Let’s Talk Compensation

Preface: This post continues our value immersion with ‘Ohana. If you are newly joining us, I suggest you start here: ‘Ohana x2 and the 10 Tenets of an ‘Ohana in Business.

“I ask you to compensate people well, and consider those people your partners.”
—The Alaka‘i Benefactor: Sharing in the ‘Ohana in Business

In this article:
1. Inequitable pay is socioeconomic disadvantage.
2. What is a “living wage?”
3. Let’s not shy away from morality.
4. What you can do.

A ‘day’ for unequal pay

Yesterday, July 31st, was Black Women’s Equal Pay Day. The day ‘commemorates’ the awful fact that black women make only 63 cents on average for every dollar a white male is paid—July 31st marks the number of days into the next year that Black women on average ​would need to work to earn the same amount their white male counterparts made in the year prior.

“It’s worse for Latinas, who are paid just 54 cents for every dollar paid to white, non-Hispanic men… The wage gap varies by state and congressional district, but spans nearly all corners of the country… On average, women employed full time in the United States lose a combined total of more than $840 billion every year due to the wage gap.”
—April 2017 Fact Sheet: America’s Women and the Wage Gap

This is discrimination, both gender and racial, and it creates flagrantly condescending inequality. This is not ‘Ohana, Kākou or Kuleana (the 3 core values in our OIB model) and certainly not Pono, the Hawaiian value of balance and rightness.

Pay inequality is wrong, and make no mistake: It also hurts all of us directly, for it creates a society which does not function as well as it could be.

We can do better friends, and business must lead the way. Our Managing with Aloha Alaka‘i leadership in this regard is long overdue.

Let’s Talk Compensation

If you’ve ever had an in-person conversation with me about business models, you know my pet peeve about them, is when there is a lack of equitable compensation factored into their feasibility. To me, running a business without compensating people adequately is simply not Pono—it’s not right.

Negligent. Presumptuous. Condescending. Preposterous. Foolish. Those are a few of the words which come to mind for me, when I learn that a business of any kind abuses those whom they employ, the very people who champion their mission, vision, and prosperity!

Yes, inadequate and unreasonable pay is abusive. It is abuse when we expect good work and its accompanying time commitment for inequitable pay.

If you expect someone to work for you, and perform well, especially with the complete value alignment ethos we talk about in regard to Managing with Aloha, you should pay them, and pay them well. If they work for you on a full-time basis, they should be paid a living wage. Part-time work and casual or contract work should also be factored to that full-time equivalent.

A “living wage” is defined as “1. a subsistence wage, 2. a wage sufficient to provide the necessities and comforts essential to an acceptable standard of living.”—Merriam Webster. In Hawai‘i, most calculators set the living wage at $17.00 per hour.

This is something I get very passionate about, and I find I must often bite my tongue and restrain myself when the current arguments and debates crop up in regard to minimum wage legislation, gender inequity, and unpaid internships. Frankly, there is no argument I am willing to listen to.

What bothers me most about these arguments and debates, is that the loudest and most indignant voices against paying a living wage —or even a minimum wage— come from those in business, the very people who are capable of making it happen.

How can they make it happen? By adjusting their business models and business plans so they can afford it (our game-changing value-alignment study earlier this year). If their bottom-line decision is that they cannot make the adjustments they can afford, and they can’t remain in business, so be it —clear the way for those who do make it happen, for their rising tide of being savvy, Pono employers will lift us all into a better functioning society.

That may seem to be a hard line taken, however that is our more prudent reality. A sound and reasonable, sensible and equitable business model is required for an ‘Ohana in Business. Furthermore, it’s required of any decent, ethical, moral business at all.

Let’s not shy away from morality.

Let’s own up to our moral duty, and do what is right.

“The bigger issue is moral, not economic. Is it not an employer’s civic and moral duty to pay a living wage? How can it be pono for a business to profit while its staff, the human beings who make up the business, do without basics? It is an illusion for a business to put such burdens on workers, ignore the massive cost to society and government, and claim to be successful.”
— State Sen. Russell Ruderman, It’s Time For a Living Wage in Hawaii, Civil Beat, February 2017.

I completely agree, and I encourage you to read his full essay.

The truth is that when economic elites like us say “We can’t afford to adopt these higher standards,” what we really mean is, “We’d prefer not to.” We like to frame our claims as objective truths, like the so-called “law” of supply and demand, but what we’re really asserting is a moral preference. We are simply defending the status quo.
—Nick Hanauer

What can you do?

Become a champion of equitable pay in your organization, whatever your circle of influence might be.

Understand that Speaking with Aloha is about creating necessary conversations.

1. Learn as much as you can about compensation as a workplace issue. Benchmark case studies (here’s one, and here’s another), and identify the initiatives and strategies which may work for your company as well.

2. Ask for full transparency with your company’s compensation policy—what does it cover and include? If you don’t have a compensation policy as part of your business model, demand one: Volunteer to co-author it with Human Resources, and be an advocate of complete clarity within the policy which results. (Read this example: How we pay people at Basecamp.)

3. Make some noise —talk about it, and don’t stop talking about it until changes are made. Be a voice of reason, and stand up for the values of an ‘Ohana in Business. Get the “living wage” and profit-sharing vocabulary into your workplace conversations—the currently proposed minimum wage of $15.00 is just a starting point in the OIB.

Own your Kuleana:

—If you are in a leadership role, and you recognize that you should be addressing areas where you fall short in your compensation policy, bring these needs to light and entreat your peers to get real about their pressing priority— you know how setting priorities works in all the strategic initiatives which are undertaken.

—If you are in mid-management, initiate changes you know you can take in your own circle of influence and engagement, and don’t take no for an answer: Commit to your WHY, though you may need to compromise by entertaining a HOW-TO different from your own ideas. (Why/How-to alignment is very similar to value alignment.)

—If you are “just a regular employee” stand up for yourself by understanding what your talent, skills, and knowledge is really worth. Help your employer to empathize with you, by getting them to engage with you more than they might presently be doing—don’t keep them at arms length; involve them so they can better see how your true equity is in being their business partner.

Inequitable compensation has desecrated and demoralized our workplaces for far too long. Be Aloha, and be ‘Ohana: Please fire up this conversation with me, and demand action.

Let’s make change happen, where equitable compensation is the unquestioned basic starting point of all business models.

“I believe that we in the American political and economic elite face an extraordinarily inconvenient but undeniable truth: Our country will not get better until our fellow citizens feel better; and they will not feel better until they actually do better. And this is the hard part for many of you: The American people will not do better until they are actually paid more.”
—Nick Hanauer, To My Fellow Plutocrats: Pay Your Workers a Decent Wage

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Preview the updates in Managing with Aloha, Second Edition, released July, 2016
Managing with Aloha, Bringing Hawai‘i’s Universal Values to the Art of Business

Our value immersion study for the months of July and August 2017:
The 10 Tenets of an ‘Ohana in Business