Is Making Salaries Public Too Transparent?
You walk into the lobby of your office and get into the elevator, just like every other weekday. The elevator music quickly rings the Monday bell as you ride the cabled box all the way to the ninth floor of the building. As you get off of the elevator and walk into the break room to put your turkey sandwich in the fridge, you notice something a little different on the bulletin board. There’s a spreadsheet with everyone’s name and salary. You notice that Joann makes more than you — even though she started around the same time as you and works in your department, doing the same type of work. How does this make you feel?
Since the enactment of the 1935 National Labor Relations Act, employers have had the right to keep salary and compensation benefits under the rug.The act even went as far as enabling employers to ban workers from discussing their pay with fellow employees when they are on the clock. What happens however, when organizations disclose pay or benefits to your coworkers?
To Disclose or Not to Disclose
For a good example of compensation transparency, look at SumAll. It has adopted a policy of complete transparency, compensation included. As controversial as it may seem at first, there are reasons to enforce a full compensation transparency strategy as part of the company culture. If an organization chooses to participate in a policy of disclosure, it has to create a compensation philosophy. In the tradition of transparency, the organization would need to communicate this new philosophy to employees to perpetuate the open lines of communication up and down the ladder of leadership. Doing so helps a team understand the importance of their role in the organization. In hopes of reducing the gender gap in compensation, reasons for the new policy include:
- substantiated evidence the organization pays all employees fairly;
- reducing unfair compensation disputes;
- and ultimately attracting and retaining a better workforce.
Some experts believe that full transparency helps to remove workplace secrecy. While this may be the case, it can also create some problems among employees. Some of the common reasons employers keep pay undisclosed include:
- variance in skills among employees causing concerns over claims of pay disparity by current or former employees;
- potentially losing workers to other competitive organizations;
- and protecting company information.
What Will Make It Possible?
The proposed Paycheck Fairness Act would, if passed, update the Equal Pay Act of 1963. Why does that act need to be updated? There are few tools to enforce the act; subsequently, any changes made possible by the act are inadequate.
The Paycheck Fairness Act could change the way employers evaluate employees. Because they would be able to make comparisons between two like-minded and similarly skilled employees, there is a chance for an increasingly competitive instead of cohesive workplace. Some of the changes of the Paycheck Fairness Act include:
- supervisors would need to demonstrate employee compensation differences based on factors other than gender;
- the act would interdict employers from retaliating against employees who ask about wage practices;
- employers would be able to compare employees within the same geographical area in order to determine a fair compensation and employ the Department of Labor to gather related information;
- the act would strengthen penalties for violations of equal pay;
- and the act would authorize more training for Equal Employment Opportunity Commission staff to handle wage disputes more effectively.
Ultimately, disclosure and transparency are organizational choices. The leadership has to understand the parameters of the Paycheck Fairness Act. The new policy would make companies adopt a level of transparency they might not have otherwise thought about. However, that transparency could very well aid productivity levels among employees. On the other hand, it could dissolve teamwork into a battle of “she did,” “he did” in an argument for credit.
A full disclosure policy within your organization would have to include more than just the salary of the employee down the row of cubicles: it would have to involve a clear delineation of company successes and failures along with any other information normally reserved for the CEO and other decision makers.
“I think the currency of leadership is transparency. You’ve got to be truthful. I don’t think you should be vulnerable every day, but there are moments where you’ve got to share your soul and conscience with people and show them who you are, and not be afraid of it.” – Howard Schultz
How successful would the Paycheck Fairness Act be in your organization?