It is every business owner’s dream to have a company that runs smoother than creamy peanut butter on hot toast. It is crucial to try and hire the best and brightest and keep those knowledgeable employees happy, but let’s get realistic here for a moment and take a closer look at something that is becoming an issue within many organizations and that is… salary transparency.
Today I’d like to talk about this sometimes controversial aspect and offer you both the pros and cons of adopting this practice. After you’ve read this post I’ll leave it up to you to decide for yourself which option is right for your business.
Even though it’s 2021 and the proverbial glass ceiling has been shattered by many large corporations, let’s face it – wage gaps still exist out in the big corporate world. There is still discrimination between sexes to contend with; ageism where younger or newer employees are paid less than more ‘seasoned’ veterans in a company (and vice versa), and then there’s racism which is the nasty secret that some businesses refuse to look at or acknowledge is happening in the workforce.
Salary transparency can address all of the above because if dollar figures are fully revealed it removes some of the resentment employees feel when they find out that Jake is being paid more than Sally even though their jobs are identical in description and function.
Bennett Conlin, staff writer at business.com writes: “When implemented properly, aspects of salary transparency can boost employee morale as workers appreciate the openness about compensation. When implemented poorly, salary transparency can lead to frustration, productivity loss, and resignations.”
Simply posting job compensation rates on a spreadsheet by the water cooler won’t cut it if you’re considering going this route. The best time to inform your employees that you are a salary transparent operation is during the initial interview process. Also, if you have a written company policy and procedures manual available for all employees to easily access, they can see for themselves in good old black and white what the salary range is for job description XYZ.
Transparent Salary as Motivation
Salary transparency can definitely act as a motivator for those employees who wish to advance within the company. Seeing that a Marketing Manager makes 15% more than they’re being paid in their current job can act as an incentive for them to perhaps take night courses to up their skillsets so they can apply for the next opening in that department. Knowing ahead of time what their potential earnings can be if they apply themselves to higher learning just might be the impetus they need to take the plunge into going back to school.
“Workers are more motivated when salaries are transparent. They work harder, they’re more productive, and they’re better at collaborating with colleagues. Across the board, pay transparency seems to be a good thing” states Kristin Wong in her article in the New York Times entitled Want to Close the Wage Gap? Salary Transparency Will Help. She raises some important issues as to how adopting this practice tends to close the wage gap and create happier, more satisfied employees. But not every company is in agreement.
Salary Transparency Can Be Tricky
Todd Zenger wrote in his article The Case Against Pay Transparency that “Employees who suddenly discover they are ‘underpaid’ become more dissatisfied with their employer and more likely to depart.” Can you say ouch? Losing talented employees because they’ve decided they’re not being adequately compensated in their current position can seriously undermine the efficiency of a company to carry on ‘business as usual.’ And that process ultimately affects the bottom line of the balance sheet.
Another con is the fact that once Bert learns that Frank is being paid more, resentment can set in causing disruption between the two employees. Plus, if they happen to work in the same department (which is highly likely), then you can forget about trying to form a cohesive team to work on projects as it just isn’t going to happen. Also, that resentment can develop into slow-burning anger that might erupt at the slightest provocation between the two aforementioned employees and trust me, the result isn’t going to be pretty.
So. As the owner of your company, you or your HR department should have a sense of how a transparent salary policy will affect both your employee’s morale and productivity. If you feel that it will only cause more harm and discord between your workers, then it’s best to keep those numbers under wrap. However, if you want to create an honest, open working environment that deliberately wants to foster less resentment, consider adopting this interesting and often productive policy.