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Pay Equity Improves Your Company’s Performance

Diversity
Fairness
Salary / Work Conditions

21 May, 2019

Alex Kroman, SVP of Engineering at New Relic, explains how introducing pay equity positively affected his company both internally and externally.

Problem

We run a bi-annual performance review process where all engineers are reviewed, with promotions and pay changes evaluated. The way we think about compensation is that we have multiple levels for both engineers and managers and for each role we have a salary band. It was up to a manager to decide where their employees fall between that range. During one of those reviews, we noticed that there were discrepancies in the setting of salaries for different engineers. There was an unconscious bias that was creeping into the way we were setting salaries.

Actions taken

  • We implemented what we call pay equity for all technical roles. Managers no longer had any discretion in setting salary. Every role at a particular level has a single salary.
  • After a year of implementing this policy, every single engineer and manager in a technical role at the same level was paid identically.
  • We spent a lot of time communicating with our team that we were trying to achieve a more equitable environment in our company.
  • During recruiting interviews, we would figure out what the level a person is at and they would get a set offer at the midpoint for that level.

Lessons learned

  • The reaction internally was very positive. Employees understood that this was a problem and believed this was the right way to solve it.
  • Externally, recruits were receptive to the transparent salary practice and it improved our hiring process; this was especially true for those who don't like to negotiate pay. Our company's commitment to equity and inclusion helped us to attract even more people.

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