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Sep 21, 2023 · 16m · a16z

The Truth Behind Salary Transparency

Shannon Schiltz · 5m spoken Brandon Cherry · 5m spoken Steph Smith · 3m spoken
0:00 / 0:00
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In this episode of The a16z Podcast, host Steph Smith and experts Shannon Schiltz and Brandon Cherry examine the rise of salary transparency laws, exploring how companies can adapt through objective compensation architectures, clear leveling frameworks, and proactive employee communication.

How this conversation actually went

Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. The host holds 24.8% of the talking time here. How this is scored →

The host as informed peer 3.0 Guest teaching 3.5 Guest disagreement 1.0 The host pushing back 1.8
05100:0010:000:44–5:41 · The host as informed peer 3/10 Legal Disclaimer and Investment Disclosures Steph sets up the legal backdrop well and asks Shannon to clarify the nuance between fairness and consistency. The guests educate on how compensation structures evolved from public sector norms to tech benchmarks.5:41–7:51 · The host as informed peer 2/10 Corporate Reactions and Managing Internal Employee Expectations Steph prompts the guests on how companies are reacting to newly enacted transparency laws. Shannon outlines three main tactics companies use, including posting exaggerated salary ranges.7:51–11:40 · The host as informed peer 4/10 Building a Compensation System and Handling Critical Talent Steph raises a practical challenge regarding 10x engineers and whether rigid pay bands hinder retaining top talent. Shannon and Brandon explain how single points of failure fit into consistent comp frameworks.11:40–16:10 · The host as informed peer 3/10 Implementation Steps, Startup Timing, and Guiding Principles Steph inquires about implementation timing and when startups should hire comp experts. The guests advise stripping human names out during design and treating ranges as guiding principles rather than rigid rules.0:44–5:41 · Guest teaching 4/10 Legal Disclaimer and Investment Disclosures Steph sets up the legal backdrop well and asks Shannon to clarify the nuance between fairness and consistency. The guests educate on how compensation structures evolved from public sector norms to tech benchmarks.5:41–7:51 · Guest teaching 3/10 Corporate Reactions and Managing Internal Employee Expectations Steph prompts the guests on how companies are reacting to newly enacted transparency laws. Shannon outlines three main tactics companies use, including posting exaggerated salary ranges.7:51–11:40 · Guest teaching 4/10 Building a Compensation System and Handling Critical Talent Steph raises a practical challenge regarding 10x engineers and whether rigid pay bands hinder retaining top talent. Shannon and Brandon explain how single points of failure fit into consistent comp frameworks.11:40–16:10 · Guest teaching 3/10 Implementation Steps, Startup Timing, and Guiding Principles Steph inquires about implementation timing and when startups should hire comp experts. The guests advise stripping human names out during design and treating ranges as guiding principles rather than rigid rules.0:44–5:41 · Guest disagreement 1/10 Legal Disclaimer and Investment Disclosures Steph sets up the legal backdrop well and asks Shannon to clarify the nuance between fairness and consistency. The guests educate on how compensation structures evolved from public sector norms to tech benchmarks.5:41–7:51 · Guest disagreement 1/10 Corporate Reactions and Managing Internal Employee Expectations Steph prompts the guests on how companies are reacting to newly enacted transparency laws. Shannon outlines three main tactics companies use, including posting exaggerated salary ranges.7:51–11:40 · Guest disagreement 1/10 Building a Compensation System and Handling Critical Talent Steph raises a practical challenge regarding 10x engineers and whether rigid pay bands hinder retaining top talent. Shannon and Brandon explain how single points of failure fit into consistent comp frameworks.11:40–16:10 · Guest disagreement 1/10 Implementation Steps, Startup Timing, and Guiding Principles Steph inquires about implementation timing and when startups should hire comp experts. The guests advise stripping human names out during design and treating ranges as guiding principles rather than rigid rules.0:44–5:41 · The host pushing back 2/10 Legal Disclaimer and Investment Disclosures Steph sets up the legal backdrop well and asks Shannon to clarify the nuance between fairness and consistency. The guests educate on how compensation structures evolved from public sector norms to tech benchmarks.5:41–7:51 · The host pushing back 1/10 Corporate Reactions and Managing Internal Employee Expectations Steph prompts the guests on how companies are reacting to newly enacted transparency laws. Shannon outlines three main tactics companies use, including posting exaggerated salary ranges.7:51–11:40 · The host pushing back 3/10 Building a Compensation System and Handling Critical Talent Steph raises a practical challenge regarding 10x engineers and whether rigid pay bands hinder retaining top talent. Shannon and Brandon explain how single points of failure fit into consistent comp frameworks.11:40–16:10 · The host pushing back 1/10 Implementation Steps, Startup Timing, and Guiding Principles Steph inquires about implementation timing and when startups should hire comp experts. The guests advise stripping human names out during design and treating ranges as guiding principles rather than rigid rules.

speaking balance: gold is the host, purple is the guest (3 minute bins)

0:00 · the host 69.7% · guest 30.3%0:00 · the host 69.7% · guest 30.3%3:00 · the host 13.2% · guest 86.8%3:00 · the host 13.2% · guest 86.8%6:00 · the host 14.5% · guest 85.5%6:00 · the host 14.5% · guest 85.5%9:00 · the host 16.5% · guest 83.5%9:00 · the host 16.5% · guest 83.5%12:00 · the host 8.9% · guest 91.1%12:00 · the host 8.9% · guest 91.1%15:00 · the host 25.2% · guest 74.8%15:00 · the host 25.2% · guest 74.8%
Sharpest disagreement ▶ 3:56 Rejecting Fairness Framing

Shannon eagerly interrupts the general framing around pay, asserting that comp structures should aim for consistency rather than subjective employee definitions of fairness.

 Hardest push from the host ▶ 9:19 Pushing on 10x Talent Exceptions

Steph questions the practical limits of rigid compensation architectures when dealing with critical 10x talent and key performers.

 Biggest teaching moment ▶ 4:02 Explaining Consistency vs Fairness

Shannon breaks down why employee complaints about fairness miss the mark, detailing how benchmarking role scope and impact creates defensible consistency.

 The host holds their own ▶ 0:00 Citing Pay Transparency Legislation Data

Steph demonstrates her grasp of the topic by citing specific legal statistics regarding state salary transparency mandates and labor force coverage.
the scores for every segment, with the reasoning behind each
ChapterTopicThe host as informed peerGuest teachingGuest disagreementThe host pushing backWhy
Legal Disclaimer and Investment Disclosures 3412 Steph sets up the legal backdrop well and asks Shannon to clarify the nuance between fairness and consistency. The guests educate on how compensation structures evolved from public sector norms to tech benchmarks.
Corporate Reactions and Managing Internal Employee Expectations 2311 Steph prompts the guests on how companies are reacting to newly enacted transparency laws. Shannon outlines three main tactics companies use, including posting exaggerated salary ranges.
Building a Compensation System and Handling Critical Talent 4413 Steph raises a practical challenge regarding 10x engineers and whether rigid pay bands hinder retaining top talent. Shannon and Brandon explain how single points of failure fit into consistent comp frameworks.
Implementation Steps, Startup Timing, and Guiding Principles 3311 Steph inquires about implementation timing and when startups should hire comp experts. The guests advise stripping human names out during design and treating ranges as guiding principles rather than rigid rules.

Statements from this episode (12)

Assertion Supported
Smith: Salary transparency laws cover over 25% of the US workforce
“And now at least 10 states require it, with over a quarter of the US labor force covered by salary transparency legislation.”
Steph Smith Sep 21, 2023 ▶ 0:07
Assertion Not checkable as stated
Schiltz: Pay transparency originated as a Silicon Valley cultural norm
“It became more of a cultural thing, right? And it became very much a Silicon Valley thing too, that people should just be, you should feel confident with what you pay each employee. It, and if somebody else finds out about it, you should be able to justify it.”
Shannon Schiltz Sep 21, 2023 ▶ 1:50
Assertion Not checkable as stated
Cherry: Structured pay transparency was historically limited to public sector jobs
“And historically, that was generally reserved for Government jobs. Teachers. You get a master's degree. You get this much more, this many more dollars. There was like real clarity, and it was structured around achieve this, or do this, or have this. You get mo…”
Brandon Cherry Sep 21, 2023 ▶ 2:04
Assertion Contradicted
Schiltz: The first pay range disclosure law was enacted in 2016
“2016 was the first time the law came out that if you are interviewing a candidate, they can ask for the pay range for the role. And you have to be able to, within 24 hours, share with the candidate what the pay range is.”
Shannon Schiltz Sep 21, 2023 ▶ 3:08
Insight
Schiltz: Early compensation structures build healthy companies through consistency, not fairness
“The earlier you think about putting a compensation structure in place, the stronger and healthier your company is, because you have consistency. Not fairness, consistency.”
Shannon Schiltz Sep 21, 2023 ▶ 3:43
Insight
Schiltz: Companies must prepare managers for difficult internal pay conversations
“You have to be ready to have those conversations and get your managers ready to have a conversation on why actually this is a level above you and you can progress into it. But that's not where you're at right now. And that's a hard conversation.”
Shannon Schiltz Sep 21, 2023 ▶ 7:39
Insight
Cherry: Startups cannot compete on cash with multi-billion dollar public companies
“Not everybody's going to be able to compete with a, you know, ten billion dollar in revenue publicly traded company on a cash basis. So you need to own the philosophy that you believe will drive the kinds of outcomes that you want as a company.”
Brandon Cherry Sep 21, 2023 ▶ 8:23
Insight
Schiltz: The top 10% of employees are critical single points of failure
“There is a top 10% of your organization that isn't just the best performer, but they're critical. And what I mean by critical is if they left tomorrow, Something stops working.”
Shannon Schiltz Sep 21, 2023 ▶ 9:45
Insight
Schiltz: Paying critical talent above ranges is consistent if explicitly defined
“If you define critical talent as being above range, that, that's being consistent. Like, you have to be classified as that type of individual.”
Shannon Schiltz Sep 21, 2023 ▶ 10:25
Insight
Schiltz: Startups should establish salary structures before reaching 50 employees
“So we always try and get companies to do it before they're like, 50 employees. And this has actually helped us, right? Like, pay transparency would be much easier, and we've always said to people, the bigger your organization, the harder this project is.”
Shannon Schiltz Sep 21, 2023 ▶ 11:40
Assertion Not checkable as stated
Schiltz: Rapid tech compensation inflation forced annual salary range shifts pre-2022
“Never in a million years did I think that we would see how the market was increasing as it was pre twenty-twenty-two, half of 20, like, second half of twenty-twenty-two. You never had to move your ranges. Right. Your midpoint might move, but we were in a set, …”
Shannon Schiltz Sep 21, 2023 ▶ 14:33
Prediction Not checkable as stated
Cherry: Early-stage startup salary ranges will change within 12 to 18 months
“If you spend 10 weeks trying to figure out exactly how your ranges should be built, and you're a 20 person company, you should know that it's likely going to change in, in 12 to 18 months.”
Brandon Cherry Sep 21, 2023 ▶ 15:19
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