pay equity

CPA Firms Use Pay Equity to Build Employee Trust – and Their Brand

Aug 6th 2015
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2015 is shaping up as the year the debate over pay equity for women reclaimed center stage.

From Patricia Arquette's rallying cry for wage equality at the Academy Awards, to the uproar over pay disparity for members of the US women's soccer team – who, despite bringing home the World Cup and record television ratings, still earned less than their male peers – the grass-roots discussion over pay equity has reignited.

But while many industries – financial and professional services included – are still struggling to close the wage gap, some forward-thinking accounting firms are using pay-equity transparency and accountability practices as a way to build employee trust – and their brand.

“Pay equity should be a marker of employer excellence,” said Joanne Cleaver, whose firm, Wilson-Taylor Associates Inc., manages the Accounting MOVE Project. “Celebrities and politicians are advocating for pay equity, transparency, and accountability, and firms have the chance to make pay equity a point of strength and trust. CPA firm staff, especially, appreciate knowing what the compensation process is and how leadership analyzes pay data to catch and correct any gender-pay inequities.”

And in an industry where everyone is competing for top-tier talent, there is little doubt that the accounting firm with a reputation for proactive and fair-pay policies will lure the best and brightest recruits to its doors.

Kristy Wallace, COO at Ellevate Network, a global women's network, said recent research backs the sentiment that a company's culture – including how it values and treats its employees – is critically important to millennial job seekers.

According to a 2014 Collegefeed survey, nearly 80 percent of millennials look for a people and culture fit with employers, Wallace said, while a recent Glassdoor survey found that 67 percent of active and passive job seekers say culture fit is important when they're evaluating companies and job offers.

“Overt pay equity will be particularly important to millennial women who are well-aware of the facts surrounding pay equality, including that women make 77 cents for every dollar earned by men, and that they should negotiate salaries, even in entry-level positions,” Wallace said. “Finding companies that are transparent about compensation could be a major selling point for women in the accounting industry.”

Pay Equity in Progress
According to Cleaver, pay equity was one of the “top trends” to emerge from the 2015 Accounting MOVE Project Report, with a growing number of Accounting MOVE Project firms examining their own compensation practices to see if actual decisions make a reality of their goals of truly paying for performance.

The Accounting MOVE Project Report shows the direct return on investment the project's more than 47 member firms, including CohnReznick LLP and Moss Adams LLP, get for their women's initiatives. The report tracks the success of women's initiatives through business metrics directly tied to the firm's bottom line, making the business case for integrating women's unique strengths to achieve firm goals.

On the subject of pay equity, the 2015 report found:

  • Forty-seven percent of firms conduct internal pay-equity surveys of all pay plus performance, up from 29 percent in 2014.
  • Forty-one percent of firms conduct pay-equity surveys of base pay only, compared to 32 percent in 2014.
  • Twenty-five percent of firms conduct internal pay-equity surveys by gender and by race, compared to 21 percent in 2014.
  • Fifty-six percent of firms offer employees communication that provides context for pay discussions and decisions, compared to 46 percent in 2014.

“Pay-equity decisions are edging out of the closet,” Cleaver said. “More firms are involving at least two decision-makers in compensation discussions – for instance, an office managing partner and a human resources professional – instead of leaving the entire decision up to the office managing partner.”

With pay equity ensconced in the national conversation, Cleaver said she has witnessed more employees talking more openly about pay practices.

“Firms that equip managers with conversational guidelines for explaining the firm's pay decisions are proactively anticipating these conversations, thus building trust with staff and recruits,” Cleaver said. “Millennials, especially, are pretty open about pay rates and exactly how a firm pays for performance. And firms are realizing that it's smart to outline pay practices to begin with – and to invite these conversations. If people don't ask firm managers about pay practices, they'll ask each other. It's smart to have on-point conversations rather than let staff and recruits draw their own conclusions and then share those conclusions online.”

Baker Tilly: Talking Pay, Building Brand
As firms begin to have more proactive discussions about pay decisions and train managers to consistently apply their equitable pay policies, others have begun to view those policies as a way to build their employer brand and strengthen their culture, Cleaver said.

That is certainly the case at Accounting MOVE Project member firm Baker Tilly Virchow Krause LLP, where the firm's transparent equitable pay practices have become a part of its everyday culture and a point of trust with employees, Cleaver said.

In the 2015 Accounting MOVE Project Report, Mark D. Aulik-Beere, who until recently was the senior manager of human resources operations at Baker Tilly, advised firms to “be upfront” about the pay process.

“You don't have to share every piece of data about how you make your decisions, but it's important to tell employees ‘this is our process,'” Aulik-Beere said.

Today, employees – especially millennials accustomed to freely sharing all kinds of information – can piece together salary comparisons from online sources. It's better to provide an official point of reference than to leave an information vacuum, Aulik-Beere said.

He also said Baker Tilly's approach is to conduct a comprehensive analysis of market data to determine what market rates are for various positions. As an organization, Baker Tilly aims to pay the market rate; however, he explained, individual salaries can be adjusted up or down based on a candidate or employee's experience, additional skills, and other factors.

“Sharing information on the pro­cess builds trust between employers and employees,” Aulik-Beere said. “They understand what information the organization uses to make its decision process and what the process is.”

Cleaver said Baker Tilly also “wins” on another critical pay-equity front: The firm coaches managers on how to discuss compensation decisions with staff. This strategy “means managers are not left on their own to interpret firm policies for individual circumstances.”

Heather Peters, vice president of human resources for Baker Tilly, said discussions between managers and staff about compensation decisions is absolutely critical.

“We begin the discussion with our calibration meetings with all managers, senior managers, and partners in a business unit to first discuss the performance of team members and high potentials,” Peters said. “These meetings are the first step in the compensation-planning process.”

Next, Peters said, the firm provides a matrix to leaders that lays out guidance for salary increase amounts based on where a team member falls in the range for their role and geography, as well as where they fall as far as a performance rating. Finally, Baker Tilly provides guidance and talking points to managers to use during the actual conversations with team members.

“We draft these talking points for various scenarios, like promotion and large increase, poor performance and small increase, good performance but high in the range so smaller increase, and so on. This helps ensure that regardless of the scenario, the manager is equipped to discuss the ‘what' and the ‘why' with the team member,” Peters said.

Baker Tilly also proactively addresses the implications of part-time work and alternative schedules on pay to ensure employees who take those options are not trading away their market value.

“When we work with any team member on a flexible work arrangement or part-time arrangement, we have a calculation we use to work through the right compensation structure,” Peters said. “We start with the appropriate salary for the role and geography, and then prorate their pay to match the proration of schedule.”

If the schedule is reduced by 20 percent, for example, then the pay is adjusted at that rate as well, she added.

“All compensation and schedule adjustments are viewed the same way,” Peters said. “The reduction in schedule matches the reduction in pay and, therefore, if the employee moves back to a full-time schedule, the pay would level back to that of full-time peers.”

Peters said Baker Tilly employees feel the “collective impact” of these proactive pay practices through the firm's philosophy and its daily practice, which translates into greater employee trust and a better employer brand.

“An employer brand must factor in equity in all its policies and practices,” Peters said. “Equity is a part of the Baker Tilly culture and comes quite naturally to our leadership. Our culture and brand are really about doing the right thing for our team members. Our employees know we do the right things because they see it and they are a part of it.”

Three Pay-Equity Best Practices
While every firm should aspire to pay strictly for performance, Cleaver said many factors can converge to prevent women from being paid equitably. MOVE suggests the following three best practices for anyone hoping to help their firm be proactive by taking extra steps to hold their managers and firm leaders accountable for actually paying for performance:

1. Train recruiters and managers to explain the firm's pay-equity policies and how they are applied consistently. It is not enough to point to boilerplate policies. With pay equity making headlines, employees and candidates are keenly aware of the pay gap, and have easy access to statistics about pay gaps for indus­tries and job titles. Managers and recruiters need to be able to explain how the firm's leaders review pay decisions and conduct audits to ensure that pay policies become pay reality.

2.Build trust through transparent pay practices. Simple, straightforward explanations about how your firm proactively scrutinizes base pay and bonuses by gender, longevity, and other factors proves to female staff that they share pay-equity values with their employer.

3. Remove barriers to equalizing pay for staff whose compensation has stagnat­ed or fallen behind market rates. Often, employees on alternative schedules or alternative career tracks accept minimal pay raises because they value nonmonetary benefits. It is up to managers and com­pensation/human resources staff, who have access to firmwide compensation data, to ensure that women's pay does not fall behind.

The bottom line when it comes to pay equity, industry experts say, is in an era where salary comparisons are increasingly shared by employees on social media, and pay equity has once again become a populist cause in the mainstream media, accounting firms must address their pay-equity practices if they hope to build an unassailable brand that lures top talent to their door.

“At Ellevate Network, we believe the research is clear: Companies and the economy perform better when they fully engage women,” Wallace said. “This includes a commitment to gender pay equity and diversification of the workforce.”

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