Lessons from Yelp: How Transparent Pay Practices Motivate Employees

Along with thousands of other people, I read Talia Jane’s open letter to her CEO with mixed emotions. Long story short, she wrote an in-depth blog, directed to the CEO of Yelp, describing the many ways that the pay for her entry-level job at Eat24/Yelp fell short of allowing her to pay for a car, apartment, and food. One of my colleagues posted a great analysis of the range of responses felt by employees across the generations. Her post got me thinking about the ways that Eat24 could have done a better job engaging Jane before it got to this point, because let’s be real—this point was way too far for her to actually be engaged in the core responsibilities of her job. What are the best steps to take to seek to prevent such dissatisfaction?

Market Study

Start by making sure pay at your company is competitive. Get good data and do a market study to determine the going rates for your jobs in your market. You may have to look at different sets of data for different parts within your workforce. I suspect pay for folks on other floors in Jane’s building were probably targeted more competitively than on her floor, and that is probably the right answer for Eat24 to maintain a competitive edge.

Make sure you check the market frequently for your hot jobs, quarterly at the very least. Your data source should move as fast as your business, and your analysis of your mission critical roles will be central to accomplishing your company’s goals.

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Share company pay philosophy and strategy

Figure out what matters to your organization. Do you want to reward results? Experience? Different skills? Tenure? Decide what matters most and what you want to pay for. Once you do that, share that philosophy with managers and employees so they know the rules of the game. Employees trust companies more when they receive more information, with trust comes good relationships, engagement, morale and performance.

In the 2016 Compensation Best Practices Report, PayScale shared that 82% of employees are okay with being paid low as long as they understand the rationale behind it. So don’t be an ostrich—pick your head up, look around, and get strategic about communicating your compensation philosophy. Maybe with more information, Jane would have had the option to make better choices for herself.

Be Real About Advancement Opportunities

Most employees seek advancement, especially from entry level roles and especially amongst the Millennial generation. Jane accepted an entry-level role with the expectation of moving from that role within a year. In many organizations, that’s not feasible because the costs of training and turnover preclude advancement before employees have a chance to actually do some work in the role for they were hired. Build out your career paths—paths, not ladders. While in the past it was typical to have linear career ladders, it’s much more likely now for people to meander cross-functionally along career paths. The chance for people to move internally from group to group provides great organizational learning and is to be encouraged. So encourage it, but be realistic about what is possible.

Identify What Benefits and Perks that are Rewarding for Your Workforce

One of Jane’s complaints was that she would have preferred cold hard cash to having snacks available at work. It’s often true at entry-level jobs that money rewards more than perks, as it’s really about meeting basic level needs. While it’s competitive, especially among tech companies in the San Francisco area, to have creative perks and benefits, it’s a good idea to talk with your employees to find out if your mix of rewards is actually landing with them and having the desired effect—motivation and reward.

At the end of the day, maybe Yelp/Eat24 did all those things and still found themselves in a situation where a rogue employee posted freely and publicly about their dissatisfaction with the company. It’s going to get more not less common for people to share their stories candidly, so companies should seize every opportunity to give employees a good story to tell. In my book, if companies truly act with the best intentions, and employees still tell an unfavorable public story, it’s fair to have consequences.

What are your thoughts?

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