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Most startups aren’t ready for pay transparency laws. Here’s why.

Protocol Workplace

Welcome back to our Workplace newsletter. Today, compensation experts say most startups aren’t ready for the new pay transparency laws going into effect in the coming months, because most haven’t even set up internal pay bands. Plus, tech CHROs have their own least favorite parts of performance reviews — and one says why she doesn’t do them at all.

— Allison Levitsky, reporter (email| twitter)

Not ready for pay transparency

Most startups aren’t ready for the pay transparency laws going into effect in the coming months, according to compensation experts. The first step for many will be setting up internal pay bands — a task that isn’t at the top of most startup leaders’ to-do lists.

  • California’s law, which goes into effect Jan. 1, applies to companies that employ 15 or more workers. But few early-stage startups crossing that 15-head threshold have an HR function, and many haven’t defined their pay ranges.
  • Matt Schulman, founder and CEO of compensation technology startup Pave, estimates that only one in four startups will be ready to be transparent about pay ranges by January — and that the vast majority of early-stage startups haven’t established pay ranges. “I bet, like, 95% of 20-person startups don’t even have a notion of compensation bands at this point,” Schulman said.
  • “A lot of companies, shockingly, don’t always know if these laws apply to them,” said Kaitlyn Knopp, founder and CEO of compensation software maker Pequity. Companies typically establish pay bands when they hit 40 or 50 employees — around the time they start hiring middle managers, Knopp said.

A big part of standardizing pay: employee communication. Heather Sullivan, who took over as Astranis Space Technologies’ first permanent chief people officer in July, is only now setting up pay ranges at the company, which has around 270 employees.

  • “It’s a ton of work,” Sullivan said. Much of that work is internal change management and communication around pay transparency, she said. “So if they see a number or set of numbers on the website, they’re not, like, ‘Hey, what the hell?’”
  • In addition to building pay ranges and training leaders on how to talk with employees about progressing through a range, Sullivan said, part of the work is defining a philosophy around pay.
  • There will “always” be an upward pay adjustment when setting up pay ranges for the first time, Knopp said. “That’s healthy, because the market’s always moving,” Knopp said. “You’re giving raises, which are celebrated.”

Standardizing pay as early as possible can help companies know how they measure up to competitors and prevent pay inequity from forming, Knopp said. Pay disparities result from inconsistent practices.

  • Pay disparities are “hardly malicious,” and are most often the result of not being systematic, according to Knopp. “It’s usually actually people who have the best of intention, where they’re like, ‘I’m really going to swing hard for this candidate — I’m going to go all out because they deserve it,’” she said.
  • Plus, the sooner companies set up pay bands, the easier it will be to do. “It doesn’t require a deep job architecture process to have a general range that you would pay for the role,” said Maria Colacurcio, CEO of fair pay software maker Syndio.
  • And starting early can avoid gaps that will only get more expensive to fix later on, Colacurcio said: “The risks compound over time, and those risks get bigger and bigger.”

Not meeting expectations

For most people leaders, some part of the performance review process needs improvement. For Protocol’s latest Braintrust, research editor Kevin McAllister asked HR heads from companies such as ServiceNow, HubSpot, and Qualtrics about their least favorite parts of the performance review process.

What he learned: Reviews shouldn’t contain surprises, the “how” of performance can be as important as the “what,” and why one fintech people leader hasn’t used performance reviews at any company she’s worked at since 2009.

Read the full story.


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Leaving so soon?

Job-hopping isn’t just for junior employees. According to LinkedIn data, rates of leaving jobs within a year are rising fastest among VPs, directors, and managers.

  • In February 2022, managers job-hopped 20% more often than they did a year before. As recently as two months ago, managers were still changing jobs within a year 11% more than they did in August 2021.
  • Earlier this year, VPs were job-hopping 16% more than they were in early 2021. By August, they were doing so 13% more than they were a year before.
  • Meanwhile, entry-level workers’ job-hopping habits have remained more stable since September 2021, with rates increasing 5% or less over the previous year.

Two possible explanations for the changes, according to LinkedIn: “unusually ragged” remote hiring processes in 2021 that meant candidates had less of an in-person feel for new roles before accepting them, and high stress levels among leaders and managers.

Managers find themselves “squeezed between the demands of top executives wanting to drive change in a hurry — and the family stresses or mental-wellbeing challenges that burden their subordinates every day,” LinkedIn editor George Anders writes.

Some personnel news

Anyone else having a bad case of Great Resignation whiplash? It’s hard to keep up with which tech companies are growing, shrinking, floating, or sinking. We’re here to help.

⬇️ Salesforce is freezing hiring through January and has ended contracts with some temporary recruiters, Protocol learned Wednesday.

⬇️ Thousands of job cuts are coming to Intel and may be announced this month, according to Bloomberg.

⬇️ Noom has let go of around 500 workers — mostly coaches — in a layoff affecting 10% of the company, TechCrunch reported.

⬇️ Brex laid off 11% of its workforce, affecting 136 employees, as the corporate spending management company restructures.

For more news on hiring, firing, and rewiring, see our tech company tracker.

Around the internet

A roundup of workplace news from the farthest corners of the internet.

The labor shortage is driving employers to hang on to workers, which could help stave off a recession. (The New York Times)

Workers at an Amazon warehouse in Southern California just filed a petition to unionize. (CNBC)

Attrition has risen at Twitter as Elon Musk moves closer to buying the company. (Financial Times)


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