Don’t Make Them Ask…

There was a lot of recent hubbub about Sir Philip Hampton’s remarks on the gender pay gap, specifically that women at the BBC “let it happen” and that he had “never, ever had a woman ask for a pay rise.”  (Article here)   I’ll confess that my jaw dropped when I read that (I myself regularly have women execs ask for compensation increases, and good for them!). Nonetheless it was a great reminder that highly effective boards should not be reactive – who asked for a salary increase – but instead proactive – who deserves extra remuneration and why. “They never asked” is not a sufficient excuse for not paying someone what they deserve, regardless of whether they are a man or a woman.  

A recent board meeting of mine included reference to the risk of one of the executives leaving for another company. The CEO said, “I would be willing to pay XXX to keep that exec.” To which the chair asked,

“Then why aren’t you paying that now?  Why insist that they come threaten you with leaving?  Plus if you do then increase the salary and keep the exec, what message are you sending to other employees about reward in looking for other jobs?”

The meeting concluded with the CEO deciding to review the salaries of the critical employees across the team and to make sure they were being well remunerated to know their worth. It doesn’t have to be salary – which can be hard for cash-strapped startups – but there are a variety of compensation forms, including equity, vesting accelerations, extra holiday, performance bonus, etc. 

While Sir Philip Hampton’s remarks indicate that salary negotiation is less common for women (and research agrees), this is not just a women’s issue. One of my most valued execs is an understated (and extremely technically sound) man who has never ever asked for a remuneration increase of any kind. At first we failed to notice his compensation difference until the new CEO began an annual program of reviewing strong performers and ensuring that their compensation reflected their contributions regardless of their requests for increases. Sir Philip Hampton is right that women ask less, but highly effective boards and board leaders need to be proactive on issues like employee engagement and remuneration, not reactive with a policy of “we pay more to those who ask.”  I don’t have this balance right on all my boards but is something I’m working to improve. In companies and startups where the people capital is the leading driver of the value, boards cannot afford to be negligent and reactive on this issue.