September 16, 2021
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In my previous job, I wrote about compensation at accounting firms. A lot. We covered it so relentlessly because 1) accountants like talking about it, so it made for great traffic, and 2) there was really no other place to discuss it. Occasionally, we would hear rumors about firms trying to discourage their employees from discussing the specifics of their pay, and then we would naturally write about that because it meant someone was possibly breaking the law. It was great. We had the reporting of accounting firm compensation and the discussions around them cornered for many years.
Pay transparency has evolved in more recent years. Sites like Glassdoor have tried to crowdsource information in all kinds of jobs, not just accounting. Plus, searchable databases are floating around the internet across all kinds of industries.
But the latest trend in pay transparency that really has momentum has come courtesy of state legislatures, as this Insider story reports (subscription required):
A growing number of states are enacting measures known as “pay transparency,” which force companies to disclose their compensation levels. New laws set to take effect in Connecticut and Nevada next month, and in Rhode Island in 2023, require employers to provide applicants the salary range they pay for each position at some point in the hiring process. Four other states and two cities have enacted similar mandates, some of which also require employers to disclose their pay scales to existing employees. The most far-reaching law, which Colorado implemented in January, compels businesses to include their salary ranges in every job posting — effectively making their payroll public.
Some employers are fighting this trend, with some going so far as to state that Colorado residents are not eligible to apply for remote positions. That is until Colorado clarified that those exclusions were illegal and started shooting off enforcement letters. Employers that don’t comply could wind up being fined up to $10,000 per violation.
In addition to the pay transparency laws, Maryland, California, and Washington (as well as Toledo and Cincinnati, Ohio) have laws requiring employers to disclose pay details when applicants request them at various points in the process. While these laws aren’t as transparent as Colorado’s, you get the distinct impression that things are moving in favor of job seekers.
This is only one of many advantages workers have right now. In the case of pay transparency, if a job applicant has two job offers, where the only meaningful difference is that they know the salary of one job but not the other, which employer has the better chance of getting the hire?
We’ve talked about accounting firms advising their clients on finding and hiring employees, and I suppose there are many ways a firm could go about this. But, for my money, I don’t know if there’s a better tactic that you could suggest than implement pay transparency for all its open positions. Here’s an imaginary conversation:
CPA: So, did you disclose the salaries for all your open positions?
Client: Yep, sure did. Over a month ago.
CPA: Great! How many applicants did you get?
CPA: So do you think salaries are high enough?
They’re not! They’re not high enough. Raise your salaries! I mean, obviously, this is not business or legal advice—there’s a full disclaimer at the bottom of this newsletter—but you see my point. By proactively disclosing the salaries for its open positions, (while its competitors certainly aren’t), employers that don’t wait for a state or a city to mandate it should get implicit feedback on those positions pretty quickly. Then they can adjust the salaries or positions as needed, get them reposted, and see if applicants show up.
And, sure, you’ll encounter pushback. But won’t your clients pay either way? If you recommend a client disclose the salaries for their open positions and they don’t, they’ll continue chasing every job seeker with a pulse, just like everyone else. Eventually, they may bring someone in for an interview, and when the candidate finally learns what the lousy pay is after getting an offer, they walk.
If the client does disclose, the main downside is that job seekers will turn their nose up at the measly salary and look elsewhere. You could reasonably argue to your client that that will save them time, energy, and money. Then, if they decide to pay a competitive salary, why not put it out there for everyone to see? No employer paying a truly competitive rate should hide that information by simply saying “competitive rate” on the job description.
Naturally, accounting firms can try this tactic for their own open positions as well. I just can’t guarantee that it will send as many visitors to your site as it did Going Concern. But it certainly couldn’t hurt things.
Elsewhere in money: Workers Want to Do Their Jobs From Anywhere and Keep Their Big-City Salaries
Accountants often operate in the background, but there’s one place they almost always have a starring role: corporate frauds. Sometimes they’re perpetrators, sometimes they’re whistleblowers, and sometimes, as is the case in the trial of Theranos founder and CEO Elizabeth Holmes, a starring witness:
So Han Spivey, who also goes by Danise Yam, said Holmes gave her a revenue estimate of $100 million for 2015 when she was working with an analytics firm on pricing stock options for Holmes and other employees.
But Spivey said she did not prepare a document that Theranos gave to investors showing it expected to generate $140 million in revenue in 2014 and $990 million in 2015.
A prosecutor asked Spivey if she had “any idea where the number came from,” to which she replied, “No.” Man, I love the ol’ “they just made the numbers up” routine.
The Theranos fraud was mainly about its technology, but that’s the thing about corporate fraud. Even if it begins with something purely scientific like blood tests, it eventually comes around to the accountants.
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- Manage Your Energy, Not Your Time with Amber Setter on September 22.
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