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Welcome to Mercer's podcast series on the new shape of work. I'm Gourde Frost, Mercer's total rewards leader, and today, we're really going to talk about data and we've got the opportunity. I'm pretty excited to geek out on data. And so in this month's edition, I hope our listeners are excited as I am. And now that I've said that, I hope that half of you haven't, tuned out because I really do think we've got a lot of great stuff to talk about today.
And I think that leveraging data to drive real insights about your people programs is one of the key tools that leading organizations can leverage to really drive fairness and transparency in their organizations. So for those of you who are still listening, and I hope there's a lot of out there, I'm really excited about our guests today. First we have Deena Harvanek.
Deena leads our strategic change and communication work, focusing on employee experience and digital enablement. And then we've also got Will Self. Will is a data scientist, which means he may love data even more than me. And he'll talk about that more on the podcast today. But he leads our global workforce strategy and analytics business. And thank you both for being here today.
Thanks for having us.
It's a pleasure.
Great. So, Deena, why don't I start with you. At the risk of starting with the obvious. And most of our listeners probably are all over this already, but why are the themes of pay fairness and transparency such hot issues right now?
Well, pay fairness and transparency have become critical over the past few years for several reasons. So there's a real heightened awareness of inequalities in the workplace, especially when we're thinking about pay disparities based on gender, race, and other demographics around the world. And so because of this, there's been some legislation changes that have happened, but also a lot more that are coming.
And many regions are implementing laws that mandate pay transparency, requiring companies to disclose salary ranges in job postings and report on pay equity metrics. So, this is really making companies reevaluate their pay structures to comply with these legal requirements. But that's just one piece of it, really. The younger generations value the transparency and fairness.
And when I entered the workforce, I remember HR telling me, if I spoke about my pay to coworkers, I would be fired. And that may or may not be exactly what they said, but that's what I took from it. And they have been a few years ago. But today employees are really informed and vocal about their compensation expectations. And so really understanding clarity about how it's determined and making sure that people are paid comparatively to their peers is critical.
And I think about the younger generations in thinking about talent and acquisition, like retention and acquiring people. And that is becoming even more challenging as what people want out of work is changing. So people are really tying their job to corporations outside brand and wanting to really make sure that they're working for a company that is fair and that is taking care of its people.
So there's a ton of ways that people can know how this is happening. So the technology, in an instant, everybody will know about one person that hasn't been paid fairly. So it's really important to have this buttoned up and make sure that you have a good message around it.
I think that's so important. You're right. It's so different from again, when we started working and where nobody talked about that. And it was kind of taboo. And now people share openly everywhere And the availability of data is so widespread and it's only going to increase with time. And so employees will have that access and are going to interpret it in who knows how. Right.
I think employers really need to get on top of it and start owning the message and making sure that the message that they want to have out in the market is loud and clear. And Will you're an expert in data, as we said earlier, and when it comes to fairness, what are some of the things that you think that every organization should be doing, as far as understanding their data, what kind of analytics should they be doing? And then I'd love to hear from you what are some things that leading organizations are doing than maybe some of our listeners could learn from and incorporate into their own practices?
That's great Gourde. First, I want to say, how powerful I think what Deena just said was because she talked about the nuance that's involved in what we're talking about with fairness in the first place. I think my mind often goes toward strict legal compliance. Are my lawyers happy? Are my regulators happy? Am I not being sued? And what Deena just opened the door for, is this bigger conversation about how these ideas of fairness weave into everything that we do in the organization, and I find that really inspiring.
I also think that's a lot of the lens that I come at problems through data from too, is this idea of nuance. There are some legal issues, but there's so much more that we could be talking about beyond strict legal compliance. And I think what you hinted at, Gourde, is completely true, that there's this gulf that exists between companies that are doing the bare minimum with their data and analytics, and companies that are truly forging a new path forward.
To me, table stakes prevent discrimination. And when I see organizations that are just getting started thinking about data or making those baby steps into the environment, that's really their goal. When we look at Europe right now, not only have we just seen over the last 10 years this proliferation of pay equity legislation at country levels.
But now we have the EU pay transparency directive coming which just takes that entire conversation to the next level and means that every company that has any presence in Europe is talking right now about what their reporting is going to look like. And is there any possibility that they've allowed disparate impacts to slip into their conversations.
Even in the United States, where DEI is a challenging conversation at the moment, everyone can agree that discrimination is illegal and it's been illegal, it continues to be illegal. The civil Rights Act, the Americans with Disabilities Act, Title VI, Title VII, Title IX, they all still stand. And so when you think about that table stakes requirement for employers, it's really to not discriminate and to know that you're not discriminating.
And to me that means that non-negotiable every organization should be able to say they have, is a pay equity program. How do we know that on top of all the work that we've put into our compensation philosophies, our comp strategies, our job architecture, that all of that is producing an environment where people are paid fairly. And as employers, we will stand behind how people are being paid, which I think is the important addition to that.
And then once you've got pay equity under control, taking that same logic and applying it to other areas of the employment life cycle, do we know that people are hired fairly? Do we know that they're promoted fairly? Do we know that they're given assignments on a fair basis? Do we know that they leave the organization fairly? All of this is just table stakes.
But I think once that's in place, there's this opportunity. And we're seeing leading organizations already going here to think so much beyond just preventing discrimination, to really be thinking beyond defensive strategies to how can we use data and analytics to become the type of employer that people want to work for, that want to have that attractive quality to it?
And I think a lot of this is about being proactive and it's about prediction. How can we get ahead of trends both within our organization and outside the organization? Do we have a sense of what's going to happen with our own workforce? When are people going to maybe leave the organization more rapidly than they have in the past, or when are demographic changes going to happen?
We talk a lot about the longevity economy and how in general, working populations are aging, and we're going to have more retirement. Getting ahead of all of that is so critical. But it's a little more challenging. Also understanding how we can show up better for our employees. We are leaving digital breadcrumbs everywhere these days. Every time we send an email, we talk to a colleague, we come in and out of a building.
We're now leaving those digital breadcrumbs, which open up the opportunity for a type of analytics that wasn't even possible to talk about five, 10 years ago, but is now very much the case in a lot of organizations.
So Will, this is just so exciting. And we could have a whole breadcrumb-- a whole podcast--
I you're hungry.
--full of breadcrumbs. No, I thinking of bread. But when you do this analysis, I'd love to hear some of the stories that are like, what have you found that was either unexpected sometimes or that surprised the organization you were working with that they hadn't anticipated to find out?
I think that is probably my favorite part of analytics-driven projects is that there is always that moment where we unsurface something that just shocks everyone. I often call it myth busting, because I think one thing that all organizations have in common is that they've got these myths that develop over time, that may or may not have ever been true or based in facts or data, but they're deeply held and often widely shared.
And so when you go into an organization that has these myths that help determine how things are done, how decisions are made, even the types of questions and decisions that get surfaced for action, starting with the just stress testing, are these myths based in reality is so important. And so going in and doing this myth busting, is step number 1.
And the reality is most HR departments, run on qualitative data more than quantitative data. These myths are the lifeblood of HR departments. And so once you get in there and you start using data to stress test them, you realize, number 1, that any time myths are based on anecdotes or personal experiences, it's really risky because those tend to be cherry picked to align two myths rather than to disprove them.
Also, the more I work in HR data, the more I believe that people often have no idea why they do the things they do. And so when you look at interview data, when you look at survey data, often they raise more questions than they answer. Because again, you've got this say do gap that emerges really that gap between why people rationalize their activities or their preferences and then what they actually do on the ground.
And then the eternal reality is that people are just overly confident. We always have more confidence in our answers than we probably deserve to have. And so when you look at that qualitative data, there's just this overindexing in certainty whereas traditional data analysis often errors the other way into uncertainty. I'll give you an example. One of the topics that's been coming up a lot recently, is around compensation philosophies and remote worker status.
And so as we talk to a client, what is your compensation philosophy? How do you determine pay? Why would any given two people in the organization make a different amount? And then go through things. There are things that everyone agrees on. People with more experience should be paid more than people with less experience, people who have more valuable skills should be paid more than people who don't have those valuable skills.
But there are always some questions where reasonable people disagree. And I think remote working is one of those. And so we'll often see in organizations will ask, do you pay a premium for people who work remotely, or is there a penalty for working remotely? Do we actually pay people less? And what we almost always hear from employers is no, we do not treat people who work remotely any differently than we treat people who work in the office.
And yet when we look at the data, there is almost always an effect for remote working status. And it's hard to predict the direction. Sometimes it actually works in favor of employees, sometimes it works against them. But it's almost always an effect. And it almost always leads to a moment of oh, wow, we didn't expect that. Which is a great starting point for a meaningful conversation.
It's interesting. I remember another client that I worked on with, I think a member of your team was adamant that they had a performance-based pay culture. And that the high performers would always be making more than the average performers, and that they were doing a really good job of differentiating pay based on performance.
And then we went ahead and used the data to validate their claims, and we found that there was actually very little difference in pay between the high performers and the average performers. And if anything, the biggest driver of pay was tenure in their organization. And you're like, did you know that? And it's so interesting.
I wish I could say that was an isolated occurrence, but that is so common in organizations. And I actually think this is why a lot of companies get nervous about implementing pay transparency, especially when it comes to transparently posting salary ranges, because they know at some level that they don't always live their compensation philosophy.
And so if you suddenly start being more transparent and showing the end results, you can almost predict how large the line is going to be outside of managers offices, with people asking, well, if this is how we pay and this is our philosophy, then why does Jane down the cubicle line make more than I do? And I think that's where the rubber meets the road and some of this pay transparency talk, which sounds so good in idea becomes really challenging in practice.
And I think you've hit on exactly the point. And I want to get Deena back in the conversation because I know she's got lots to say on this. Is that ultimately-- it's not just as you said earlier about compliance, about doing the analysis, about understanding where you stand, about being able to publish your data, it's about how do you enable people to understand what you've published, understand the data that's out there, have conversations with their managers who are lined up with-- who have a line of people inside their office waiting to talk to them about their pay.
So, Deena how do you find that organizations can take some of the results of the analytical work that they're doing, and incorporate that into their employee communication programs to really be more transparent?
Well, you're making me geek out on data now because I'm just sitting here listening to you two, and thinking really around people that-- companies are probably doing things inadvertently, they don't realize, what you're saying, what their data is going to show. But once they do know that, they can't be afraid of the message. So you can't hide behind oh, it's exposed now. And so it has to be part of your story. This can't just be like a check the box exercise, like now we've posted it and move on.
We really need to create a story around what is this journey going to look like for us now that we know we can do something differently. And we can work toward a more fair and equitable place for everybody based on your comp philosophy, I know that they vary, but as long as you have of what that North Star is going to be, you can create a journey then that you can bring your employees along with you and have that story naturally woven into your employee value proposition.
And being up front and owning the narrative, is going to go a lot further when delivered with empathy and transparency than if you just keep trying to hide from it and not be truthful, not be transparent about the situation that you're in, but instead own it and say, wow, we found this out, let's make some differences.
And what do you find are some of the roadblocks or challenges that you've seen companies grapple with in their attempts to be more transparent with employees about pay?
Well, it is scary because you know that you're going to have that line out of the manager's door and nobody wants to have those conversations. And in fact, most managers aren't equipped to have those conversations. They may have inherited this practice. It's embedded long and deep into the organization where pay has just gotten off. And then especially as people were moving jobs a lot in recent years, those who come in may be making a lot more, because that's what the market demanded to get people in the door.
And so it's hard there's just not this infinite bucket of money that they can instantly elevate everybody up to the same level. But when the competitiveness is known, it's really important that companies take a stand and say, we are going to do things differently, we are going to align. And I see that as a big opportunity.
And it's important to remember, though, that competitiveness is a relative term. So even the last person in the race was in the competition they just were out ahead. And so it's not just about pay, what we really have to do, is help speak around the total rewards of the organization and what are all of the benefits, not just talking about within the organization of like, am I paid as well as this person next to me?
But if I look out at other companies, what is the total value of whether it's my growth opportunities, my flexibility work environment, mobility, all of that becomes part of the story. And so we really have to make sure that we're telling that. And what I find that we're working with clients a lot on right now, is really helping with that strategy and activation plan.
And so having a truly defined EVP and making sure that supported with manager education so that they actually are owning the story, will really help support these productive conversations throughout the organization.
And I think that that's so important. And one of the things you're making me think of is that all of these laws and regulations around the world, they don't require that everyone be paid the same. People can still differentiate, pay for a whole variety of different reasons. A merit-based differentiation, obviously. People's performance, which is tied to merit should allow them to potentially move faster. As Will said earlier, if they gain new skills or new capabilities, or they have more experience that's relevant to the organization.
There's lots of reasons why one individual might be paid differently from another in an organization. But I think being really clear to employees on this is what it takes to get ahead. If you want to see your pay advance more quickly, here are the things that we value in our organization. Here's how we evaluate pay relative to performance in all of these other things. And then here's the path for you to move forwards in your career.
To me, that's actually a really compelling message. And then that gives employees the information that they need to make the right decisions around like how they prioritize what they're going to focus on in their careers, what kind of training and development programs they might engage in, what kind of conversations they might want to have with their managers that are more future focused and more positive, rather than just like, I don't understand why I'm not paid what I think I should be paid.
So I think that it gives-- as you said, in a good environment, it gives people the really good tools to have a robust conversation that's positive. And in the absence of that, then you're left with people being confused and not understanding or maybe feeling frustrated with what they've got.
But Will coming back to you on a similar question, but from a different angle, as more and more data does become available because it's required to be published or organizations voluntarily start sharing their data, or individuals start posting it on social media and sharing it with their friends or whoever. One thing's for sure there's going to be lots more data available.
Some of it might be reliable, some of it might not be reliable, but it's going to be out there. What are some of the challenges that you think companies will face when it comes to workforce analytics given all of this data, data, data that's going to be available to them?
That's a really good point. That part of why we're even talking about data as being an important input into this storytelling that Deena was talking about, is that there is more data than we've ever had access to before, and our ability to create insights and value out of that data, is richer than it ever has been before. But I won't pretend that makes things easy especially for a lot of HR departments that are probably trying to transition into being more data-driven and data first.
There are some real meaningful friction points as you start making that change. I think one of the biggest is just having a data strategy, a philosophy for how you collect data, how you store it, how you retain it. I can't tell you how many clients bring me in for a conversation, and we get very excited about something that we want to do with their data in their organization.
And when we go to look at the actual data, we find out that it's recently been purged as part of a data security exercise. And there's this moment of oh my gosh, does that mean we just made it so we can't use data? And sometimes the answer is yes than in an effort to be more governed, and controlled, and judicious about our storage of data, you've actually gotten rid of the same type of historical data that we need to train models and be able to use advanced analytics and AI. So being proactive about that, is so important right now.
Also, I think there's a people skills gap in general at the moment that I see in most organizations where the types of data and data analysis that was valued in the past just doesn't quite align with the type of opportunities that we see in the future, which are more complex, more AI driven, more advanced, analytics oriented. And so being honest about where are our people right now and where are we going to tap into the talent that we need to answer the types of questions were asking.
Sometimes it's as simple as looking within the organization and finding folks in IT, or in an enterprise data and analytics group who can pitch in. But sometimes it's about hiring new talent into HR or partnering with third parties that can augment those skill sets in an important way.
And then the last thing is technology. I think HR folks are very, very used to having conversations about HR technology and how to do things in HR better, faster, more efficiently. But they're not as used to talking about data and analytics-related technology, which is tricky. But as data has become bigger, as it's become faster moving, faster changing, more dynamic, the type of technology we need to be able to store and move and analyze the data has become a lot more complex. So that's kind of the doom and gloom here. An acknowledgment that this is hard.
If people are feeling overwhelmed right now, that's exactly what you were hoping.
They should be overwhelmed. This is truly overwhelming stuff. But let's talk a little bit about the opportunity because I think that's what makes it worth digging into this difficult situation. And it's that really there is now a moment that is different than I think at any point in history, for HR to dig into data and to have decisions really made in a data first way, that can then increase the value of the entire HR function, get us a secure seat at the table when it comes to enterprise decision-making.
The parallel I often draw is, if we were to truly think about employees the way we think about our customers as a company, how would that change the way we think through a lot of the things that we've always done in HR? When a marketing department or your marketing practitioners come in as an organization and think about how to create the best customer experience, the most responsive customer organization, they are taking advantage of everything they know about the customer, the situation, those digital breadcrumbs that customers are leaving.
And they're creating these personalized custom experiences with the right nudges, the right anticipations of removing obstacles that a customer has come to expect. We need to do the same thing for HR. Employees should be expecting their HR departments to know everything about them, everything about their job, everything about their day-to-day life, and be anticipating all of the things that would get in the way of a really great experience.
It creates a different way of thinking about HR that is number 1 data driven. But number 2, proactive. Getting out there in front of problems, fixing things before they break in just a different way than we've expected in the past. And I don't know about you, but that makes me super excited.
I think so too. And I think your point of-- I feel like we're geeking out on data.
We're geeking out on data.
But really-- and I love the point you made earlier and I agree with you so, so much that it really presents this golden opportunity for HR and total rewards leaders to really have a more strategic seat at the table of not just reporting on what we've done in the past or providing trends that are backward-looking, but really being able to drive insights around your people.
Like you said, get out ahead of problems before they even happen, or even make recommendations around if this is where our business is going, then these are the actions that we need to take from a people perspective to support and accelerate those business strategies. So I just think that's really, really exciting. And I realize we're probably running out of time now.
So, Deena, I want to come back to you for maybe the last comment because I liked Will's approach of taking. I asked him about challenges, and he started with there, and then he flipped it and talked about some of the opportunities. So maybe if we end on that positive a note with you. What opportunities do you see for leading organizations here?
So when you think about some of the challenges around using data in more innovative ways, the exciting things that we just talked about there, the needs of employees to be more transparent or their expectations from employers, this creates some amazing opportunities for organizations as well. And I'd love to hear your thoughts on that.
Companies have a huge opportunity right now to pave the way in pay fairness and transparency because it is something that is very top of mind. And even if companies don't believe they have just extra money lying around to pay people more. But if you consider the ability to attract and retain key talent, as well as positively shaping a company's reputation, especially today when consumers are really speaking with their dollars of what they believe, how they're treating their people, consumers are either choosing to shop there or not shop there. Give business-- give your business or not.
And so being known as the leader in pay fairness and transparency, will really pay off if done well, and if it's communicated effectively. So you can't just do it well, but you also need to take the opportunity to communicate it effectively, to really have that positive culture and ensure your long-term success through this new world of pay transparency.
Wow. I feel like the time has flown by. And we've barely even scratched the surface. I'm sure that this has given our listeners a number of ideas that they can take away, and test with their own organizations or given them some real food for thought here. If they want to find out more, are there any good resources that you would recommend? Maybe Will where should people go if they want to go further on this stuff?
Absolutely so please come back to mercer.com and look at the types of collateral that we're putting out there. Honestly we're so engaged in this conversation internally right now that you'll see the flavor of the things that we've just talked about here in everything that Mercer is putting out at the moment.
And, Deena, anything you'd add like favorite sources of information?
Yeah. Just reach out to us directly. I know that we're all very active on LinkedIn and feel free to reach out directly and let's have a conversation. Obviously, we could talk all day about this so let's keep it going.
Awesome. Well, those are great suggestions. I really want to thank you both for being my guests today. To all of our listeners, thank you for joining us as well. And Deena said you can find out more on these topics on mercer.com, you can follow us all on LinkedIn, where we regularly post updates on leading practices that we're seeing in the markets. And please continue to join us on the New Shape Report podcast for future episodes. Have a great day, everyone.
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