Millennials and Gen Z workers are comfortable sharing information about salary and benefits with their co-workers, but are surprisingly reluctant to discuss these topics with managers. More than half (54%) of respondents to a survey by beqom, a global provider of compensation management software, reported that they had no plans to ask for a raise or additional benefits this year, and less than 20% of those surveyed said they felt comfortable discussing salary or compensation with their managers — period.
What’s more, the same survey shows that millennial and Gen Z workers aren’t comfortable discussing career paths or even their own happiness at work. In fact, career happiness — or its opposite — proved to be the most taboo topic in the survey, with only 11% of workers saying they would feel comfortable discussing such a topic with their managers. Reviewing career trajectories is nearly as awkward, with just 12% of workers saying they’d broach the subject.
Employers suffer
In the long run, this communication gap is most harmful to employers by negatively impacting productivity and decreasing retention rates. Nearly one in three (29%) of U.S. workers say they are planning to get a new job within the year because they are unhappy with their salary. And that figure is kept deceptively low by baby boomers, who are far less likely to change jobs and who are also happier with their salary. A whopping 39% of millennial men report they plan to look for other work due to dissatisfaction with their salary.
“Given their willingness to discuss salary and benefits with each other, younger employees could hold the key to creating broader transparency in compensation culture,” states the beqom report, entitled “How the Next Generation of Workers is Changing the Culture of Total Rewards.” It recommends finding employees who are open to engaging in conversations with HR and managers about their feelings on pay and have them lead compensation workshops — safe spaces where workers can discuss pay with colleagues and get the tools they need to feel empowered to engage in talks with managers about pay.
Pay for performance is not an equalizer
One might hypothesize that in sales, where people are paid largely on performance, there would be a narrower pay gap between men and women. Unfortunately, this isn’t true. A 2019 study by Xactly of sales teams across a diverse cross-section of industries reveals that despite being underrepresented (with women making up 29% of the reps and 26% of the sales managers), women tend to hit or exceed their quotas, but are paid less in salary and commissions over time.
The report also offers evidence that this pay gap worsens over time. As employees progress through their careers, men are more likely to find themselves in executive positions with bigger paychecks than their female counterparts. The report is a follow-up to an Xactly study that found a similar situation five years ago.
“We originally released this report in 2014, and the consistent takeaway remains that women outperform men when it comes to winning deals and hitting their quotas, and they are not paid equally. In fact, many industries today still have an incredibly low representation of women across their sales departments,” said Chris Cabrera, Founder and CEO of Xactly.
To begin correcting pay inequality, the Xactly report recommends gathering multiple department leaders who will commit to the effort. It’s most helpful to look at each role individually to sort out pay inequality. For example, look at AEs with the same years of experience. Are they all being paid the same? Or, do you have a female AE with 10 years of experience making significantly less than her male counterpart with similar experience and in the same role?
It’s not always about being underpaid
Careful analysis of companywide compensation may turn up some surprises. When Xactly underwent this exercise with its sales teams in 2014, one woman was actually paid more than she should have been and her salary was adjusted. “The idea is not just to raise everyone’s salary. The goal is to achieve equal pay for performance so that your top sellers, be they male or female, are competitively and fairly compensated,” the report states.
Transparency is vital. “It is important for employees to know and believe that they are being paid fairly, which requires that they have visibility into how their pay was calculated,” the beqom report states.
Putting in a plug for its compensation management software, the report concludes, “For companies that want to commit to more transparent practices around pay, investing in digital tools can help show employees how their performance contributes to their pay and what their financial growth trajectory looks like long term. By connecting the dots between pay and performance, employees can be incentivized to work harder to meet required benchmarks and earn the next boost in pay.”
