Pay Transparency + the Power of Preventive Strategies: Episode 3 — Pivoting Toward Preparation in the Life Sciences

Transcript

Laura A. Mitchell 
Principal, Denver

Hello, welcome to the latest edition of our pay transparency podcast. I'm Laura Mitchell, and I lead Jackson Lewis’ Pay Equity Group. I am joined today with my friend and colleague, Peggy Strange. It's been a couple of years since we've talked about pay transparency on a podcast. I'm excited to do this again with you to hear about what's new and different and what's the same for our clients. 

Let's start off with a little bit about the Life Sciences Group. You do a lot of work for our clients in this space, and if you could tell us what Jackson Lewis’ experience is with supporting this specific group, and what that looks like.

Peggy Strange
Principal, Hartford

We really have a deep, deep bench in the Life Sciences Group. In life sciences, where I've got a large focus, it's really an industry that has unique challenges, an industry where it's helpful to know: What are other companies doing? How are we going to handle these issues? It's an industry that faces unique pressure from lots of outside sources and lots of regulations and so forth. The Life Sciences Group obviously is very important to our world, to our future, and Jackson Lewis is here to help in the employment areas.

Mitchell 

Much like tech, it's a quickly developing industry. Things turn over quickly – there are new developments, new products, and new things that companies are working on. The advice has to be nimble and keep up with what it is that our clients and those companies are facing on a day-to-day basis.

That leads us into our discussion today on pay transparency, because as we've talked about in our previous episodes, there's a lot to think about just from a regulatory standpoint, lots of different states with different requirements, and they're impacting industries in different ways. What are you seeing and hearing from clients about pressure points and things that they're concerned about and grappling with around pay transparency right now?

Strange

We've had pay transparency for a bit now, and in theory, it sounds almost simple. We'll just put out there what people are getting paid and the pay ranges. Where the Life Sciences Group in particular faces a real challenge is that there are so many very different, highly specialized jobs in the industry. It's hard to say which ranges for which job, how much people should be paid for these jobs, because you're not always comparing apples to apples. There's very limited paid data available because the jobs are so different and often unique to the product, unique to the company, unique to how the company works, or geographically unique. There are a lot of specialized jobs that require almost a deep dive just to get the basics for pay transparency.

Mitchell 

Because pay transparency comes at the end of the process, like what we're disclosing to the public or what we're disclosing internally to our incumbent employees. However, you have to know what that pay is going to be; you have to have that range. You must compare it against that market data. It's almost as if some organizations try to put the cart before the horse when saying, we'll just post ranges. To your point, how do we value these jobs? What are we going to put out there? I'm reading between the lines here, but this is a highly competitive area as well. It's not just about what we are going to value, but what's going to be attractive to this highly specialized talent. We have to think about the competitive nature of these roles. Pay transparency sounds like it is really complex and not just as easy as you said, put a range out on a job posting and go with it.

Strange

There's no solid benchmarking. There's not a lot of structure for them to go off of to make these accurate pay ranges; that's one problem. A second problem is that you can make whatever pay ranges you want when a senior leader has, for example, an incredibly unique product that they're working on, and they need the Laura Mitchell who has hands-on experience in that area of health or that type of product. You can tell a senior leader what the pay range is, and they may very well tell you what I need to pay you more, and I can't,  and that's a constant challenge.

Mitchell 

We have heard a request for an exception so many times from so many different clients that there's a concern that the exception is going to swallow the rule. They are always coming saying, this is my needle in a haystack. I can't lose this person. They're the only one that can do this job, I have to pay them more. They're asking for twenty thousand dollars over what our range is, and we just have to pay it right. That's a concern from a pay transparency side and from a compliance side. We're paying outside of the posted range, and if we do that continuously or often, then the legitimacy of our ranges gets challenged. However, what does that do for our internal pay equity analyses, because those two go hand in hand. I'm wondering if you get that question, if our clients are actually thinking about it in those terms as well.

Strange

They're not thinking about it as much as we're having to remind them that that is a very problematic situation to have. From a practical perspective, we often have to remind clients that we absolutely support what the business wants to do. However, although the business is very excited to bring somebody in, maybe they don't work out, and maybe they're not as great as we thought. Now you've got your current employees who are like, well, why does Laura make more than all of us? You have the next employee that you want to hire, who's like, well, why does she make that much? While it seems like a quick ask of: hey, Laura is available to start in two weeks, we need her, can we just get an exception? It's how do you make a business see that that exception will continue to follow the life of your new hire? It's a very difficult situation.

Mitchell 

Really at the most basic level, it comes down to if you want to pay this candidate more now than when we do our annual pay equity analyses or when we do our merit increases; you have to be prepared business leader to spend the budget to increase the pay of your incumbent employees so that we do have fair pay and that our compensation processes are administered equitably. I've seen some success in those types of conversations with senior leaders, but it's right. It seems like it's a momentary in-the-moment decision, but it does have legs to it. It really does last throughout the organization and the life of that employee.

Strange

With life sciences companies, many of them must gear up very quickly. The decision to hire is one of the most important decisions you make. It's often the one you put the least amount of time into. It's really a matter of trying to get clients to pivot to more preparation, as you said, what are those pay ranges going to do? Do the work early on to get to the right place.

Mitchell 

The most successful organizations we work with are those that understand that compliance starts earlier in the process, that it really isn't just at the tail end. Weaving the compliance personnel and those decisions into the hiring process, the pay setting process is helpful and a best practice, frankly, for what we see within the organizations.

Another thing that I was thinking about as you were talking is just this highly specialized workforce. The fact that these organizations, these companies within life sciences, are usually working on highly confidential, new-to-market, new products that they really don't want folks to know about. Do you see questions and challenges around how we comply with pay transparency when we are also balancing the protection of trade secrets and confidentiality, and frankly, market competition?

Strange

When we first started with pay transparency, the pushback we would get was, I have to tell them the ranges. They're just going to go over to another company and say, this is the range and pay me more. People have settled down that concern because it just is. However, now there is a very real concern that we need to protect intellectual property and trade secrets. A job posting could reveal too much detail about seniority or responsibilities or compensation bands, so that maybe another company can say, this is the product space they're going into, and that's really a discussion for whoever is setting your pay levels to think about from a business perspective. Are there confidentiality provisions that you're inadvertently violating? Can someone guess or figure it out? Is this a new drug to the market that they're trying to develop? It’s a very real business concern that HR or whoever is doing the pay needs to think about.

Mitchell 

It's just a good reminder that compliance doesn't operate in a vacuum within organizations. You need to make sure you get all the stakeholders read in on what's going on to make sure you're not creating undue risk, liability, or exposure in other areas while trying to comply with these pay transparency laws.

Strange

Another area that also covers that a little bit is talent mobility. Folks may want to go to a different place, for example, sometimes a sales rep may say, what? See, my career is going to be a little bit better if I move to that job in Texas. It's going to give me a bigger territory. How are you handling that? Are there any issues with geography? Sure, you, as a company, pay more for Texas than for Ohio. It's all the considerations that life science particularly faces.

Mitchell 

We had that same discussion on our podcast with our healthcare industry folks around this notion of nationwide pricing for jobs. Do you want to continue to pay differently, have a geo differential pay, different for different geographies, or do you want to have a nationwide compensation structure where talent mobility is easier to support, so that you don't lose that highly valuable talent when they say, what, I want to move to Texas, or that Seattle is probably better for me than living in Ohio. That's an internal consideration, and we're seeing organizations go in both directions. Some have done away with the geo differential, and others have created regional geo differentials and just rolled that out and made that known to their employee population. At the end of the day, it's all about transparency, whichever way you go with it, making sure that your employees and your applicants are informed about what they can expect to be paid.

Strange

Well, and then a follow-up question, is there also intense talent scarcity sometimes? The answer is, well, why don't we just throw a bonus in, a sign-on bonus? There have been laws in some states, such as New York, about whether you can make somebody pay you back years down the road. However, pay transparency is a consideration if they start adding bonuses and adding incentive comp? How does that play out?

Mitchell 

It's both a pay transparency consideration, but also that pay equity consideration that we were talking about, because a number of the states are including those additional components of pay in the valuation and the comparison of whether you're paying fairly and equitably for similarly situated roles. It's something that employers need to be mindful of, and to your point earlier, it seems like a momentary good idea in the moment, but it does have longer-standing implications.

Strange

On that note, Jackson Lewis, again, we have our Life Science Group. It's sometimes helpful to the business to say, we're in your space, and we know that other companies are including their bonuses and pay transparency, they don't feel like it's just your HR department or your legal department over at Lawyer Inc.

Mitchell 

That’s a fantastic note to end on. Clearly, there's a lot to think about each time we do these podcasts. Each time I do one of these podcasts, I learn something new and just have a deeper understanding of all the nuances that are impacting our clients and companies, trying to grapple with all of this. 

Thank you so much for sharing your insight, and I look forward to doing this again sometime soon.