Commentary

Nike Revamps Compensation Policy, Gives Raises To 10%

Four months after a privately circulated survey about workplace behavior and disparity in pay became a widely covered scandal for Nike, the company is overhauling the ways it compensates people and is raising the salaries of about 7,400 of its 74,000 employees.

“Nike cast the pay changes as part of its effort to maintain a corporate culture ‘in which employees feel included and empowered,’” according to an internal memo sent to staff on Monday and obtained by the New York Times’ Stacy Cowley.

“Two months ago, Mark Parker, Nike’s chief executive, pledged at a companywide meeting that Nike would alter its compensation and management training programs to reflect its goals for equal pay and work force diversity. Mr. Parker apologized to the gathered workers for missing signs of discontent,” Cowley reminds us.

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It all began last year when “a group of women employees at Nike circulated an informal survey to take stock of what they considered to be inappropriate workplace behavior, pay inequity, and gender imbalance at the highest ranks,” the Wall Street Journal’s Sara Germano, who broke yesterday’s story and has led the reporting on the issue, writes.  

At least 11 executives, including the CEO heir apparent Trevor Edwards, subsequently left the company. 

“Edwards and Jayme Martin, Nike’s vice president and general manager of global categories, resigned in March due to what company chairman and CEO Mark Parker said were ‘behavioral issues that are inconsistent with Nike's values,’” writes Charisse Jones for USA Today.

New York Times expose in late April carried the lede: “For too many women, life inside Nike had turned toxic.

“There were the staff outings that started at restaurants and ended at strip clubs. A supervisor who bragged about the condoms he carried in his backpack. A boss who tried to forcibly kiss a female subordinate, and another who referenced a staff member’s breasts in an email to her,” wrote Julie Creswell, Kevin Draper and Rachel Abrams. “Then there were blunted career paths. …” 

“Like several other companies in the U.S., Nike got caught in its own #MeToo movement this spring after a group of women circulated an informal survey that examined disparities in pay and advancement at the Oregon company. Several senior male employees resigned. In May, Nike CEO Mark Parker apologized to employees for cultivating a corporate culture that excluded some of its employees and did not take complaints about conduct seriously,” write Lauren Thomas and Amelia Lucas for CNBC.com.

“Changes to compensation are just the latest attempt from Nike to improve its corporate culture for women. Nike appointed Amy Montagne as vice president and general manager of global categories and Kellie Leonard as its new chief of diversity and inclusion,” they continue.

“It’s not unusual for companies to make changes based on annual pay reviews, and lately, a handful of companies have focused explicitly on pay equity. This year, for example, Citigroup Inc. announced widespread reform aimed at narrowing discrepancies for women, minorities and others who warranted better compensation. Cloud-computing giant Salesforce.com recently spent $3 million adjusting the salaries of 11% of its employees,” reports Even Nova-Williams for Bloomberg.

“Those expected to receive salary adjustments include both men and women and employees across ‘all levels, geographies, functions, and brands,’” according to a Nike spokeswoman. “Eligible employees will continue to have individual bonus targets, such as 10% or 20% of their annual compensation, but the level that gets paid will be uniform. Going forward, the memo states, the bonus pool 'will measure success based primarily on company-wide performance,’” the WSJ’s Germano writes.

With yesterday’s development, Beaverton, Ore.-based Nike seems to have delivered on the fourth of four effective crisis communication tips that Sol Marketing CEO Deb Gabor offered to Footwear News’ Sheena Butler-Young back when news of the discontent within Nike survey was cascading. 

“After you’ve conducted a thorough investigation, determine what you’re going to share [publicly. Most importantly], make sure that throughout the entire process, you’re constantly renewing your commitment to deliver on your promises [and identity] as a brand,” Gabor maintains.

“Elizabeth Tippett, an associate professor at the University of Oregon School of Law, said the pay raise decision was a good one for Nike. She's written extensively on employment law and discrimination, and on Nike this year following the Times’ report,” writes Talib Visram for CNNMoney.

“Sometimes companies are afraid to make a change. Nike was not afraid, and I think that’s really commendable,” Tippett tells Visram.

Enough so that it makes news of its own.

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