Story of Compensation - The Boat and the Sail, a Story of Equality and Equity

Pay equality and pay equity have been in the news often lately. This is a little story I like to share to explain the difference.

Many years ago, in a world very similar to our own, trees could speak and move. One group of trees lived very near the shoreline of a seemingly vast ocean. Occasionally a brave young tree would bravely dive into the sea with the goal of learning what was on the other side. They never ever returned.

Some believed that these swimmers so loved what they found on the other side of the ocean that they had no desire to return. Other’s believed these trees to be fools who were lost in an endless sea forever. Still, every year a few adventurous individuals jumped into the water to explore.

After one unusually harsh winter, a charismatic tree announced a new plan. Rather than travel alone, he recruited other interesting trees to travel the ocean as a group. On a warm spring morning, they gathered at the shore, jointed limbs, and clambered into the water.

The tide was high and as it receded, they were pulled away by the currents. They clung together tightly and decided to make up a name for their merry band. After some serious, and not so serious, discussions they decided to call themselves “The Boat.” (there is no record of why they chose this term.)

The Boat floated farther and farther away from shore over many weeks. They passed the occasional small island with a lonely tree or two. They said hello, but did not stop for fear of losing their grip to each other.

Then they stopped. The currents stop pulling and pushing them and they just sat there in the water, getting increasingly wetter.  The tree who convinced them to join together in the first place asked for ideas on how to start moving again. The trees were equally quiet for many days then two younger trees at the very edge spoke up.

“Do you remember how the wind use to make us sway when we were on land? The breezes would push their way through our branches, making us whisper to each other. What if a couple of us climbed on top of you and stood up tall enough to catch the wind?

The leader thought they were crazy and told them they may get blown into the ocean. But he also agreed it may be their only chance to get moving again. The young trees slowly climbed to the middle of the boat and stood tall. The boat was not as stable as the land used to be and standing was scary. But then the wind came by to say hello.

Rather than letting the wind pass through their leaves and branches, the tall young trees grabbed hold of it. They creaked and bent with the effort but before long the boat was moving. In fact, it was moving faster than ever before! The two trees decided to call themselves The Sail (again, there is no explanation).

In just a few days The Boat had made it to a new land on the other side of the great ocean. Everyone hailed The Sail as heroes and let them have the prime spot on the shoreline to dig their roots back into the soil.

The moral of the story. Everyone gets an equal chance to be part of the boat. (Anything less is inequality.) This lets everyone have a better chance of reaching their goal. Equity is the sail. Anyone can choose to be the sail but only some will and can do this. The boat and the sail get to the same goal equally. Those who are the sail equitably receive a bit more.

Equality is easily definable and easy to see. Equity requires a more nuanced perception. A basic rule of thumb is that if your pay programs don’t feel equitable, they aren’t.

Dan Walter is a CECP, CEP, and Fellow of Global Equity (FGE). He works as Managing Consultant for FutureSense. He has three metaphors for every occasion and is a leading expert on incentive plan and equity compensation issues. He has written several industry resources including the only resource dedicated to Performance-Based Equity Compensation. He has co-authored ”Everything You Do In Compensation is Communication”, , “Equity Alternatives” and other books. Connect with Dan on LinkedIn. Or, follow him on Twitter at @DanFutureSense.