Why Companies Should Make Their Pay Transparent
Jennifer Deal
Jennifer Deal is a senior
research scientist at the Center for Creative Leadership
and an affiliated
research scientist at the Center for Effective Organizations
at the University
of Southern California.
She is co-author of “What Millennials Want from Work.”
In the past, it was difficult
for the majority of employees to know how much people
in their organization or in
equivalent jobs elsewhere were paid.
Discussing pay was frowned upon in the workplace (and in some
cases banned outright),
and people felt protective of their privacy.
But today, because of
technology and changing cultural norms regarding
sharing personal information,
everyone knows a great deal more about how much others
are paid. Employees have
access to online systems like Glassdoor.com that provide
crowd-sourced information about compensation searchable by job, organization,
and industry,
in markets around the world.
Individuals can look at equivalent jobs in their organization
and with competitors, locally
or nationally, and see how their pay stacks up.
In fact, in our
research, 60% of millennials and 53% of older staff said they use these
sites.
In addition to online
resources, we find that staff now discuss their compensation
with other people directly,
in person or electronically. Millennials are most likely to discuss
their compensation with their
parents (71%) or their friends (47%),
but are less likely to discuss their
compensation directly with co-workers (38%).
In comparison, older staff are
substantially less likely to discuss their compensation with co-workers (19%),
friends (24%) or parents (31%).
In the past, hiding pay
information was a technique leaders believed reduced pay dissatisfaction. But
today, with the compensation information floodgates open, workers can use that
information to decide which companies they want to work for. Though much of
that calculation
is about the actual dollar
figure and parity with other organizations,
part of the equation is about
the perceived openness and honesty of the leadership.
And those who aren’t honest
and transparent don’t win.
So leaders have a choice: Be
open about pay, or leave a pay-information vacuum
that staff will want to – and
can – fill. Distrust is toxic within organizations, and employers
who choose to hide information
about compensation run the risk of staff thinking
they are being deceptive – or
worse. When people are believed to be hiding something,
it makes others wonder what
they’re hiding and want to investigate further. Recently some organizations
have been perceived as discouraging staff from sharing information about pay,
which actually caused even
more staff to share pay information, and many to come to the conclusion that
the leaders of the organization were trying to hide unfair compensation
practices.
Leaders who choose salary
transparency reap the benefits of everyone at the organization
having a clear understanding
of what the compensation situation is, and not feeling as if
the organization is trying to
hide something, which increases trust. Pay transparency is likely to be
especially important for those organizations that are trying to narrow the pay
gap between groups like men and women, as it shows the leader’s commitment to
pay equity extends beyond rhetoric, and all the way to providing real information
showing what is actually going on
with pay in the organization.
If an organization pays well,
leaders should leverage that information to increase trust
within the organization and
build their reputation, while making sure their workforce isn’t always shopping
for better compensation elsewhere. And if a company is just at the market norm,
being forthright about it may
win points from employees who will feel respected and in the loop.
http://blogs.wsj.com/experts/2016/03/14/why-companies-should-make-their-pay-transparent/?utm_content=bufferea3b0&utm_medium=social&utm_source=plus.google.com&utm_campaign=buffer
Tom Fisher
going waaaaaay out on a limb
here - the author has never made a payroll in her life.
George Gmach
Secrecy can hide poor compensation
administration or might be a legitimate factor when protecting the employer
from predatory competitors. There are cases where industries,
like government, have pay
transparency. The circumstances and competitive environment of each
employer are different and so it is hard to generalize about whether
transparency is good or bad from the employer's perspective. It is easier
to generalize about the benefits to employees.
Caution should be used when
viewing free data, whether crowd sourced or published by recruiters. As a
retired compensation research professional, I have observed numerous cases
where information does not
align with professionally gathered data or is so broad that it is useless.
Free data may lead to unwarranted dissatisfaction.
James Ewins
The terms of my employment
are voluntarily agreed only by myself and my employer...
and of no business of anyone
else. It is a contract with NO third parties involved.
Why should either of us wish
to make it known? Where would be the advantages to either?
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