Dollars and Sense

I have asked executives at various companies where I worked why one property in my department had a higher number of employees devoted to it than the property where I worked, even though my property had a higher workload and generated greater revenue. That was the easy, socially acceptable question. The other question I did not ask to preserve propriety was how much money the other people parallel to me in the organization made. For many people—including maybe some of your organization’s employees—the burning question is: Am I getting taken advantage of by being paid less for my work than others who are doing the same, or less, work?

Salary transparency is a potential solution to the challenge of employees feeling insecure or disengaged because they worry they are being taken advantage of. However, if it is not handled in a savvy way, it could open up great conflict and resentment. Openness about the salary of others at the same level does not necessarily mean disclosing exact numbers. It could mean saying to an employee: “Your colleague’s salary is within $5,000 of your salary.” Or it could mean saying: “Your salary is commensurate with all those at the same level, adjusting for differences in time with the company as your colleagues who have been with the company longer than you benefitted from the regular across-the-board salary increases we implement every few years.”

Whether you release exact numbers or offer statements that give employees a general sense of how their salary compares to others at the same level, it’s important to put the numbers into context. If your company habitually gives across-the-board 2 percent salary increases to all employees every couple of years, then remind employees of that. Such a company practice would explain why an employee in the same position but who has been with the company for 10 years makes more than an employee who is doing the same work, but has been with the company for just two years.

Another taboo in transparency is the question of how much the person who last held the position an employee is applying for made. That question isn’t as touchy when the potential employee asking is new to the organization. However, when the employee applying for a new, higher-level position is already a part of the organization, and knows the outgoing employee, it can become uncomfortable. Employees in those cases are familiar for better—or worse—with the outgoing employee’s job performance, and could bristle at the idea that they might automatically make less because they are new to the position, despite have a better work track record with greater evidence of productivity.

One other concern could be that those at the same level who make more money, only do so because of their gender and/or race.

Despite the conflict and discomfort that could arise from letting employees know how their salary compares to others at the same level, there are potentially great rewards, according to an article posted in January 2020 by Payscale.com: “For example, at Compference19, Joe Bast, VP of People at Chewse, led a session on how data-driven compensation strategy, salary transparency, and performance-based evaluations has made EEOC and ACA reporting a breeze. In addition, 80 percent of employees are satisfied with their careers, there is low turnover throughout the organization, and the company is experiencing explosive growth. To achieve these kinds of results requires an intentional cultural shift that not every organization is ready or willing to make, but even organizations with a more traditionalist approach to HR practices can take steps toward compensation planning with the intention of improving pay transparency and addressing pay equity.”

Salary transparency is such a big and risky endeavor that the first step might be to pose a question on an employee engagement survey about whether salary transparency is something respondents want. It might be that many do notwant it. My guess is those with high salaries they are happy with would be less likely to want it than those with lower, less-satisfying salaries. If that is, in fact, the case, that alone should tell you something about the value of salary transparency. It’s a way to open the opportunity for a high level of pay to everyone who is doing the same good work and have been with the organization for roughly the same amount of time.

Do you offer salary transparency at your company? Is it something you have discussed? What would be the big challenges and benefits of letting employees know how their salary compares to others at the same level?

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