Dear Octonauts,

An article was published last week by the Australian Financial Review (AFR) about pay equality as measured by the Australian Government’s Workplace Gender Equality Agency (WGEA), which included Octopus Deploy, along with several other Australian tech companies. The conversation has gained steam recently and you’ll also see mentions of Octopus in various social media posts commenting on the WGEA statistics.

The goal of WGEA and this legislation is to create a conversation in our society about why work performed by women is often valued less than work performed by men. This is absolutely a vital conversation to have at the societal level. I understand that steps like this and the AFR “naming and shaming” employers who underpay women or undervalue their contribution are often necessary to create change at the broader societal level.

Per the WGEA report, our uncontrolled gender pay gap in Australia is 30%. At a global level, our uncontrolled gender pay gap is actually 16%. However, I don’t think either of these statistics tells an accurate story of Octopus as an employer for women.

When looking at an individual company, a statistic like the gender pay gap, I would argue, is not very actionable. At best, it begs the question: there is a gap, so why does the gap exist? This leads to assumptions, and each of those assumptions can be tested in isolation. To form any kind of view of the company or the experience of women in the company, you can ask things like:

• Are people paid the same for the same work?
• Is there a gap between people in the same career pathway based on gender?
• What is the overall representation of women in different career pathways?
• What is the hiring profile of the company like - e.g., what % of roles require technical skills?
• What steps does the company take in attracting, promoting, and retaining women?
• How out-of-step is the talent pool at the company from the wider external talent pool it hires in?
• Are women well-represented in leadership positions?
• Does the company have policies and a culture that supports women?
• Is the employee experience of women at the company markedly different from that of men?

The gender pay gap, as published by WGEA, only includes Australian employees. A company like Octopus operates globally - of our 5-person executive leadership team, only two are based in Australia. Which, with Australia being our R&D hub, is mostly engineering-dominated and only reflects 58% of our workforce. I think it’s more meaningful to look at these questions for the entire Octopus global group.

Our commitment is to build a workplace where every Octonaut can build an incredible career regardless of gender or any other attribute, with equal opportunity for all. We could be better and are constantly iterating and improving on this journey. Rather than seeing a statistic and making assumptions about what the statistic must say about our workplace, I want to give you full context and answer many of the questions above so you can make up your own mind.

At Octopus, people are paid the same for the same work, with transparency

Our open, transparent compensation tables and career ladders ensure we pay everyone precisely the same for the same work, regardless of gender, race, socio-economic background, or any other factor. These tables are published internally for all Octonauts to see exact dollar figures over 5 job levels (Junior to Principal) and 3 maturity ratings (Maturing, Performing, and Exceeding).

We introduced a systematic approach to compensation almost a decade ago. It wasn’t always perfect and people fell in gaps - for example, we had people who were up for review around the time we did a hiring freeze and didn’t correct it fast enough, though we did eventually spot and correct it. In 2023 we decided to open these compensation tables up transparently for all Octonauts to see, which puts more power in the hands of people to spot variances themselves, as well as to see how future promotions might unfold. This transparency not only ensures that people are paid the same for the same work, but that they can check for themselves.

The criteria we use to evaluate performance are well-defined in our larger departments, with written examples of what behavior and results are expected at each level. This is something we have room to improve on - some departments (usually those with a small number of employees) have some work to do this year in defining their career pathways better.

The gap is also generally minimal at the entire department level

When we take the average pay of men and the average pay of women, in, for example, engineering as a whole, and compare them regardless of seniority (i.e., including the most junior of employees through to VP’s), we also see minimal gap.

For example:

• In Engineering, our largest department with 77 people worldwide, the gap is -1.15%. I think this is quite impressive, given this includes everybody from the most junior engineers to the most senior VPs in engineering. In other words, if we only employed software engineers, Octopus would have no gender pay gap at all.
• The gap in Support, Design, and Solutions Engineering is also narrow (<1%)
• Other departments have swings that vary - in sales, it is 25% (men in sales on average are paid more); in marketing, it is -28% (women in marketing on average are paid more). These differences have to do with the mix of job levels/seniority/experience.
• In our smaller departments (10-15 people or less), we see more significant gaps because one leader’s pay can greatly affect the average, but these gaps aren’t in any particular direction.

What causes our global uncontrolled gender pay gap, then?

The 16% global uncontrolled global gender pay gap appears once we combine all departments.

Specifically, technical roles, or roles requiring experience in a technical domain (engineering, product, sales, sales engineering) are male-dominated, both at Octopus and in the wider industry.

To be clear, it’s not that women in these roles are paid less than men - certainly not for the same work, and even in most departments when looked at regardless of seniority - but simply the fact that these roles are male-dominated. In contrast, non-technical roles pay less and tend to be more mixed-gender, impacting the average male and female salary.

For example, in sales, the department-wide pay gap (regardless of seniority) is 25%, while for marketing it is -28%. These two gaps in some way cancel out (at least, to me, they don’t say that “Octopus values men’s work more than women’s”). But we have more people in sales than in marketing (29 vs. 11), and sales is 25% women while marketing is 45% women, and sales on average pays higher than marketing. This combines with a pay gap due to gender representation in career pathways.

All tech companies are different. Some may have technical software teams, but the product is designed to be used by HR or finance teams or designers, and therefore not all employees need to be technical. Their R&D teams need a technical background, but their sales and marketing teams don’t. Octopus is on the far side of the tech spectrum. We sell a highly technical product, to technical buyers, and supporting it, selling it, and marketing it often requires some background or at least a strong demonstrated interest in technology. I estimate roughly 75% of jobs at Octopus require or definitely benefit from a technical background.

In the past I have said “Octopus doesn’t have a gender pay gap; we have a job pay gap”, and what I mean by this is that even if Octopus was 100% one gender, we would still have a gap between the pay for technical vs. non-technical roles, as this reflects the competitive talent markets we hire in.

We’re working to create more technical careers for women

There is a good debate to be had about what the ideal gender representation in different career pathways looks like. My view has consistently been that our obligation is that the overall talent distribution at Octopus should broadly match the overall talent distribution of the countries and talent pools that we hire in.

We’d love to get more women into technical roles. Like many companies, we slowed hiring in 2023, but towards the end of the year and beginning of this year, we are ramping up and actively taking steps to ensure we’re continuing to build a diverse and inclusive team. This is something I don’t think we’ve fully achieved, but it is something we have always been working on for many years now.

For example, for the longest time, we asked software engineering candidates to do live coding during an interview. We tried to create a relaxed and positive environment for this but found many introverted or just nervous candidates still struggled to write code live in the interview setting. In around 2020 we changed our interview process to allow candidates to write some of the code before joining the interview, so they could come in with more confidence. While everyone is different, this seemed to make women candidates more comfortable and the number passing this phase of the interview increased (we noticed it also made a more comfortable environment for other candidates too). The old way we did the interview wasn’t creating an environment where all candidates could show their true skills.

We continue to experiment and evolve. Some of the things we are currently doing:

• Leadership expectations shared to actively improve our female gender balance in R&D (no quotas, but intention at this stage)
• All job ads are run through a bias checker
• We actively encourage diverse candidates to apply (even if they don't have 100% skill fit)
• Ask me Anything links shared with candidates
• Managers are starting to add 'videos' to humanize the process
• Active screening in and search for diverse candidates (TA + Mgr)
• Leveraging Culture Add vs Culture Fit into screening
• R&D managers leveraging their networks to spread the openings
• Advertising on women and underrepresented group job boards
• Budget set aside for sponsorship of women in technology groups and hosting and sponsoring community events
• Company-wide bias and allyship training

For R&D specifically, you can read more about what we’ve done recently in our SVP R&D Colin Bowern’s LinkedIn post.

That said, even with the best efforts in this space, it’s unrealistic to expect technical roles at Octopus to become 40-50% women - necessary to close the uncontrolled gender pay gap - and attempting to do so would probably require a lot of bias in the opposite direction. Also, the work we are currently doing - like actively hiring recent women graduates - will likely increase the gap in the short term as junior salaries skew overall salaries down.

Women are well represented at Octopus in leadership

Each department at Octopus is different, but generally speaking, women in leadership are well represented at Octopus.

• Women make up 26% of all Octonauts
• Women make up 33% of all managers at Octopus
• 40% of our board of directors seats are held by women

Promotion & performance review outcomes

Beyond gender representation in technical roles and pay equality, we think it’s important that women have the same opportunities to progress in their careers as men.

Octopus has had some form of systemic performance review process for close to a decade. Up to 2022 we didn’t formally track performance review outcomes by gender, but since January 2022 we have data about promotions. Each cycle is different, but generally speaking women and men get promoted at similar rates over the last two years.

In our last performance review cycle, we started tracking this more formally, and we shared the results company-wide:

• The rate of promotion of men and women was roughly equivalent
• Performance review outcomes were fairly evenly distributed

Aside from bias/allyship training done earlier in the year, we didn’t take any active steps to ensure this would happen, it happened naturally. Reviewing this and sharing the anonymized results with the whole company is something we started doing in our last performance cycle and something we plan to continue.

A look back at terminations over 2 years also shows no statistically significant differences in women retaining their roles at Octopus vs. men.

Performance review processes are something we’re always iterating and looking for feedback on.

Octopus is a great employer for women

In addition to the things we can measure, there are a lot of other reasons why Octopus is a great workplace for women:

• We work from home
• Compensation is transparent
• We have generous parental leave and flexibility around returning to work
• We have generous annual leave

Octopus has been a fully remote-first company since about 2016, so working asynchronously, judging each other by what we deliver, and treating each other like adults has been part of our DNA since long before COVID.

All Octonauts also benefit from some level of flexibility around the hours of work depending on role. Whether it’s picking up kids from school or looking after elderly parents, Octopus provides a very supportive environment that acknowledges that life happens and everyone has different needs.

Summary

As I said at the opening, I think that the gender pay gap conversation is an important one to be having at the broader societal level. The raw gender pay gap number published by WGEA (uncontrolled and Australia-only) and the ‘name and shame’ articles being published are blunt but probably necessary to create the kind of society-wide change we all want.

But when evaluating an individual business, I think it’s a very problematic statistic to use. Many people assume that for a gender pay gap to exist, the company must clearly be doing something wrong. That it needs to “do more”. That it is a cop-out to “blame it on the shortage of women in tech”; clearly, we must have structural biases that prevent women from getting jobs in the first place, hold them behind on promotions, or prevent them from entering into leadership roles.

As you can see from the data I have shared above, none of those assumptions hold true at Octopus. Are we perfect? Absolutely not. Are we suffering from the kind of systemic unfairness you imagine when you hear 30% gender pay gap in the media? I would also unequivocally say no. Actually, I think Octopus is a great example of doing most of the important things right; most of the things gender pay gap advocates argue for, Octopus already does in a world-class way. Salary transparency, women in leadership, flexible working, actively taking steps to increase women in technical roles. Yet despite this, a pay gap exists.

While the main body of the AFR article was written in a particular way which I think was unhelpful, the AFR author's post on LinkedIn was, I think, generally correct:

Among Australia's tech companies, male-dominated engineering and sales teams have contributed to a median industry pay gap of 24 percent. Solutions? Getting more women into technical roles - and keeping them there.

We’re working hard to ensure Octopus is and remains a place where women can thrive as well as men - small in number as they may be today - whether in technical roles or not. We sell a very technical product to technical buyers and I expect that despite continuing to try to do everything right, we’ll always have some kind of pay gap because of the general distribution of genders in technical roles, and how it’s calculated.

Thank you for your contribution in helping us make this happen, and as always, I welcome any input you may have on how we continue to improve. If you have any questions, please do not hesitate to reach out.

Paul