Transparency alone won’t fix pay gaps. Here’s what will

There are a couple of countries in the world that have gotten pay equity legislation right. The U.S. is not one of them.

But Australia is. Why? In 2014, they started requiring companies to publicly disclose their pay equity analyses. In the years that followed, they went from 18.5% to 13.9% in 2019.

Transparency works, on many levels. The executive team of Blizzard Entertainment found this out the hard way. Their employees did what many do in the face of opaque pay practices: they filled that void by crowdsourcing and sharing their own pay, to the consternation of Blizzard’s leadership team and PR department.

Kudos to employees for trying to take matters into their own hands. Unfortunately, it’s a misguided effort because it creates a poor substitute for the truth. A crowdsourced spreadsheet of individuals’ pay may get attention from management and the media, but it’s something that often highlights issues that are not legitimate while masking real problems.

Blizzard employees are doing the right thing by demanding more from their employer. The company is the only entity that has access to all the data needed to do an adequate analysis of pay equity and practices.

For Blizzard—or any other company contemplating creating a robust and effective pay equity strategy—transparency is key. But they must look at transparency on two levels.

First, they need to allow employees to have visibility into their own pay metrics. Everyone knows what they, personally, are paid. But incredibly, many employees do not know what grade, band, or level they are in. For those that do, many do not know where in their grade/band/level they sit. True transparency allows employees to know where in the pay grade or band does their pay fall, how they’re paid relative to that band, and what limits there are to move within that band.

Second, more critically, the company needs to help employees understand whether they are paid fairly relative to others. If an employee is paid at the midpoint of their band, does that tell them anything about their pay relative to others’? If the company made pay adjustments because of disparities, how do employees know if they were made “because of” gender or race? If the company did make adjustments “because of” gender and race disparities, did they pay employees retroactively or will it simply be a forward-looking cosmetic fix?

These are exactly the questions the Blizzard employees are trying to answer with the crowdsourced spreadsheet. But crowdsourced, self-reported salary data is notoriously full of errors and, often, not the whole truth. Additionally, it doesn’t take into account neutral job-related factors that legally drive pay like education, tenure, and skills.

Employees cannot make informed decisions if they have no visibility of the underlying information needed. For most workers, the honest answer to the question: “Are you paid without regard to gender or race” is “I don’t know.” Some can point to public statements their employers have made. Those public-facing statements made by employers are helpful, but they also amount to “Trust me, I’ve looked, you’re good.”

Employees don’t expect perfection, but they deserve transparency. The most effective approach a company can take when addressing the pay gap or pay equity is to say openly to its people, “We are committed to pay equity and, as part of this commitment, we will regularly analyze our pay and we will be transparent with you about the results.”

Then, they do it.

Maria Colacurcio is the CEO of Syndio.