Demand for pay equity pries open the books

Cogo founder Ben Gleisner earns $165,000 a year; a good wage but not the highest in his company. 

Gleisner doesn’t mind sharing this information, nor will it surprise his employees, as the sustainability fintech practices not just pay transparency but full financial transparency. 

Staff and shareholders know the details of the company’s finances, from how much is going in to what is going out and who it is going to. 

“Our business is all about putting transparency around things like businesses’ impact on climate change. We thought we better practise what we preach,” Gleisner says. “Everybody knows everything, effectively.” 

The transparency is currently kept internal, which Gleisner says respects employees who might feel uncomfortable with public disclosure and adheres to contracts prohibiting sharing such information.

But why practice pay or financial transparency? 

It offers staff a degree of certainty and the perception of fairness that can encourage work and help manage issues like pay equity, says Lisa Oakley, an employment relations and human resources consultant at Employers and Manufacturers Association (EMA). 

Latest figures, which are for 2023, put the public service gender pay gap at 7.1 percent. A positive number indicates that males are, on average, paid more per hour than their female counterparts. 

By comparison, Cogo’s three highest earners identify as female or non-binary, leaving the startup with a negative gender pay gap. 

With no legislative requirement for companies to share their information internally or externally in New Zealand, especially in the private sector, Cogo’s move to full transparency is rare but the company isn’t alone in opening the books. 

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Getting started

Tackling pay inequity with data is at the heart of Kathleen Webber’s business, LiveRem. Having launched in March as the first cross-industry tool to offer Kiwi businesses live salary benchmarking, this week LiveRem released its new dashboard, Know Your Gap, to make gender pay gap reporting easy. The tool is free for Kiwi businesses. 

The platform syncs with payroll and HR data to break down the details of a company’s pay structure, including whether it may favour a specific gender when hiring at certain organisational levels, and any shifts in this bias over time. 

It also enables the analysis of staff turnover per gender, allowing teams to understand whether their organisational environment attracts and retains diverse talent. 

“Ordinarily, this level of analysis simply wouldn’t be possible instantly; and this probably contributes to why moving the needle on these stats has historically been such a huge challenge,” says Webber.

The LiveRem team uses the platform to analyse its own pay structures. The average pay gap within its New Zealand-based team is -0.5 percent, and within the global team, it is 14 percent. 

The pay gap calculation is applied very strictly and is regionally agnostic, with the large average basis a product of the international locations in which its staff work and the higher number of men in LiveRem’s international workforce, Webber says.

“While they’re well paid in their regions, there is a difference in the gap due to the wage rates in Europe versus Asia versus New Zealand,” she says. 

Webber intends to evolve the LiveRem tool to also assess ethnic pay gaps in the near future. 

The 2023 public service figures show the Māori pay gap sitting at 5.4 percent, the Pacific pay gap at 16.6 percent and the Asian pay gap at 13 percent.

Webber says pay transparency can be a confronting subject for employers. “I talk to professionals every single day. You have conversations with them and they either get it or they don’t get it, or they don’t even want to because it’s opening a can of worms.” 

She believes change is possible, it’s just about monitoring and diagnosing inequities quickly.

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Ignorance is(n’t) bliss

While pay transparency can foster trust and engagement when done right, Oakley says it can create an environment for gossip and negatively impact collaboration and teamwork when it goes wrong. 

“The ownership of work and activities can be shifted to other staff who are paid more or are deemed it as their responsibility,” she says. 

Gleisner agrees: “Businesses need to make sure they feel comfortable with it if they’re going to be transparent; there’s probably some unknowns in these businesses around what people do earn.”

When these unknowns are made public, people will need to be accountable, he says. For instance, a product of Cogo’s pay transparency approach has led the company to institute a new policy where sales commissions will be shared amongst the staff.

“Everyone contributes to helping clients, so we’re going to share that with everybody in the business,” he says. 

For those scared transparency will only cause problems, Gleisner says while it may not work for everyone, it has only been good for Cogo. 

“Having transparency around what other people earn means we’re collectively holding each other to account,” Gleisner says.

Through financial transparency, “everybody knows not just about everyone’s pay, but they know about the health of the business financially, what’s driving it, and what the future looks like”, he says, which creates a sense of unity.

This has helped the company “weather quite a few of these big storms”, including restructuring over the last seven years, he says. 

Gleisner suggests embedding financial transparency early in a company’s setup so it’s part of the DNA, and then keeping communications channels open about how it is, or is not, working. 

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Transparent from the top down

Practising full financial transparency, like Cogo, is one end of the transparency continuum but it needn’t be all or nothing. Other companies share pay bands but not specifics, while some organisations don’t share anything at all. 

Presently, there is no legal requirement for transparency but there are legislative adjacents such as The Equal Pay Act 2020. However, Oakley says that Act, which addresses pay equity, is based on principle and is “open to interpretation.”  

“It’s not particularly prescriptive; it doesn’t say thou shalt [not] or you must [do this]. It just says you need to be fair and reasonable. You need to act in good faith.”

There are legislative moves being made. In March 2024, the Employment Relations (Employee Remuneration Disclosure) Amendment Bill was drawn from the member’s ballot, which would allow employees to talk about their pay without fear of retaliation by their employer. 

Despite the lack of legislation, Oakley believes adapting to pay transparency is a “must,” but adds that there are some basics to consider. One is the Privacy Act 2020, which regulates the collection, use, and disclosure of personal information and requires employee consent. 

Another is that it will require an organisation to be transparent about other things, including effective feedback mechanisms and professional development pathways, which is an investment.

It is also important to consider culture, she says. “New Zealand is very multicultural [and] some cultures may be uncomfortable with salary being openly disclosed.” 

Oakley sees the following trends around pay transparency emerging: 

1. Voluntary disclosure: organisations voluntarily disclose information about their pay practices, including salary ranges for different roles and the factors that influence pay decisions.
2. Pay equity audits: pay data is analysed to ensure compensation is fair and equitable across demographic groups.
3. Total rewards transparency: beyond base salary, there is a growing trend towards transparency in total rewards, including benefits, bonuses, and other forms of compensation. 
4. Narrative reporting: some organisations supplement traditional pay data with narrative reporting to provide context around pay decisions. This can include explaining how pay decisions are made, the organisation’s approach to compensation, and efforts to promote fairness and equity.

The best approach is to involve your employees and request feedback on the compensation practices, Oakley says, adding that it should be viewed as best practice and a benefit of workplace culture that attracts employees. 

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