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The Need for Real Equity in Equity Compensation – TechCrunch



I started my career at Oracle In the mid-1980s and since then in the proverbial space, particularly in Silicon Valley, has worked for and with companies ranging from Fortune 50 to global consulting firms to leading a number of startups, including the SaaS company I currently run. During my career, I have not only worked with technology companies, but have also focused on designing and implementing global compensation programs.

In short, if there are two things I know like the back of my hand it̵

7;s technology and how people get paid.

The development of compensation that I have seen over the past 35+ years has been dramatic. Among other things, the perception and pay of women has changed profoundly seismically, mostly for the better. Some of it was actually window dressing. It’s good PR to say that you are a company with a strong culture that focuses on diversity as it helps attract top talent. But the rubber hits the road as soon as the employees get past the recruiter. When companies don’t do what they say we see mass exodus and even lawsuits, as recently happened with Pinterest and Carta.

Given that Intel, Salesforce, and Apple are publicly advocating gender equality, there’s nothing left to see here, is there? Actually, we’re not even close. Yes, the glass ceiling is breaking. However, relative to the broader scope of long-tail compensation for women, there remain significant, largely unresolved gaps, particularly in startups where key economic reward measures such as corporate stock options are often not even part of the equality conversation are.

While progress can be seen, gender pay is a work-in-progress, to say the least. Recently, the US Bureau of Labor Statistics found that white women earn 83.3% as much as their white male counterparts, while African American women earn 93.7% compared to men of the same race. Asian women made up 77.1% and Hispanic women made up 85.1%.

According to Payscale, the average earnings ratio of women to men has only decreased by $ 0.07 since 2015, and in 2020 women will make $ 0.81 for every dollar a man makes. In the long run, women could lose up to $ 900,000 over the course of a career calculating suspected increases over a 40-year career.

But that’s just the tip of the iceberg. Even if we’ve only left the gender pay gap to inequality in cash pay is to see something here. However, to quote a famous Pitchman: “But wait, there is more!” And the More – at least in my eyes – is far more worrying.

As innovative startups from Silicon Valley to New York’s Silicon Alley and beyond continue to transform the business landscape, guess how most of them can attract bright, entrepreneurial minds. It’s certainly not a salary because when a company has nothing but a great idea and maybe a hint of a VC on Sand Hill Road, there isn’t a fat paycheck or benefit package to offer. Instead, they dangle the proverbial carrot of stock / share compensation.

“See, we know you can get $ 180,000 a year from Apple, but we’re giving you $ 48,000 a year plus 1,000 shares that are currently valued at $ 62 per share. Our board – packed with studs from the Bay Area – expects that to go up within two years! Wait until we go public! “

This is the pitch, at least if you are promising male. But WomenHistorically, they have been removed from this lucrative rewards package for various reasons.

How did this happen? Aside from promoting corporate culture, while legislative steps have been taken to address inequalities in the remuneration of public companies and the distribution of shares, there are no rules on how private companies distribute or manage the increase in the value of shares. And as we all know, the appreciation can potentially be massive.

It makes sense. Many companies, and even naïve job seekers, view equity as the “third pillar” of pay, beyond titles / allowances (which go hand in hand) and benefits. Startup stocks are simply not promoted – often ignored or misunderstood – by many who grapple with the gender pay gap, although that couldn’t be more misleading.

A study recently published in the Journal of Applied Psychology found a gender gap in equal awards of between 15% and 30% – even beyond consideration of typical reasons why women have historically earned less than men, including differences in work and length of service in a company. Keep in mind that many of these companies will be making massive valuations and, for some, lucrative IPOs or acquisitions.

It’s a problem I realized a long time ago, and most of all, it’s why I agreed to run our Bay Area startup on behalf of our New York-based parent company AST. I found a commitment to a truly just culture, shaped by a common moral compass, a belief that companies that care about gender equality perform better and get better returns, and a belief that diversity has unique prospects that promotes talent retention, builds a stronger culture, and supports customer satisfaction.

Speaking to industry peers, I know CEOs, both men and women, are dedicated to addressing. I believe that having a broader picture of compensation for startups, global conglomerates, and every company in between is essential. If you are in a leadership position and you realize that this is a challenge that needs to be addressed in your company, I recommend the following steps:

  1. Look at the data: Do the analysis. See if this is really a problem in your company and make a commitment to level the playing field. There are many experienced consultants who can help you develop remediation strategies.
  2. Remove subjectivity: Hire an independent arbitrator to analyze your data as it will remove the politics and emotions as well as the bias in the work product.
  3. Create compensation bands: Similar to the government GS system, create a salary system that includes compensation areas for specific roles. Before hiring a person, decide which band the tasks will be assigned to.
  4. Empower a Champion: Identify and empower an in-house champion with real parity – someone whose performance will be judged by equity creation across the enterprise. Create a role of chief diversity officer instead of assigning it to your hiring manager. After all, this is more than just payment or medical benefits. This is the culture and therefore the foundation of your company.
  5. Get your board on board: Let your board know why this is important. Ultimately, if your board doesn’t appreciate this, it doesn’t matter. Companies have chairpersons of the audit committee or chairpersons for nominations. Identify a “culture chair”.

One of the first reports we made was a wage comparison report. Therefore, there are tools that make it easy for anyone in management to review stock grants for all employees and ensure equality between people of different races or genders. It’s not that hard if you want to look.

When I graduated from college and Ronald Reagan was in office, we talked about the potential for women to break through the glass ceiling. Now, many years later, we’ve somehow managed to come up with lights that you can turn on and off with a clap, and most of us walk around with the power of a supercomputer in our hands. Is it really too much to ask that gender equality, including all three pillars of compensation (cash, benefits and stocks), be a priority?


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