4 Lessons from Implementing a Living Wage
B Corp Boldr Rolls Out Living Wage Goal in the Philippines
“A rising tide lifts all boats” is a metaphor that means when a community shows material positive improvement or grows, everyone benefits. The same way a rising tide in the ocean raises all boats, a growing economy or company is meant to benefit everyone in it, regardless of their specific circumstances. This was the kind of upliftment Boldr envisioned when we made it our goal to introduce a living wage.
However, when we set out on a mission to pay each team member a living wage, there were a couple of knock-on effects that we did not anticipate. While these learnings presented some challenges, they did not derail our journey toward achieving a living wage in all the countries we operate in.
“All team members will be paid a living wage by the end of 2023.”
This was the goal we set at the beginning of the year. In the business process outsourcing (BPO) industry, which historically kept wages as low as competitively possible, we committed to paying wages that enabled all team members to live dignified lives. We studied all the approaches and methodologies for determining a living wage. Having teams in Manila, Tacloban, Cape Town, Hazyview, and Merida, where readily available living wage baselines have yet to be established, added to the complexity. After two years of research, we decided to execute the first step of our phased approach, which was to roll out a living wage for our Philippine team members. We adjusted the salaries of team members who we found were earning below the prescribed living wage. This move affected 9% of our team size in the Philippines.
To put this change in perspective, the average salary of an entry-level BPO worker in the Philippines is PHP 15,407 or USD $282. This hovers minimally above the national minimum wage that amounts to PHP 12,540 or USD $229.50 (at PHP 570 or USD $10.43 per day) for a full month of work. BPOs also hire service personnel and custodians who are typically paid the minimum wage and, given the nature of their work, do not have a lot of options for upward mobility. Both the average entry-level salary and the minimum wage fall short of the prescribed living wage, which is PHP 25,000 or 457.53, by nearly 50%.
This means both entry-level and minimum wage earners earn half of what they need to live a dignified life in the Philippines. When we looked at our Philippine team members who were not yet earning a living wage, we grew excited about the impact created by adjusting their salaries to a living wage. We are proud to be the first BPO in the Philippines to implement a living wage through an initiative that was a learning experience. Here are four crucial lessons we learned from our recent experience.
Communicate all the practical changes related to a living wage rollout.
As with any kind of organizational change, a living wage is essentially a form of change management with implications to a company’s resources, but, more importantly, the expectations and understanding of the team members involved. Eager to start with our dream goal of paying a living wage, Boldr implemented the adjustment before our teams received the appropriate context behind the change. Understandably, this led to a series of clarifying questions from affected team members.
The key takeaway from this experience is to communicate the changes related to a living wage early and intentionally to every stakeholder involved. Communicating the practical implications of moving team members to a living wage reduces ambiguity and leaves less room for misinterpretation.
Anticipate the impact of introducing a living wage to other salary bands and future hiring.
We learned that establishing a living wage floor not only affects the layer of team members who need to be moved to a living wage but also the next layer or salary tier level. Closing the wage gap for non-living wage earners must consider the valuation of the roles that follow or are close to the living wage baseline. This means that the change required us to revisit and even adjust the salary band above the living wage to normalize the differences between the two bands. The positive outcome of this unanticipated knock-on effect was that another 6% of our team will be able to benefit from the living wage adjustment, bringing the total share of impacted team members to 15% of our Philippine workforce.
Our key takeaway from this is that forecasting the costs of implementing a living wage in our next regions will factor in adjacent salary bands. By extension, a living wage change impacts future hiring decisions, particularly entry-level roles because the starting rates are expected to be higher than market rates. Practically, this change will reflect on the salary rates posted on job boards. It is crucial that the living wage consideration is communicated as the rationale behind this salary point, which makes it crucial to ensuring alignment with the hiring team on this initiative.
Continue creating awareness and education about the living wage.
Empowering our teams with an understanding of our commitment to a living wage is vital. This means continually advocating and communicating the impact of a living wage through real-world examples. Some of the practical ways we’re doing this are by holding forums for team members to ask questions, creating and disseminating explainers and content that differentiate concepts such as living wage and minimum wage, simplifying the methodology, and breaking down living wage to its component parts in terms of what expenses are accounted for.
Involve your clients in your living wage journey and milestone.
It is essential to explain the living wage concept to clients and to help them understand why it’s important for their extended teams. Creating awareness for clients and giving them the opportunity to celebrate this with their teams can have three positive outcomes:
- Setting an example of how clients can implement a living wage in their own context.
- Creating more transparency with regard to our salary-setting practices.
- Establishing a strong case for considering a living wage in present and future pricing models.
Involving clients in one’s living wage journey means sharing the outcomes and stories that come out of implementing a living wage. Let them know how team members are doing and how paying a living wage has impacted their lives. Keep them updated on any changes or improvements you make to your business as a result of paying a living wage. Involving clients in a living wage decision can be an excellent way to build trust, transparency, and support because it demonstrates that you value their opinions and are committed to making a positive impact on your team members’ lives and their community.
These lessons are relevant for future change management.
Implementing a living wage is not a straightforward process and does not end with having all team members on this wage level. This change was the culmination of nearly two years of research and analysis, yet its practical application taught us more and will serve as a guide for the next countries where we will be rolling out a living wage. The critical lesson that this experience has reinforced is that even well-intentioned initiatives require all the elements of proper change management: early and deliberate communication, foresight into the operational impact a policy such as living wage has on succeeding pay grades and recruitment strategies, ongoing awareness building and dialogue, and a focus on ensuring that clients are involved and have the opportunity to celebrate this decision.
Boldr is committed to continuously refining our living wage methodologies and baselines. We have a formal partnership with the Ateneo De Manila University in the pursuit of building our own framework for evaluating the living wage annually for our Philippine teams. This is a pioneering piece of research as it is slated to be the first BPO-focused living wage designed to guide other BPOs to implement a living wage in their own companies and drive the much-needed change in the industry. In South Africa, we are connected to the University of Cape Town and are connected to the Living Wage Coalition of companies that are also committed to or have already rolled out a living wage in their contexts. We have also begun our preliminary research work as well with our teams in Mexico, through our partnership with Anker Research Institute.
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B The Change gathers and shares the voices from within the movement of people using business as a force for good and the community of Certified B Corporations. The opinions expressed do not necessarily reflect those of the nonprofit B Lab.
