In discussions that followed, the chief executive, Danny Grossman, and his colleagues committed to a not-so-simple restructuring, lasting years, to create a “job architecture” — a framework that defines the duties and title of each job, classified into an eight-level hierarchy of positions. The group also established a market-based pay range for each level. Eventually, the architecture will include a performance-pay system as well as career ladders so that employees have a clear view of how they can advance in the organization.
The federation began including salary ranges in its job ads in January. It’s too early, officials say, to determine if the transparency is significantly increasing the number or diversity of job candidates. Some job openings are attracting more applications; others are not.
Other benefits, however, are apparent. The new architecture provides clarity and data-driven consistency for position titles and salaries; pay decisions in hiring and promotions are made faster and with less fuss.
“It’s almost like sitting on this kind of integrity pillow,” Grossman says. “You’re not pulling things out of the air.” That matters, he says, when you’re considering an employee’s job. “It’s sacred to them.”
How They Did It
Grossman and another executive had proposed the change in job ads as part of the organization’s efforts at diversity, equity, and inclusion. Data indicates that publicizing salary ranges for job candidates helps reduce pay disparities based on gender and race. “The beating core of this was pay equity,” Grossman says.
But officials concluded they could make that move only after assessing how the federation paid employees and ensuring that there was a fair, equitable system in place. “With that level of transparency, you’re kind of naked,” Grossman says.
Here are the steps the organization took:
- Review and analyze job descriptions and titles. The study revealed that there were 80 different job titles across the 90-person organization, and that moss had grown on some job descriptions. They were rewritten to reflect the actual duties and the competencies needed to do the work.
- Create a hierarchy. In its analysis of job titles, the organization found that employees in different departments had the same core duties but carried different titles. A vice president for human relations, for instance, might perform the same functions as a managing director in the business office. To ensure consistency across departments, the federation created eight levels of employees: entry level, called “individual contributors,” with no management responsibilities; senior individual contributors; managers; senior managers; directors; senior directors; managing directors; and executives. Titles were assigned based on the levels, regardless of the department.
- “Level” each position. With its revised job descriptions, the organization assigned each position to one of the eight new categories.
- Set salary ranges based on the market. To determine pay ranges for each level, human-relations staff members studied compensation data for similar positions at nonprofits in the Bay Area and Northern California — data available through an annual survey of more than 600 organizations. For positions in departments like finance, technology, and human relations, they also drew on national and regional data on compensation in for-profit industries, as those employees have easily transferable skills.
Compensation for 20 of the 90 employees fell below the established ranges, and their pay was increased. Only two employees had a salary above the established range; their pay will hold steady for a time.
Lessons So Far
The federation expects to complete its job architecture — with the career ladders and performance-pay system — by November 2022, about two and a half years after it started.
- This is not “do-it-yourself.” Officials devoted significant time to the project — “The water was deeper than we thought,” Grossman says — but still hired a consultant in human relations and compensation.
- Communication is vital. The organization says it tried to give employees key information at every step but didn’t always foresee the questions that arose. There was concern, for instance, that with market-based pay, cost-of-living increases would no longer be automatic. “It’s a huge culture shift,” says Kate Sylvester, director of human resources. “That’s one thing we may have thought of but we weren’t all prepared for.”
- Training managers is critical. They are the ones whom employees turn to for answers, and they provide crucial information in one-on-one conversations. At the federation, manager training is a continuing process, Sylvester says.
- Managers may feel diminished. “There’s probably been some loss of agency for our managers,” Grossman says. “It’s not the Wild West anymore. If you have a salary range, you have to operate within those boundaries.”
- You might not like what you find. Grossman says he knows of another organization that started on this work only to find that it was not paying individuals at market rates. It abandoned the project.
- Expect questions — lots of them. “It’s good conversation,” Grossman says. “It’s honest, open, and difficult conversations about who gets paid what and why.”
- Expect questions about pay differences across departments. Because the federation’s salary ranges now are set by the market, pay varies by department. “A manager in one department — say, HR — is going to make less than a manager in fundraising or IT or finance,” Sylvester says. “That’s just what the market and comparable data call for.”
- The work has no end date. “We’ve accepted that this is like Trotsky’s eternal revolution,” says Grossman, who majored in Russian and European studies at Yale. “It continues on.”
