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How pay transparency will change compensation in tech

Protocol Workplace

Welcome back to our Workplace newsletter. Breaking news: Elon Musk reportedly plans to go through with his purchase of Twitter after all, at $54.20 per share. After the news broke today, Twitter’s director of machine learning ethics tweeted: “I am sitting on 2023 company-wide strategy readouts and I guess we are going to collectively ignore what’s going on.” Oof.

Today, we look at how tech companies might shift their compensation practices in response to California’s new pay transparency law. Plus, Protocol reporter Lizzy Lawrence tells us about a new Microsoft Teams dance remix ringtone, and Protocol’s Nat Rubio-Licht and AJ Caughey reveal just how soon after raising money most startups conducted layoffs this year.

— Allison Levitsky, reporter (email | twitter)

How pay transparency will change comp

California’s new pay transparency law, SB 1162, promises to shake up compensation in the tech industry by requiring employers in the state to list pay scales in job ads and reveal pay information to both the state and to current employees. We spoke with Susan Alban, operating partner and chief people officer at Renegade Partners, and compensation consultant Ashish Raina to learn how.

Startups will adopt pay bands earlier. Five or 10 years ago, it wasn’t unusual for 50-person companies to be operating without a “career ladder” or “career architecture” with compensation bands for different job functions and levels, Alban said.

  • Today’s tighter labor market — and demands from candidates — mean that companies structure their compensation bands sooner.
  • Because the new law applies to companies with just 15 employees, even tiny startups will be required to define their pay bands in a more structured way, Alban said.
  • “Which is a little funky when you have, like, eight people, to have a band for every single job, because sometimes you just have one person in a job,” she said. “It just nudges companies to be a little bit more thoughtful in defining what is the job, what is the relative seniority, and what would we reasonably pay relative to market-based pay.”

Companies may find other ways to differentiate pay in order to compete for the best talent. The law only requires companies to disclose base pay, not stock, bonuses, or benefits.

  • This means bonuses and equity could become more important forms of compensation, which may shift the issue of unequal pay to other areas.
  • Bonuses “can be very arbitrary,” especially in early-stage companies where goals change all the time, Alban said.
  • They may prove to be even more important levers for attracting and retaining great employees, however. “Fair pay is not equal pay,” Raina said. “If someone is more proficient or more highly performing in a role, there should be a differentiation in pay.”

The law might provide a little more incentive for companies to hire outside of California, but not much. The law on its own is unlikely to have a major effect on where companies hire, but it adds more administrative headache to California employers.

  • “I don’t hear employers talking about not wanting to hire in the state of Colorado because of these laws,” Alban said.
  • Some companies may choose to advertise jobs with a national labor rate that would overpay candidates in low-cost states like Mississippi but underpay Californians, Raina said.

Big companies are likely to comply more readily than startups. An online job search shows companies like Google, Salesforce, and Twitter listing pay ranges in ads. Some listings cite the Colorado law explicitly.

  • “I think the general consensus among progressive technology employers is that this is the way the world is going,” Alban said. “Rather than fret about it and deviate from hiring in particular regions to avoid compliance, better to just comply anyway.”
  • Some startups likely won’t comply with the law, Raina said. “They’re trying to survive,” he said. “Yes, this law exists, and yes, there’s going to be some risk if they don’t comply, but that isn’t necessarily people’s forefront of an issue.”

Work spot

Last year, I told you about the Slack “hummus” ringtone. Now I’m here to tell you about another ringtone that might bring you out of a work stupor: Microsoft Teams’ dance remix (if you've never used Teams, you'll recognize the jaunty beat from waiting for your Skype call to be answered). The sound was developed by Calum Newton, aka CandyMoore.mp3 on TikTok. The sound originally included Bill Gates saying “Microsoft Windows”; unfortunately that didn’t make the final cut.

The video blew up after another TikToker with the handle Mr. Brotein used the sound, which is how Microsoft program manager Surbhi Lohia stumbled upon it. After months of will-they-won’t-they, Microsoft implemented the ringtone in September. “The most gratifying part has been the excitement on social media,” Lohia said. “Teams is a workplace tool, so you don't get to see people freaking out about it on social media.” Newton was also surprised to see the traction the sound gained on corporate TikTok. “It was really funny seeing all these comments and videos relishing in my remix of this traumatic sound,” Newton said.

The next company Newton’s trying to infiltrate with a ringtone remix? Discord.

— Lizzy Lawrence, reporter (email | twitter)

A MESSAGE FROM AUTOMATION ANYWHERE

Today, we expect instant results from our every action, from calling an Uber to ordering takeout. Companies no longer can afford to not adopt technologies like automation. We are now living in the Automation Economy – a new world that requires agility and a complete reimagining of how we work.

Learn more

By the numbers

Many of this year’s layoffs came within a few months of raising funding, according to a Protocol analysis of layoffs by more than 400 startups. On average, startups that cut jobs did so three months after announcing funding rounds.

  • Most companies made cuts two or three months after a funding announcement, while a few did so within two weeks of a round.
  • Trade Republic, Elementor, and Postscript all made cuts within eight days of funding announcements, the largest of which was Trade Republic’s $268 million series C.

The largest layoff in the bunch — Getir’s 4,480-person cut — took place 69 days after the Turkish delivery app maker raised a $768 million series E.

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.

⬆️ Google’s Chicago expansion will likely bring several thousand jobs to the city. (Chicago Sun-Times)

⬆️ Venture dollars aren’t exactly flowing, but fintech startups are still hiring. (TechCrunch)

⬇️ Meta is closing one of its New York offices as the company scales back. (Bloomberg)

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

A MESSAGE FROM AUTOMATION ANYWHERE

Today, we expect instant results from our every action, from calling an Uber to ordering takeout. Companies no longer can afford to not adopt technologies like automation. We are now living in the Automation Economy – a new world that requires agility and a complete reimagining of how we work.

Learn more

Around the internet

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

Uber plans to require non-remote employees to come in on Tuesdays and Thursdays starting next month.

Remote work 🤝 side hustles. (Time)

Nvidia is closing its Russian offices seven months after it stopped selling there amid U.S. sanctions on the country.

Meta plans to give Sheryl Sandberg personal security services as she steps down as chief operating officer.

Lastly, Google “Cloud bard” Forrest Brazeal just proved that you *can* write a song about company reorgs: “We’re going to do a little reorg, yessirree / This time we’re going to fix this company / We’re going to have this DevOps thing in the bag / After one more round of the reorg rag.”

Thoughts, questions, tips? Send them to workplace@protocol.com.

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