Imagine if one day you walked into your workplace and found your name, along with all the other names of your co-workers, written on bright Post-it notes and your salary rates clearly written there too? Now, include all the salaries and perks that your supervisors, the CEO, and even the janitor displayed for all to see. How would this experience change the way you view your company?
For many, this type of situation could induce a strong sense of unfairness, depending on how well the company has designed it’s compensation planning. However, some experts think that complete transparency about wages and benefits is a good thing – that it can even produce high levels of employee morale and productivity.
What do you think? (Be sure to leave your comments below)
Not Publicly Disclosing Salaries
There are some who believe that revealing employee salaries is not such a good idea. First of all, people are hired at different times, each starting at a rate that was fair at the time. Over the years, salary rates can change for a number of reasons, including industry demands, technology knowledge needed, and cost of living fluctuations. Secondly, employees often have widely different skillsets and backgrounds, meaning they may be viewed as more valuable in the workplace. Other reasons can include:
- Fear of losing employees to a competing company that compensates better
- Concerns over claims of pay disparity by a current or former employee
- Desire to protect all information that belongs to the company and it’s partners
Up until recently, there have been certain labor laws that protect employers from discussion about salaries at work. Back in 1935, the National Labor Relations Act gave employers the power to limit or ban their employees from discussing pay when they should be engaged in their work tasks. However, it’s important to note that employees are free to share their salary and compensation information with others when they are not on the clock. They can also research salaries and ask for the best rate when negotiating for better wages and benefits.
Making the Case for Salary Transparency
Although the US Senate recently blocked it, the Paycheck Fairness Act prohibits federal contractors from retaliating against workers who discuss their wages. If the PFA successfully passes into law, it will make it illegal for all employers to take adverse action against an employee who talks about their paycheck with other employees. This is just one of several initiatives to make pay fair for all, to reduce pay disparities between genders and minority groups. Other arguments for making pay transparent include:
- Ability to prove that the company is paying fair wages for all employees
- Reduced claims of pay discrimination from current and former workers
- Leveraged salary data to attract and retain a better workforce
Essentially, complete transparency can lead to employers being held to stricter guidelines when assigning salaries to certain jobs and to individual employees. Why? If salaries are openly displayed and discussed in the workplace, there is no room for error. Employers will have to offer fair and equitable salaries based on job responsibilities.
To recap, transparency can be beneficial for employees because they know what they are earning and they also know what the person sitting next to them is earning too. Salary transparency can also be good for the business because it can prove that it is paying all workers a fair and equitable salary.