Salary transparency was supposed to be the major fix for the pay gap.
The disconnect, she said, isn’t intentional, but it still has consequences. HR and compensation teams spend months building thoughtful strategies. But then “that strategy hits the wild wild west,” when recruiters are trying to land candidates and managers are making last-minute retention plays. Merit increases also often go to whoever is loudest, not necessarily whoever performed best.
“All of that thoughtful strategy goes out the window, because all these daily decisions are just completely ungoverned, and so the output of that is where we end up [being] inconsistent,” Colacurcio said. Those inconsistencies show up as pay decisions that drift from stated values, and employees that can’t get a straight answer about why they earn what they earn.
But with all of her experience talking to everyday people, most people can’t answer that last question.
“Are people able to articulate why they make the salaries that they make? Absolutely not,” she said at the Fortune Workplace Innovation Summit. “When I ask them, do you know why you make what you make, they’re like, ‘what?’”
The conversation, moderated by Fortune Senior Features Editor Indrani Sen, landed at a moment when pay is actually moving in the wrong direction.
To be sure, “it’s not unlawful to pay people differently if you’re looking legally, and for a company it’s not bad comp practice to pay people differently,” Colacurcio said. “You just have to have a philosophy and a strategy as to what you value.”
But when workers can’t get answers to their questions about pay, Williams said, it can breed the kind of resentment that transparency was supposed to solve.
“If you find out Greg makes 100k more, and there’s anger, that’s a clear demonstration that people don’t understand why they’re paid what they’re paid,” she said. “It’s really important in the hiring process to clearly communicate how pay is determined and explain why people are paid what they’re paid so that that disgruntlement doesn’t happen.”
Colacurcio, as CEO of a pay transparency company, reports three numbers annually: pay equity (whether people doing similar work are paid similarly regardless of gender or race), the pay gap (which reflects representation and movement up the ladder), and the CEO pay ratio.
“It’s really important to stay committed to pay transparency, even when the numbers don’t look great,” she said. “Some years it’s painful, and some years it’s not painful.”
AI has also made pay equity and transparency more challenging, the panelists said.
Companies are racing to put a premium on AI skills, but most can’t yet define what an AI skill is or how to verify it. Without governance, Colacurcio warned, employers will have “a really hard time differentiating between what’s real and what’s not real.” That only creates the next set of unexplainable pay decisions.
Williams, who quit her data analyst job in 2022 after discovering she was underpaid and doubled her salary on the next offer, also said an older generation’s reluctance to talk about money and salaries publicly is a challenge. “It’s what we’ve been spoon fed for decades,” Williams said. “Don’t talk about your pay, don’t rock the boat, don’t get in trouble.” But she pointed out that under the National Labor Relations Act, it’s a protected right.
“We can learn how our experiences have shaped each other and how we can help each other,” she said. “I think it’s important to come to the table with a lot of empathy, take it slow, [and] provide transparency.”
