Protis Global – The Consequences Of Pay Transparency With Bert Miller

This is RecruitingDaily’s Recruiting Live Podcast where we look at the strategies behind the world’s best talent acquisition teams. We talk recruiting, sourcing and talent acquisition. Each week we take one overcomplicated topic and break it down so that your three-year-old can understand it. Make sense? Are you ready to take your game to the next level? You’re at the right spot. You are now entering the mind of a hustler. Here’s your host, William Tincup.

This is William Tincup, and you’re listening to RecruitingDaily Podcast. Today we have bet on from Protis Global. And our topic today is the consequences of pay transparency. So we hear a whole bunch of the pros and a lot of people, especially on the legal side, talking about what’s going on, different states enacting different things. And generally, there’s a lot of people that think it’s super, super positive, which there probably is, of course. Bert and I are going to talk about some of the consequences, maybe unintended consequences of pay transparency. So without any further ado, Bert, would you do us a favor and introduce both yourself and Protis Global?

Absolutely. Thanks, William. That’s great to be on the show with you. So appreciate that. Look, when I left Corporate America at the tender age of 33, I had the opportunity to co-found Protis Global back in 1995. Protis is a retained search firm focused on seven key verticals in consumer products space and it’s a retained search firm. I’ve also had the opportunity and pleasure to have launched a staffing firm called ace Talent Curators in late 2018, early ’19. And then, the opportunity came about where I bought MRI Network, Management Recruiters International in 2019 and have just successfully navigated a successful exit this month selling MRI to Higher Quest. So it’s a little bit about me and a high view of the companies.

Not busy at all is what the audience should take from that is you guys got a lot of time on his hands. So I think the really fascinating part about Protis Global for me is the niche in which you play the consumer package goods. Do you ever dabble over in retail at all? Do you cross over and some of the retail clients might be interested in the CPG?

Yeah, absolutely. We’ve had some of our manufacturing organizations that set up on premise type of outlets. So yeah, we’ve done that. We placed brew masters, winemakers, general managers of those facilities. And yeah, we’ve done that a few times, but it’s not the core business that we do every day. We basically go across seven verticals. Food, food tech, pet beer, wine and spirits, cannabis, non elk and then horizontally, we actually have an open desk that we’ll be launching around automation.

Oh, very cool. Obviously the National Restaurant Association, have you ever exhibited or sponsored some of their events?

No, we’ve not sponsored, not adopted, but we have been to those events. They’re massive events.

They’re massive, yeah.

Especially the McCormick Center in Chicago is just, it’s huge.

The last time I was there, it’s been years, but it’s like 35,000 people. I’m like, “How do you…” In a conference when there’s a thousand, you might be able to meet almost everybody, but 35,000 is like, man, that’s just a sea of people. And the expo hall was crazy. You couldn’t get through it in a day. Crazy.

Yeah. We are doing more and more conferences across our verticals, William, and the way we’re doing that is first of all, we do a spend a lot of time marketing that we’re going to be there. And secondly, then we set up in invitational meetings and we have many one-on-one set up prior two, and then occasionally we’ll do interviews there on camera and utilize and reuse and repurpose that content, which helps them and us. And in addition, we’ll host an invitation only cocktail reception. That way we get to the people we want to get to, start to meet others and also market the fact that we’re there and have been there and we’ll be there. Which also then starts to bleed into other areas and other people.

Right. Well, last thing on the industry verticalization, especially after doing it for as long as you’ve done it, you’re an expert in that industry. You’re not just obviously retain search and executive search, headhunter or recruiter, all that stuff. That’s great, but you’re actually not just seen as… You’re seen someone that actually understands what the industry is doing, going, headed, et cetera, trends that are happening. So I love that because you get seen, yeah, you’re an expert, obviously, executive search. Got it. But you’re also an expert in their industry because you know all the players, you’re talking to all the people. So you get to see and hear other things about the industry, which I think is fascinating. I think it’s also a value add to the clients.

Well, you hit the nail in the head, William. Look, we’ve been into business long enough, we should be subject-matter experts in the space that we play in. The opportunity though, for those that are capable, are really moving into the area of really thought leadership and really the experiences you have and bring ideas and different ways of thinking as well as being able to bring advisory and consulting to clients. And now you’re moving into a leadership position in that space. And then our hope is to ultimately become a voice in a space where those conferences want us to be there, that there’s a value to them that we’re there and spending time versus being seen as just a transactional headhunter. That’s not who we are.

No, no, that’s how you started, that’s how you had to get off the blocks, but not now. Let’s dig into this topic, the consequences of pay transparency. What are you seeing right now with pay transparency?

Yeah, it’s interesting. It’s still fairly young and it’s the topic itself, but what I’m seeing is when I think about the compensation transparency, I think about the bias. What is the key objective that is trying to be solved? And the key objective I think if you do any research is that the number one argument is bias, whether it be gender, race, whatever the case may be, is really to reduce the bias toward inequity and compensation for doing the same job. So that’s really where we got to start, is what is the objective. And certainly, I’ve seen a lot of pluses and minuses toward possibly doing it though it’s so early in the game, it’s the second inning of the nine inning game. I don’t know that we truly have the research that’s necessary. But also on the contrary, I do see some hurdles, William, that I think that have consequences to companies and to the talent, and to the individuals.

So let’s dig into those, because then I want to ask you an executive compensation question, but let’s dig into some of the consequences for both the candidates as well as the employers.

Yeah, well, the first thing I would say is just set the tone. We were heading down this path organically anyhow, William, and then COVID hit and we’ve… All things have been accelerated, right? And so if we start from the viewpoint and the lens that we can’t really look at the world and wish it to be back at what it was before March of 2020, that’s a good starting point. And when I think of that and the idea of this acceleration of compensation and transparency and compensation.

(08:47)
There’s the side though that people see it. I think as individuals I find that people see compensation as a very personal thing to them. Much like grades at school. We don’t have schools publishing your grades out there in the public to see. However, there are guidelines to the individuals on how they’re earning the certain grade. So that is something to consider. I think individuals, some want to be out there and many of the younger folks want that transparency, at least they think they do, but not always, William, do those things pan out to be a benefit in the long run?

It’s interesting because I think that especially when it deals with executive comp, I can see a job posting on Indeed, which is not something y’all would probably even be thinking about. But a job posting on Indeed for an hourly worker in a warehouse, I could see the candidate wanting to know, “Okay, is this even worth my time?” And I can see from the employer’s perspective of, “We’re trying to recruit you. Here’s what this salary is or here’s what the hourly rate is.” I can see that. But when you get on the other end of the spectrum with executive comp, it’s complicated. There’s many moving things. Again, if it’s $16.50 an hour, okay, that’s pretty easy, that’s pretty easy to put down. But if it’s a mixture of stock and bonuses and salary and 19 other things, how do you ever convey that, especially in a historical job posting way? But even if it’s not, even if you’re just talking to the candidate, how do you then render that in a way that they want to hear that would also be fair to the company as well? Oh, you’re on mute, Bert.

I don’t know why I’m mute. Yeah, no, that’s a great question, William. I think it falls into three buckets, and the buckets are pretty simple. And you have the executive piece that you’re talking about, which is multifaceted in terms of how compensation is put together. The concern or what I think we ought to be thinking about is how does it affect middle management, the everyday worker and middle management and what I would call junior, senior management. And as I look at this topic, William, I get it. You can pay one person differently than another person due the fact that maybe another person might have negotiated with you better. That could happen. Transparency per se can defend, if you will, against biases. And the outcome of that is there’s an opportunity that one might pay more fairly going forward. However, there’s other things to really consider. And when you’re being open with compensation, particularly if you are an established organization, this really opens up the current staff to what you’re paying with incoming talent, incoming individuals. It’s not cool.

Right. You might have a compression issue there. Yeah.

Exactly. And I don’t find it being horrible, but it can be incredibly disruptive. And then when you bring in the level of talent, when I think of if all things are equal, how do you incent and pay the A level talent, right? So you have an A level talent, how do you incent them? Because now as they look around, you have individuals with the transparent of compensation and now you have some of these tension and push and pulls happening in an organization.

Yeah. I’ve seen this recently with executives, especially on the pay equity, pay transparency, hopefully leading us to more pay equity. And I’ve seen and I’ve talked to executives that have traded salary or comp for flexibility. So let’s say they’re paying $350,000. Yeah, that’s a salary, that’s whatever. But originally, the company wanted them to be in the office five days a week, the whole bit. And they’ve seen through COVID or whatever, I want to be around my family a little bit more, how about three days a week? They’re willing to trade. Whereas again, if it’s black and white and it’s like, “No, the salary is this>” and again, we want everyone that’s at that experience level, et cetera, with same title. We want them to be in this, at least in a band close to each other. But I’ve seen executives actually trade flexibility for comp. I don’t know if you’ve seen some of that with some of the folks that you’ve dealt with as well. Have you seen, because you can be transparent, but then it comes down to the candidate and the company coming to a mutual agreement?

Well, I’ve seen a big part of the negotiation without question. It has been part of the negotiation, and it starts to become complex because there’s a lot of moving parts related to this. And in addition to whether it’d be hybrid and having some flexibility or whether it’d be in office or biases that can occur to players that are equal in talent, but one being local and in the office and the other one being remote, not wanting to come into the office, there’s a lot of decisions that are being made and will be made over the next couple of years that will create other issues. And then from the pay transparency, and let’s be real, people see their value different than maybe people see them.

Right. Hopefully.

Yeah. Actually, well, you can have the clear communication, even if you’re talking with them on a weekly basis and everybody knows where you stand, that person still sees themselves as good or better than someone else, which may not be true in terms of value of the leaders. And so we just have to remember, not everyone is created equal in terms of talent. There are people that are better and more talented and suited to do certain roles than others. And to come up with a transparent pay system that pays equal, and I’m not saying that’s what we’re trying to do, I think we’re trying to close the gap in certain areas, which I think is really, really important. But when we solve one problem, we have to be careful not to swing 180 and create others.

That’s right. That’s right. It’s interesting that you mentioned that because it’s almost like the talent that you want, that A talent, you want them to think highly of themselves. It’s almost a tell. If they don’t think highly of themselves, how good can they be? Now, some of that is predicated on this just innately. Some people are just better in negotiating than other people. Hard stop. But I’ve always wondered like, “Okay, unless the job is negotiation.”

(16:49)
And that’s their job. I can see this for chief revenue officer. As a chief revenue officer, they’re going to be in constant negotiations with people. That’s just going to be the job. They’re always going to be talking sales as they’re always going to be negotiating with people about things. So they actually have to do, have a level of acumen related to negotiation. But let’s say it’s a general manager or somebody, a different type of position where maybe a negotiation isn’t the central to their skillset, then do you counsel to your clients to have a budget basically to say, “Okay. Well, let’s just talk about the budget.” And where do you want to land on this position and whether or not they negotiate to that salary or not, it doesn’t really matter. You’re going to get them to that place because you don’t want to create a pay equity issue.

Certainly, that is the direction that we’re somewhat headed. And when I think about the level of talent, if I have an A player and I don’t have the ability to take my outstanding individuals on my team and find a way to pay them a little bit differently and pay them their value that they’re bringing to the table, due to pay transparency or equal pay, then I believe I’m going to have a problem because… Then if I’m able to then create incentives for the best talent to earn additional money, then what am I doing? Am I creating inequities once again based on the level of talent?

(18:33)
There’s a lot of complexities here and it’s not always what you want to see. I can see jealousy setting in. You have people that will quickly, if there’s a lack of communication, you have people that will… So the transparency then allows for jealousy to start to set in. And then if you flip that over, it allows for people to jump and you don’t communicate. If that’s going to be your policy, then you allow people to come to their own conclusions and they may believe that they’re not being paid as well, and perhaps at that point, they’re not going to give you all that they have and be as productive. There’s a lot of dynamics that occur in this.

Yeah, it’s funny. I read Jimmy Johnson wrote a book a hundred years ago and ironically, it was about not treating players the same. It was basically run at the Cowboys in Miami. It’s just like, “Hey, some players you just treat differently.” If you think that the third offensive lineman on the depth chart is getting the same treatment as Troy Aikman, yeah, you’re thinking wrong. There’s different rules. And so I wanted to ask you two questions left. One is around budget. And years ago, companies, especially with working with executive search RPO staffing, they’d look at the budget and they were trying to get the most for the least. So whatever the salary was, again, let’s say it was $350, if the candidate came in at $300, that was $50,000 back to the budget or as a win in some ways. Now that’s probably 20 years old. Have you seen the clients change in terms of looking at budgets as either a win or it is what it is? What have you seen with their mindsets?

Well, traditionally, William, right, I think the boards want to get the best talent for the least amount of money.

Right. Hard stop.

Yeah. And they get a pat of back for doing that if they’re able to do that. I think the last couple of years, as we’ve seen the climate shift more to the individual than the company, you’re seeing people think differently about how they’re compensating individuals. Now in the last eight to nine months, as we’ve had some uncertainty and volatility in whether it be geopolitical, economic, et cetera, you’re starting to see it shift a little bit back to the company. And now, we have a little more of a level playing field. And I love your analogy on Jimmy Johnson because, I think, really what he said, if I remember right, is it’s about treating people fairly but not treating them equally.

Right, that’s great.

Yeah. And that’s really where we are, because as long as there’s a way to communicate and it’s done upfront and it’s clear and you can treat people fairly, then there’s not going to be equal pay go across all facets. I think that’s where the idealists would like to get to. I’m not so sure it can really happen, certainly not in the short term.

(22:05)
The advocates as you know, around these platforms, they think it’s going to create better collaboration, it’s going to create bias reduction, greater diversity, higher productivity. Anyone can take that position, William, today. But the facts are still not fully baked and it’s not been embraced across our country and across all of a lot of them at corporate America, nor in the private sector either. And I think we need to be really careful because I mentioned earlier when you have people that become jealous, when you have people that may be earning less, they may decide to quit their for your impact and retention, and retention can… There’s a flip side argument, retention can be impacted both positive negative on both sides of the conversation. But I really think you really have some things that we need to flush out and before we start throwing an umbrella or blanket over this particular topic, it’s one of the things, and I’ll share this small story with you at Protis Global, we’ve had conversations around flexibility for last two, three or four years.

(23:25)
We have a young group, we have Zs and millennials as a good part of our organization. One of the things they shared with us is… And we have a really solid culture and we let people, William, be adults. These are high performers. They were really struggling with have to take time to go do something. And they said, “Well, we feel guilty.” the question I came back, “Why do you feel guilty?” And the point is, well, feel guilty because I don’t know, I said, “Who’s making you feel guilty?” They go, “No one.” So the point is they go [inaudible 00:24:08]-

That’s the unlimited PTO thing. People don’t take it because they feel guilty.

Exactly. But they say, “Well, we want a policy around this.” And I just simply said, “Okay, we can do that.” We can build a policy around this, but understand if today you have leeway and we treat you like adults, tomorrow we create a policy which black and white, and at that point in time though, that’s the policy and we don’t deviate and we have to live to the policy. Now, which one do you want to go? And the room gets really quiet.

The former.

The room gets really quiet. They want to stay with where they are. So when I think of something like this, pay transparency, let’s be careful what we wish for. There’s other ways we can, and I don’t have all the answers, but I think as executives, we have to be honest with ourselves that if we want to hire the best talent, we have to close pay gaps around gender and diversity-

100%.

… and things that are where people are performing at equal levels. We have to close those gaps. Not close the gaps based on the fact that it’s just gender or otherwise, but close the gaps based on the talent themselves.

Right. And what’s interesting about that is compensation departments and the board or the executive team, they can quietly do that. You know what I mean? They can actually look comp professionals in particular, they can look at what’s going on. They know where these things exist. And if they were given permission, especially from the board and executive teams to say, “Let’s get this right.” And even if it’s incremental, we’re not going to just, “Oh, flip a switch and overnight everyone’s going to be paid the same.” I think you use the word utopian, which I love because I tell people this bid all the time. I’m like, “Have you ever read the Communist Manifesto?” And it’s like, “Yeah.” I’m like, “It’s a wonderful work of literature.” When you read it, it is wonderful. The problem is you add human beings and it all falls apart because it’s utopian.

Well, our intentions are certainly positive in what we want to accomplish. I think people generally are thinking about the right things, but they’re not thinking about the consequences essentially-

100%.

… which just automatically… What we’re going to do is we’re going to create a bill in a state and with the United States all of a sudden becomes law that we can’t ask for how much people make. We have to be transparent with what the job posting is.

When my dad was in the ’70s, worked for Weyerhaeuser for a hundred years and he was in the corrugated industry, and I remember one time he was up for a position, it was outside Weyerhaeuser, actually. And the recruiter basically said, “Send me your tax returns. You can white out whatever you need to white out, but just send me your tax returns.” And then that was the negotiation. He’s like, “Listen, I can get you 15%, 20% more than your tax return.” And he opted into that, obviously. My dad opted into that. He was like, “Yeah, okay, sure. Sounds good.” It is what it is.

(27:37)
So last question I wanted to ask you was about location based pay. I don’t know if you see it as much from your vista or not, but somebody working in San Francisco, somebody working in Topeka, obviously doing, let’s say, the exact same job, same experience, all that. So twinkies, got it. San Francisco’s cost of living is crazy. Topeka’s not. Have you seen that in your industry in terms of how do you reconcile those things?

Yeah, it’s been a topic of conversation. And by large, we have not had to face often where the locale and geography is going to either lower the compensation. I’ve seen it go the other way. I’ve seen it go the other way where-

Me too.

… New York is a person’s going to get compensated more in New York than say a town in Des Moines, Iowa. But they use cost price indexes and they have formulas for doing that. I’ve seen it go that way. But the conversation has come up, but I’ve not seen it become prevalent yet in what we’re doing.

It’ll be interesting to see, because first of all, this is a great conversation because most of my podcasts around pay equity and pay transparency have been on the, we should be doing this and not even thinking about consequences. So I think this is really good for the audience to hear. But on location based pay, I’ve seen a couple firms move to more of a domestic pay. So whether or not you’re in Topeka or San Francisco or Des Moines or whatever, they have a range of band that they use that’s basically here’s the domestic pay range and they stay within that.

Yeah, that makes a lot of sense. And certainly that, I think more and more companies will do more of that. It’s interesting what you just said. I tend to lean toward the Jimmy Johnson piece. Treat people really fairly but not equal, and the talent will certainly dictate what their compensation will be.

(29:53)
The other side of the equation that your folks say, just fix it, forget hell with the consequences. I get that, because I understand where that side is coming from. Because really they want to fix, as we all do, quite frankly, we want to fix compensation and equity. But when you just saw a blanket over you’re… Again, you’re creating a whole set of other issues. And by the way, you’re hurting those people as well that they get paid more money for the moment. But what happens ultimately is as a company takes a look and assesses their organization, they’re going to make decisions of who they’re going to go with as a band, as they go up and down, who they’re going to have in their organization. And I think what you have to do is make sure that people get paid for their talent regardless of gender or any other bias involved. We need to pay people for their talent. Yeah.

Drop spike. Walks off stage. Bert, congratulations on the exit with MRI. You did a wonderful job. And obviously, that’s just a one thing off of your plate. I’m sure you’ll fill it up with 16 other things. But thanks for coming on the show today.

No, it was great. And William, I appreciate that and I also appreciate being on the show. I know that I have a chance to watch you speak at one of the MRI conferences years and years ago, and certainly that was a moment in time that we connected and watch each other on the other platforms. And so, it’s really great to finally come full circle and be on your podcast. So I appreciate very much.

Absolutely. Thanks for everyone listening to RecruitingDaily Podcast. Until next time.

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