Is a transparent wage policy right for you?

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Crystal Spraggins

A very common line in policy manuals is one urging employees not to share wage information with coworkers. Although such a policy could run afoul of the National Labor Relations Act (NLRA), which guarantees employees the right to congregate with other employees for their common good, many employers apparently believe the policy’s inclusion in their manual is worth the risk. After all, if everyone knew what everyone else was making, all kinds of problems would follow. People would be jealous, and management would be inundated with complaints and requests for pay increases. There could even be lawsuits.

But more than all that, our culture teaches that money matters are private. And that’s the way it should stay, right?

Not so fast…

Recently, startup Buffer, which allows users to schedule social media updates, announced that it had adopted an open salary policy. That’s right. Every Buffer employee knows what every other Buffer employee earns, and every employee also knows the formula for how salaries are determined. Further, just to prove how much Buffer means business (I’m assuming), all the salaries have been posted on the Internet for the whole wide world to see. Pretty interesting, huh?

But why?

A core cultural tenant of Buffer’s is to “default to transparency” because transparency leads to trust, and the powers that be at Buffer value trust. Actually, when you put it like that, it’s pretty simple.

Could this work for you?

Government entities and larger educational institutions have long incorporated public salary ranges into their compensation philosophies, and private non-profits are required to disclose the salaries of key personnel on their annual IRS form 990. However, private for-profit companies haven’t tended to warm to this idea at all.

Benefits of an open salary policy

Some argue that wage transparency should be legally mandated. Until then, supporters say, wage inequality will continue to impede women and other minorities. That’s a fairly radical idea, but there’s probably some truth to it. If employers knew that their wages were accessible to anyone within the company, it’s only logical to assume that less discrepancies would exist. (According to the Department of Labor, complaints involving the Equal Pay Act represented 1.1% of all claims filed in 2012.)

And it’s also true what Buffer says about transparency enhancing trust. Transparency also tends to increase accountability. Finally, an open salary policy might attract progressive, forward-thinking employees who like the idea of working in an organization that entrusts employees with information that other companies literally keep under lock and key.

Summary

Wage transparency is an intriguing idea, and organizations with a proven track record of openness might benefit greatly from the adoption of a wage transparency policy that has the potential to severely reduce the angst associated with who earns what, and more importantly, how wages are determined.

However, for all that Buffer seems to be doing right and despite how consistent an open wage policy is with the company’s culture, it’s unclear how long this particular policy will remain in effect. Right now, Buffer’s staff is very small. What will happen as the organization grows and becomes more complex? Will this policy change, and if so how? Only time will tell.

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