The Case for Pay Transparency
There is no negotiating salary when you receive a job offer at Ribbon Home. You get paid at the 75th percentile above the market rate for that role. No ifs, ands or buts about it.
If skipping negotiations in a job offer induces a sigh of relief, you are in the majority. “I would say maybe one out of 100 times someone wants to negotiate — that’s the outlier,” said Director of Talent Acquisition Vishal Vakharia.
The real estate and fintech company uses market audits to map compensation for all of its roles. When candidates receive an offer to join the team, it is a non-negotiable, competitive offer based on the 75th percentile of pay. When an employee hits high performance standards and is ready for promotion, there is a leveling framework for moving up.
Simply put, there are no surprises about salary at the company.
Ribbon co-founder and CTO Wei Gan has seen the benefits of pay transparency firsthand. “It shows up in all sorts of ways downstream,” said Gan. “Our engineering leadership is majority women, for example. It takes intentional work and a lot of time to get there, but we’ve truly removed the bias as much as we can from the process to end up with a diverse team.”
The Benefits of Pay Transparency
Diversity, equity and inclusion are mission-critical elements of the work at Ribbon Home, where the goal is to make homeownership achievable for everyone. The team cares about leveling the playing field, and they see pay transparency as a natural inward extension of that outward mission. So far, the response has been positive, despite the Great Resignation.
“When we treat our people well, they refer others as team members, and people join us. We’re not seeing the big resignation,” said Gan. “When you put people first, market dynamics hold companies to a high bar.”
Built In NYC talked to key members of the team to discuss the motives and method for adopting this mode of pay transparency.
What motivated the company to adopt this policy?
Gan: There’s been a lot of systemic racism and redlining in United States housing. We as founders have personally dealt with those issues, so our mission is to make homeownership achievable for everyone. Diversity, equity and inclusion matters because it provides the values base for our company. We have to do DEI well internally to be able to effect that mission at scale externally.
Pay equity is the foundation of DEI. You can recruit the most diverse team possible, but if you don’t have pay equity, it’s all for naught. The compensation philosophy is designed to be market-based, equitable and proactive.
You can recruit the most diverse team possible, but if you don’t have pay equity, it’s all for naught.”
What convinced you that this was the right approach?
Shalom Weberman, Total Reward Manager: The most common insight that I’ve taken away is that men tend to do better in negotiations than women for a range of reasons, which is a big driver of the gender pay gap. By opting out of the negotiation process entirely, it levels the playing field. We compensate for the role, not the individual. Before we even post a job, we’ve already determined what compensation is going to be at each level before any individuals come into the picture.
I remember when Ellen Pao was leading Reddit and she decided to institute this policy, that was really a big lightbulb moment. It clicked in my head — this is a really tangible way to solve this issue. It’s really forward-thinking, it’s not just dwelling in what was always done. Removing negotiations from the process is a powerful way to start closing that gap.
How common is this type of compensation structure? What feedback have you gotten so far?
Weberman: It’s pretty uncommon. I think more companies should adopt it. It’s a lot easier for startups and smaller companies, in general. For a much larger company, it can be very difficult to make that shift — especially if you’ve been around for a while. It’s easier said than done, the larger and more established you are, but it’s possible to gradually do this over time.
Vakharia: The feedback has been overly positive. Right now, since it’s a candidate-driven market, transparency around compensation is very rare. We’re doing right by them by doing our research around market pay, leveraging the compensation platforms that we have, and not leaning on the candidate to understand how they should perceive themselves in the current market since they don’t have any of the tools we use. It’s almost unfair for them to do their own research.
We’re also seeing that doing this early on allows them to really understand the values and principles at Ribbon. Candidates really understand the mission, what we’re building, and how we’re growing and scaling.
How Do Promotions Work?
- Promotion cycles are run on a monthly basis to enable real-time recognition and continued career progression. Separating promotions and merit increases from feedback cycles helps avoid recency bias and ensures that each team member has a fair chance at opportunities for advancement.
- Ribbon operates on a continuous-feedback model, supplemented by forward-looking conversations focused on development and goals twice a year. In this same spirit, Ribbon continues to reevaluate its approach to reviews to find the best process for the team.
- Each department has its own leveling structure that details the skills and competencies expected at each tier.
- Ribbon’s approach to compensation and leveling structures are available on an internal wiki for all employees to view.
What was it like to transition to this model?
Gan: The earlier that companies do this in their lifetime, the better — and the less aggressive the change. As it is with most DEI work, the longer you put it off, the harder it is to undo. Frankly, we put a lot of effort into this at an earlier stage than an average company would.
This year we moved from market-level to market-leading compensation. Nearly everyone in the company got a raise, so it was extremely well-received. We put a lot of thought into it: Can we afford it? Does the performance justify it? Is it really fair? We were at 15-times growth by the middle of the year and raised our Series C. The performance was outstanding, and it made sense for us to reward the company.
How does this type of pay transparency impact candidates in the hiring process?
Vakharia: From the candidates’ perspective, it’s pretty remarkable how transparent and upfront we are. Compensation isn’t a mystery waiting at the end of the interview process. Plus, negotiating can take a week, so you’re just adding time to the process by going back and forth.
Negotiating is not a skill that many people look to leverage on their job hunt. They’d rather discuss their experience and how they can make an impact, or learn about the company and the role. Adding in negotiation could hinder their experience.
Gan: If you have a process that pays the people who negotiate the best, the reality is you’re going to get a company full of people who are really good at negotiating. But is that really what you’re looking for? It’s certainly not what we are optimized for. We’re looking for people who are great at their job and can contribute to our mission. Removing negotiation optimizes hiring.
Compensation isn’t a mystery waiting at the end of the interview process.”
How does this pay transparency impact employees in their daily work?
Weberman: There’s a certainty that comes with this type of thoroughness. It ensures that everyone is getting paid competitively and fairly. Nowadays, you have to expect that employees and candidates are going to discuss compensation. Removing concerns about disparities prevents hits to morale and increases trust among the employees. We’re doing our best to do what’s right. Knowing that everyone’s on equal footing puts the focus on doing your best work.
Vakharia: Fighting for your value — or needing to read The Art Of The Deal — to be able to succeed is really unfair. Pay transparency allows you to understand what sort of company you’re at. Candidates and employees greatly appreciate the thought, effort and transparency here. Ribbon is a really special place to work.
Gan: Every day we’re re-recruiting our team, especially in the age of the Great Resignation. If you’re asking people to trust the process, then you have to be very transparent about what that is. This is about more than just compensation — it’s about leveling frameworks and our promotion process. You can trust that if you level up, you will be compensated fairly because it’s a formula. There is rigor and fairness.
When people join Ribbon, trust has to be built because often they have been burned by prior jobs. So, we train managers to think proactively about rewarding team members. If they’ve earned it, they’re getting a promotion increase before they’ve asked for it. Over time, that builds trust.
Removing concerns about disparities prevents hits to morale and increases trust among the employees.”
What does it mean to be people first in your work? Why is this important?
Gan: Our mission to make homeownership achievable is people-centric and has DEI built into it. If we don’t make sure that our team is treated fairly, then we’re never going to achieve that mission because there will never be internal and external alignment for us as a business.
Co-founder Shaival Shah and I were startup employees for far longer than we have been founders. We wanted to build a company where we as employees would be able to do our best work. I always hated pushing to get a raise. But, due to working for the right people, good things happened to me anyway. I know that’s not true for everyone, and it is unequal for different demographics.
Vakharia: Candidate experience is so important, especially when you think about how many different conversations a candidate is having in a candidate-driven market. So, we apply a people-first philosophy as we bring candidates into Ribbon. We tell them our compensation philosophy from the get-go so we can start building trust right away.
It is making a difference. When you think about the people who have joined — we were roughly 60 people at the end of last year, now we’re hitting 190 — we’ve been able to grow and scale our team rapidly. Leveraging pay transparency has been a huge component of that.
What gets you excited about the mission to build equality, both when applied to homeownership and pay transparency?
Weberman: Giving everyone the same shot at incredible opportunities has a cascade of positive long-term effects. It’s all about leveling the playing field — giving everyone the same chance.
The housing market is really tough to compete in, especially as a first-time homebuyer. Owning your home has so many positive benefits, and conversely, when someone’s housing situation is not stable it has all sorts of detrimental effects.
It was personal for me, too. I felt like I was getting outgunned in the housing market when I was trying to buy an apartment in New York, it really resonated with me to help other people get a foothold. It’s powerful to give everyone that shot at homeownership.
Vakharia: This mission is bold and honorable. I am proud to be a part of this change agent every day. We really have an incredible, diverse team of people coming from large tech to small companies, from prop-tech firms to financial services. It’s exciting to work and learn from that diversity of thought as we fulfill this mission.
Gan: Fairness allows people to do their best work because they don’t have to worry about the rest of the nonsense. Certainly, compensation and promotions matter, but incentivizing the people who make the most noise about it doesn’t incentivize great work.
I’m psyched that multiple employees have used Ribbon to buy a home. That is so magical. We hope that everyone here gets to achieve homeownership at some point — and it’s not lost on us that employment and income is a core factor in that.