How fashion begins to talk about payment

About two years ago, Rockt, an e-commerce technology company that helps online market brands like Wayfire and Land’s End, began disclosing the salaries of its employees to enforce “fairness and equity” in its pay structure.

However, there was another reason: as in most companies, information was leaking. Rocket’s chief people officer, Sarah Wilson, says that showing the numbers to everyone seems less destructive than letting them get out in the rumor mill.

“Payment is like a secret secret, so everyone knows it,” Wilson said. “Ultimately, Susie tells Jessie and Jessie they’re mad because Susie works so much and then instead of being mad at the system for being unfair, you’re mad at the employee for sharing… We want to get rid of all those distractions.”

The fashion industry is notorious for its wide, and often unclear, salaries. Store clerks and entry-level designers can bring in as little as $10 an hour, but executives and creative directors can easily clear six- or seven-figure salaries and more.

Experts say the lack of transparency is in many cases intentional — a way for brands to maintain their reputation as creative havens for uninitiated, out-of-the-box thinking. It’s also a convenient way to cover low compensation for backbreaking work in stores, warehouses, and studios, as well as rigid gender and racial pay gaps. If salaries for female employees are closely guarded, it’s hard to know if they’re being paid less than their male counterparts, or if the creative director is making 20 times as much as a junior design assistant.

However, the industry is facing pressure to become more open. In California and New York, labor shortages, high turnover and new disclosure laws are changing payment transparency from accountability to competition. Added to the mix is ​​a generally vocal workforce that has taken to social media to complain about unfair pay and the widespread adoption of remote work. Fashion companies are realizing that there are benefits to normalizing their pay scales and telling the world about them – not least of which is avoiding a PR risk.

Laying the foundation

While some large companies, such as Whole Foods and Starbucks, now disclose pay rates for most of their employees, they are limited to announcing starting pay for store employees in fashion statements.

Experts say there’s a lot going on behind the scenes. Some fashion companies are taking steps to define formal career levels within their company, which may include levels such as junior, senior, director and so on – or titles such as merchandiser, designer and account manager.

The next step is to clearly define salary bands, or the minimum and maximum amount you want to pay someone for a job level or title, says Jeff Hewitt, a partner in the leadership, change and organization practice at business consultant Kearney.

The whole point of releasing salaries for companies is to build trust and improve the overall company culture, experts say. But companies are becoming clear that they can’t do that if wages aren’t fair.

“You have to get to equity before you get to transparency,” Hewitt said.

When creating pay bands, companies need to be careful not to use broad ranges that mask or exacerbate gender and racial pay inequity, said Rocketts-Wilson, an issue that some upcoming legislation has not adequately addressed.

“A company may be asked to set a salary range and that range may be $60,000 to $90,000 for a job,” she said. “You can hire a white man for $90,000 and a black woman for $60,000.”

Salary transparency should help organizations establish and maintain a clear and fair roadmap for career advancement within the company, according to Reed & Co.

“When you look at the region, there needs to be an understanding of what drives the region — what does one do in terms of performance, responsibility or business impact,” she says. “So what does that person need to do or be responsible for driving to the next level?”

Some aspects of this approach were part of best practices in industries such as banking and finance, medicine and engineering. But companies pride themselves on innovation and fluidity over organizational rigidity and formality, say experts, with little in the way of fashion.

“The glamor of the fashion industry itself breeds a richer and therefore more refined talent pool to compensate,” says Rockett’s Wilson. Historically, it’s harder to pay people more and influence you if you don’t have to do that.

Avoid traps

Ideally, pay transparency creates greater organizational trust and fosters equity, which leads to a better overall company culture and improves recruitment and retention. At worst, it compresses compensation, complicates rewards such as stock options and bonuses, and increases the workload of superintendents who are ill-equipped to answer tough financial questions, experts say.

“Payment transparency can backfire,” Reid said. “What you can find is that the people at the top of the income scale may not have room to move up – sometimes even if they are your best performers.”

At Rockett, Wilson said the company “has been proactive in hiring a workforce that is aligned with the philosophy of having a stable and clear career ladder.”

“We also spend a fair amount of time in coaching discussions through our performance cycle,” she says.

The company has a “preparation program” to help them “learn how to talk about pay” and is at the forefront of the hiring process about fixed pay scales, Wilson said.

Organizations can be smart about giving reward incentives – other than monetary compensation – to employees who perform better. Benefits such as training courses to learn new skills, tuition grants and additional paid time off can offset concerns about wages.

Other financial incentives, such as stock options and cash bonuses, should be done on a company-specific basis, said Devin Wheeler, president of Bond Creative MMMT, a management consulting and executive recruiting firm.

“It’s a process that tends to lower wages, especially for small businesses and startups for the sake of fairness,” he said. For example, when a seed company is growing and has a lot of cash in the coffers for staffing, it needs to reconcile how to offer competitive wages to new talent and current wages, including high non-monetary compensation.

“Companies need to work proactively with their talent acquisition teams and HR teams [to determine] How to take advantage of this opportunity and not see it as a crisis,” Wheeler said. “If companies embrace pay transparency as an important part of their culture, they can use it to build the best teams, products and brands.”