Salary is one of the most sensitive topics in just about any workplace. In fact, many companies have rules in place that make salary matters confidential between the employee and only the relevant people in the company. Employees discussing salary information among themselves is usually regarded as taboo.
But issues such as the gender wage gap, where women are paid less than men for the same work, are coming to the limelight, leading to calls for greater transparency in pay. Several countries, including the UK, Austria, and Belgium, have passed laws requiring companies to publicly disclose the wage differences between their male and female employees.
Some workplaces, in the interest of equality and transparency, have opened up their compensation information to the public. A cultural shift is happening where millennials, who are most open about sharing information online, do not mind or even expect that their compensation details are disclosed to the public.
One example is the social media startup Buffer. Its employee salaries and wage formulas are accessible to all employees and the general public. Meanwhile, Figure53, another startup company, has a flat pay structure where all employees, including the founder, have the same salary. The amount was voted on by all staff members. Social news networking site Reddit has banned salary negotiations in an attempt to close the gender wage gap, and other companies such as Jet.com and Magoosh have implemented similar policies.
According to Pamela Murray, senior human resources consultant for Willis
Towers Watson, companies should assess where they lie on the pay transparency spectrum and try to strike an appropriate balance. She advised that being more transparent with pay information, especially with employees, will create an environment of goodwill between management and employee, as well as help narrow the wage gap among the genders.
However, there are pros and cons to transparency. Transitioning from a confidential system to a transparent one will not be an easy task, especially for large companies that have many specialized roles. While transparency usually is associated with better employee motivation, it could backfire, as some employees may feel undervalued once everyone’s pay information is revealed. Each company must seriously consider them before making a shift on the transparency spectrum, Murray said.