The effects of making employee salaries public
We’re living in a rapidly evolving world where almost everything is done online and the very notion of privacy seems to be evaporating. Most of us are growing increasingly more comfortable having our lives made public through a variety of social networks. This new open and public approach to sharing information is affecting companies as well.
How so? Many companies are embracing the notion of complete public transparency and disclosure in ways they never have before. Everything is potentially on the table for being made public, including employee salaries—something that up until recently has long been held in the strictest of confidence. Let’s dig deeper into this concept of employee pay transparency, and how it’s affecting the status quo.
The idea behind making employee salaries public is an arguably noble one—more and more companies are seeking to embrace the philosophy that being open and honest with their employees about all things is an effective way to forge more progressive, sincere, and honest employee/employer relationships. It can also help address some unfortunate inequities in compensation that women and minority groups sometimes face, an issue that gets inadequate attention, especially when salary information is kept hidden.
The Wall Street Journal published an article on the good, the bad, and the downright awkward aspects of companies adopting an open salary policy. According to the article, “The idea of open pay is to get pay and performance problems out on the table for discussion, eliminate salary inequalities, and spark better performance… But open pay also is sparking some awkward conversations between co-workers comparing their paychecks, and puncturing egos among those whose salaries don’t sync with their self-image.”
The truth is, as employees we can make a direct correlation between our pay and how our employers perceive and value our contributions, so having this information helps take the guesswork out of knowing where we stand—both as individuals and in comparison with our colleagues.
So, despite its good intentions, when salaries are revealed employers can count on seeing a potentially disruptive effect—while those employees who are at the top of the pay scale will likely be grateful and appreciative (unless they feel that they’re still not being paid enough compared to their coworkers), those at the bottom of the salary food chain can count on being unhappy and confronting their bosses to help remedy the situation. Then, if balance regarding compensation is not reached, it will likely lead to some employees seeking better opportunities elsewhere. Making salary information public can also lead to potential awkwardness and strife among colleagues who sit at opposite ends of the compensation spectrum, which can adversely affect productivity and motivation.
It seems clear that although there are some truly good potential reasons for publicly disclosing salary information, there are some significant potential pitfalls that employers should be on the lookout for when making the decision to do so. Progressive employers who react quickly and decisively to address issues regarding pay inequity will be in the best position to quell any potential disruptions, while those who are slow or late to respond may create some tension among their staff or lose some valuable talent to competitors who are willing to pay your employees what they feel they deserve.
Perhaps the best approach for handling the issue of whether or not to publicly disclose salary information is to plan carefully—and proceed with caution.