewarded is asking for more negotiating. What I really see now is that people are trying to negotiate for pay increases quicker, like I'd be curious if you see this too around like they're working a job and in three months they want to increase. So it may be that there may need to be internal flexibility to be able to give somebody maybe their annual increase in smaller increments over a period of time, or I don't know what it is. But yeah, I mean, or maybe also work with clients who kind of are like this is when we're willing to negotiate and there's certain factors in that.
Dana Dowdell:Yeah, I'm not a fan of the kind of like the sales pitchy, game playing and negotiation. I want to get to the point of like what's going to work for you, that'll also work for us. So I don't want to end this conversation without talking about your book. So you have a book coming out this summer.
Sally Loftis:Yeah, very exciting. So, yeah, hopefully coming out summer 2024. I just finished writing it last week, so I'm in the editing stages. It's going to be about implementing pay equity in US-based nonprofits, titled TBD.
Sally Loftis:But I'm really excited about it because it kind of goes through those four phases and walks through a process for you to use. And also, I will say I have what's called the Pay Equity Collective, which is on my website. There's a free version of the community where you can go and get resources about pay equity, because in my work I find there's very little and if there is, it's more like leadership level versus like the HR person having to implement it, you know. And then I also have paid versions where we can work together in a community of other organizations and, of course, I do one-on-one. But yeah, I'm really excited about my book. It's something like I talk about all the time and it's like to sit down and kind of write it all out and be to that point. You know, to have done enough work to get to that point is super exciting. So I'm trying to temper my expectations of what it's going to be like.
Dana Dowdell:I admire anyone that writes a book. I just think that it's such an incredible accomplishment and the dedication, the drive, the focus to do it is just beyond, so very admirable.
Sally Loftis:Well, thank you. It has been cathartic in that I've had some other things in my personal life going on, um and with my kids, and so it's been one of those things where I can like go into writing and it's like not you know, it's not anything related to that, so I can kind of I've been able to kind of go into that world and so, um, people are like you're writing a book right now. I'm like, of course I am. I mean why not?
Dana Dowdell:What do you? Can you leave us with kind of where you think pay equity pay transparency is going next?
Sally Loftis:Yeah, I think that pay transparency laws are they're more coming. I think that's going to be coming. If you look at and you were just talking about this earlier if you look at other countries in the world that are peers of ours, that's where you know they're already there doing gender and race and ethnicity gap reporting. So it's coming. So it's always nice to be able to work on that ahead of time rather than being forced into it.
Sally Loftis:Right, I think, from a pay equity standpoint, is the work that's going to need to be done is really in the middle of organizations, because so much work has been done on the frontline, which still needs to happen, but frontline workers have come up about 20% in the last four years, which is awesome, and then leaders have really been rewarded, but it's all the people in between that are sitting there experiencing salary compression right now. So that's going to need to be some work on organizations, and I think it's also a place where people can do systemic change around equity and inclusion. So a lot of times, people have, you know, had awareness, things like that, done some policy work, but this is truly a systemic change that really cuts across all identities, so it can really make investments across the board for everyone.
Dana Dowdell:I'm very excited to see more of these pay equity laws and requirements being put in place.
Sally Loftis:I was laughing because I'm like wow, an HR person saying, yes, more laws. I love it.
Dana Dowdell:I'm just joking. I think the intention is there. I always explain pay equity laws in that they're tied to like lily led better adverse action. You know, adverse impact, adverse action. So I think, in a way, like the hr fanatic in me gets to like share a little nugget of hr that people don't really know um. But I think overall, I think it's I I think leveling the playing field with talent and the compensation of talent I think is really important and I think it's causing employers to really step up their game, which I think is a really good thing.
Sally Loftis:Oh yeah, I agree with that and even with, like, the FLSA salary exemption. You know, if they increase that again, again I tell people they're like, oh, we can't afford that. I'm like, well, it's coming at some point, so you might as well take, you know, at least micro steps that way now, so you aren't so caught off guard when it does happen.
Dana Dowdell:Right, right, Sally. You are a wealth of knowledge. Where can listeners find you?
Sally Loftis:Thank you, I enjoyed being on here. You can find me on social media, and specifically LinkedIn and Instagram, at Loftis Partners and then on LinkedIn I have Loftis Partners and myself and I'm on there quite a bit. You can also find me on my website and, yeah, on LinkedIn I have the fully human resources newsletter that I publish monthly and then on my website at we have events you can join the pay equity collective things like that. Would love to connect.
Dana Dowdell:Amazing, and of course, we will make sure that all of Sally's information places to find her are in the show notes and then you can follow her so that you can stay up to date of when the book is dropping. So it's so exciting. Sally, thank you so much for being on Quirky HR.
Sally Loftis:Yeah, thank you.