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How to Get Ready for the New Pay Transparency Requirements in 2023

183:906269490 • October 10, 2022

Preparing for the new California bill.

Employers of 100+ employees with even one employee living in California and California employers with 15+ employees just got handed a stack of paperwork that’s due May 10, 2023. You can read more about that in Part 1 of my pay transparency series.


And if you don’t employ in California and are thinking this doesn’t apply to you, think again. California isn’t the first state to pass a sweeping pay transparency law, but it is the biggest and this will have both immediate and long term affects for the rest of the country.


So the question is…how do you prepare for the new pay transparency requirements?


Document, Document, Document…


If you, like most companies throughout the brief history of our country, have done your hiring and compensating as needed and on a case-by-case basis, you may have some work ahead of you. In order to meet the reporting requirements for the new law, you’re going to need to document several things.


Document and standardize your job titles and pay ranges. You need to make sure that every role and employee in your company has a job title with an associated pay range. Of course, this could bring up some information that will need resolving. For example, if you have 10 people in the role and only 9 of them are within the pay range you’ve created for that role, you’ll need to address the situation and quickly! Legislation requires pay ranges be posted effective January 1. And be available upon request by all employees.


As a note, this actually does get to the root of the intent of this law, which is ultimately the goal of achieving pay equity through reduced ambiguity of pay levels, but in the short term is likely to uncover problems and create additional work for every organization.


Document every single employee, their job title, and their current pay. You’re going to need this information for the reason listed above and also for reporting purposes. If you’ve hired contract workers, you’ll need to document their information as well.


Document your compensation structures. Having a carefully planned compensation structure is essential to meeting the requirements of this new law. If this is something you’re struggling with, feel free to reach out and I can help. You can also check out my guide to sales compensation for the steps to creating a solid variable compensation plan. 


Analysis and Action


Once you’ve got everything documented, take a look at your data. There’s a story, and if you don’t like what that story is telling you, you may need to address some issues sooner rather than later.


I’ve already mentioned one example. If you notice that one or more of your employees falls outside the range of pay for the job title they’re working for, you’ll need to correct that situation. You’re also going to need to start analyzing the pay within a role for different categories like gender, race, and ethnicity. Now’s the time to look for inequities and create plans to resolve those inequities.


Again, the intent of this and other pay transparency laws is equity and fairness. While the reporting and punitive structures will be burdensome to businesses, the goal is worth pursuing.


Get Ready


As you’re preparing your documentation and doing the analysis, it’s important to remember that you’re not operating in a silo. Your managers and employees are going to have questions. Start developing a plan to get in front of the story and give them the information they need in terms of their rights and responsibilities.


Now’s the time to create training programs for managers to start keeping more detailed records so that reporting will be easier in the future.


Like it or not, this is happening. There are likely going to be many conversations about the pros and cons of this law (which I’ll be addressing in my next post), but the bottom line is, we have to get ready. While it can be overwhelming up front, the sooner you get your documentation in order and begin correcting any issues that arise, the sooner you can put into place processes that will help you operate more smoothly in the future.


Stay tuned for more on pay transparency.

By 183:906269490 December 16, 2024
In my first Best Practices post, I talked about the importance of knowing what you can pay for your sales roles before worrying about what the market is saying. In my second post, I covered ways to utilize culture in a sales organization . The following Best Practice in sales compensation involves job content. Job content plays several roles in your compensation plan: 1. It gives your salesperson a guide to what success looks like in their role. 2. It gives you a guide to evaluating the performance of your salesperson. 3. It rationalizes differing levels of variable pay outcomes for varying performance levels. 4. It provides your organization with the structure needed to comply with any reporting, pay transparency, or other regulations. Hopefully, that’s enough to convince you of the importance of taking the time to define your new roles and revisit the definition of your existing roles. Now, here’s how job content actually does those things. Defining the job The first role of job content is to define the who, what, where, when, and how of the function. It can be tempting to borrow a job description from LinkedIn, Glassdoor, etc., with the assumption that the content will be similar enough to fit your needs. However, the way a specific role performs is unique to the organization it’s acting in, which is why it’s important to take the time to define the job from scratch. Here are the questions you should be answering in your job content: What does the person need to do on a daily basis? How does this individual pursue sales, and in what segment or with what type of customer? Where should they focus their time and attention when building a pipeline of deals? Who should they be interfacing with, both internally and externally? When do they engage with customers and/or prospects? What portion of the sales process do they own or support? How do they interface with and influence decision-makers? Now, even though I said to write your job description from scratch, that doesn’t mean this is the time or place to get too creative. Job seekers are going to be searching by job title or category, so it’s essential to stick to the common vernacular regarding industry jargon and expected job titles. Job Description: A Byproduct of Job Content Another positive outcome of creating job content for your roles is that you will have generated much of the information needed for a job description if or when you’re ready to hire. Information such as: Job duties and responsibilities that clarify the type of work and engagement with customers. Qualifications/Requirements that are both minimum and desired. Those include education, knowledge, skills, capabilities, and competencies. Performance measures of the role include items like achieving sales targets, new logo acquisition, development of pipeline, accuracy in forecasting, etc. With all of this information on file, it will not only be easier for you to prepare to hire for the roles you want, but it will also be easier to evaluate existing employees in those roles. Beyond all of that, you’ll be well prepared for competitive market research and establishing your variable pay program. I’ll be posting more best practices on the blog, but if you’re anxious to dive deeper into the subject of sales compensation, you can grab a copy of my book Starting Simple: Sales Compensation and consider working through the companion Workbook to build a sales compensation plan from scratch.
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