Psst, Your Pay is Showing
In the name of creating tighter bonds and engaging employees, some small companies have taken to granting access to more and more private information. Information like an individual’s salary and performance reviews is getting shared with employees. Some say that it builds trust and engagement when employees know exactly how their efforts are effecting the company as a whole. This open enterprise concept encourages employees to strive harder for that higher salary that they now know is attainable, or go the extra mile that got their co-worker that bonus.
To be clear, pay transparency does not necessarily mean that every person in the company knows what each employee is paid. It actually only makes clear an average pay for employees at differing levels and retention rates within that specific company. Employees can then see where they stand in relation to others.
One intrinsic flaw to this open type of business model is that when employees are granted access to things like company finances, hiring decisions and investor agreements, they are merely presented with numbers and facts. Do they know how to read those agreements, how to interpret those numbers, or all of the factors that came into play for a specific hire? Sharing this information without knowledge and context can present some problems. After reviewing the numbers and performance data, a lot of these half-informed employees wish to throw in their two cents based on their own interpretations; this can slow things down and become an annoyance. Putting all of this information on blast is often seen as an invitation for criticism or unwarranted opinions.
To combat this problem, a lot of companies are requiring their workers to take courses on interpreting the data and meetings on understanding company decisions. Employees in companies using this model have reported feeling more a part of a team when they know exactly what their work has done to the impact of the bottom line. So this new transparency model not only holds workers accountable, it holds the company accountable as well. When profits line up with the amount of engagement, employee satisfaction can sky rocket.
This model also promotes employee accountability, not only to the organization, but on a more personal level. When a worker does a good job and it is reflected in a public performance review, it is also seen as recognition. When a worker is doing poorly, first of all, it’s probably no shock to anyone, but secondly, the review can be viewed as a call to action, or even a warning. This creates all the more incentive to perform.
The goal here isn’t to post salaries and reviews in the hopes that engagement will ensue. The companies that have implemented this transparency model have spent time and resources on making it work for them in very specific ways. HR professional Gail DeLano says, “Targeted actions by management to increase the degree of transparency can result in more efficient operations, savings in time and money, and increased company revenue because employees are more engaged and satisfied in their jobs, and offer their discretionary effort.”
If you would like to learn more about pay transparency, here is a white paper from KnowledgePay (registration required).
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