How companies use Pave to better communicate compensation packages to attract and retain top talent
- Today's more sophisticated talent pool welcomes compensation transparency from their employers.
- Employers want to communicate better so employees can understand their full compensation, beyond just cash.
Tech talent is highly sought after. Early and late-stage startups are fighting to land the right talent, and then keep them on their books. On top of that, there’s the rising inflation — with both public and private funding drying up — forcing companies to re-evaluate their compensation packages, and it helps to do so by looking at the industry at large.
Amid this environment, compensation transparency has become ever more important for businesses and workers alike. Workers want to be able to compare their compensation with others performing similar roles at similarly sized companies, while companies want to make sure they’re compensating their talent enough, so they don’t jump ship for better pay. San Francisco-based fintech Pave is helping both parties achieve that with its real-time compensation benchmarking platform. The firm’s tech integrates directly with a number of ATS, HRIS, and equity management tools, and brings together a variety of data points into a single coherent platform. From there, firms can review, plan, and communicate compensation, while workers can see where they stand in comparison to the market.
COVID initiated a flurry of dynamic shifts, including the accelerated prevalence of remote work, an unprecedented tech bull market, rampant inflation, new pay transparency legislation, and now, a dire downturn as we enter a possible recession. This changing job market has made compensation benchmarking critical.
“Compared to the hot job market and bull economy 2022 began with, the realities of today’s economic dip are in stark contrast,” Matt Schulman, Pave’s CEO and founder, told Tearsheet. “During times of uncertainty, Pave’s real-time pulse of the market is more relevant than ever. It is now a competitive disadvantage for employers to not be on top of cash and equity pay trends in real time.”
The demand for compensation transparency from today’s workers
Pave was born in 2019 out of the recognition of workers’ growing desire for compensation transparency. This is not a new phenomenon. Over the last few decades, much has been said and written about compensation across industries. For example, the gender pay gap has been brought to the limelight and scrutinized, and the biggest corporations, like Amazon, have been slammed for how they treat and compensate their employees. What’s different today, however, is that workers don’t just want to learn about these things; they want to see them in action.
“Today’s workforce not only wants to know that they themselves are being paid fairly, but they also want to know that they are working for employers that pay everyone at the company fairly. This desire for greater fairness in compensation naturally leads to a desire for greater transparency — it’s the only way to ensure that your company is being equitable,” Schulman said.
A greater desire for fair compensation is not the only factor driving this phenomenon. The job market has seen a shift in dynamics, creating a more candidate-friendly environment. This, coupled with the competition for good talent, means companies have to do everything they can for their employees. When the best candidates value transparency, companies that don’t practice it won’t be able to compete for the best talent — it's as simple as that.
Today’s more sophisticated talent pool also means that they’re more aware of what they deserve and want from an employer. Candidates today are much more educated on different types of compensation, which were really not in conversation just a couple of decades ago. Today, for example, equity compensation is almost table stakes in technology companies, and employees have naturally become savvier. As candidates begin to have a better understanding of how equity works and its potential impact on their financial situation, they naturally have begun to ask more questions. They might want to know what the strike price offered to them is, for example, or what the preferred price is. This has created pressure for employers to be more transparent with candidates in order to remain competitive.
Lastly, competitive employers have come to use transparency as a retention tool, setting the pace for the rest. Increasingly, companies are waking up to the realization that being transparent with their employees leads to greater satisfaction and motivation. And ultimately, this also leads to better business outcomes. As top companies lead the way with transparency, they attract the best employees. This force causes other companies to adopt transparent practices.
What does this greater transparency look like in practice?
Companies have become more straightforward with their compensation philosophies, sharing them with their candidates, and readily telling them what they’re willing to do for them. This allows employees to self-select for companies that match their financial goals. It also means that employees have more information about things like what determines their salary, and how to get a raise.
‘Total compensation’ is increasingly becoming a part of employment conversations, with both employers and employees thinking about compensation in its totality, instead of just a cash compensation perspective.
“Employers want to highlight all of the things that they invest in for their employees. The reason is obvious — their investment in any given employee is often much more than just cash compensation, and if the employee doesn’t see that, they are likelier to leave the company, potentially even for less total compensation,” Schulman said.
Several large companies have even invested in their own homegrown ‘total rewards portals’. Google has an internal tool called Prosper that allows employees to understand their total compensation and model out future scenarios given inputs like stock appreciation. Uber also built a similar tool for its employees.
Over the last decade, private companies have also become more open in sharing details regarding equity — information that was previously only shared under rare circumstances. Things like the valuation, most recent preferred price, fully diluted shares outstanding, percentage ownership, and liquidation preferences are now openly discussed in interviews. In yesteryears, most candidates or employees only knew the number of shares they were getting in the company, without any additional information. In that situation, it’s impossible to assess the value of their equity — which is what really matters.
There is also more transparency around compensation bands. This is a much newer trend, backed by some recent legislation, where companies have begun to post their salary bands on job descriptions. This allows candidates to have an idea of what the potential compensation for the role is without having to speak to a recruiter or having to go through an interview process. California, for example, has long had a law that requires recruiters to share the compensation range with candidates if asked, but this new trend means that candidates don't have to ask that question — they are entitled to that information.
Paving the way for Pave
Pave saw this shift in the employer-employee relationship, and thought it could do something about it. The SaaS platform has three offerings, and while its benchmarking product is free, the other two products are offered on an annual subscription model.
Pave’s Benchmarking Product gives companies access to real-time compensation data by integrating their HR systems. This offering is free and works on a give-to-get model. Once Pave receives the data, it is aggregated and securely anonymized, increasing the size and quality of the dataset companies have access to. The product is designed to enable employees to be more transparent about compensation, as it is crucial that they have a foundation built from trusted market data.
Then there’s Pave’s Communicate Product. Providing transparency into candidates’ and employees’ total compensation sounds simple, but it’s not. That data often lives in multiple systems — the HRIS, equity platform, benefits administrator, and ATS, as previously mentioned — and so the process of getting it all in one place is arduous, time-consuming, and error-prone. On top of that, every employee’s situation is different, and there are endless combinations of bonus plans, benefits selections, and option grants that make creating a single sheet for each employee exceptionally challenging. Pave solves all that by integrating with a partner’s systems and creating a customized, interactive, and real-time portal for employees to view their total compensation.
Lastly, there’s Pave’s Plan Product. When companies use spreadsheets or legacy compensation planning tools, managers get limited visibility into their employees' data and the decisions that are being made with their compensation. Pave provides transparency to line managers so that they can proactively fix any pay inequities and ensure that increases are going to their best employees who have the most impact.
“During times of uncertainty, Pave’s real-time pulse of the market is more relevant than ever. It is now a competitive disadvantage for employers to not be on top of cash and equity pay trends in real time,” Schulman said.
Since Pave’s inception, the team has grown to 150 employees and now supports over 2,500 customers.
Pave’s new funding round and Advanced-HR acquisition
Pave has entered its late-stage startup phase. This week, the firm completed its Series C round, raising $100 million. The round was led by Index Ventures, as the firm’s partner Mark Goldberg takes a board seat.
The news was coupled with Pave announcing a new acquisition. The fintech has acquired Advanced-HR from Morgan Stanley, which has a product suite that includes Option Impact, Option Driver, and the VCECS (Venture Capital Executive Compensation Survey). Option Impact is a startup compensation tool used by over 2200 startups, while Option Drive is a tool that helps firms develop, customize, and manage compensation plans. Pave seeks to use the capital infusion and acquisition momentum to accelerate its objective of becoming a premier global compensation platform.
The Advanced-HR acquisition strengthens Pave’s standing in the market. The consolidation of both firms’ customer bases into Pave’s ecosystem has enabled Pave to become the largest compensation benchmarking database for private technology companies in the world. Additionally, Pave will partner with Morgan Stanley at Work, bringing Pave’s compensation benchmarking and planning products to its clients, and offering integration with the Shareworks platform.