Should Staff Wages Be Made Public?
It’s the question that has been on nobody’s lips until recently: Should an individual’s salary be made public? Of course, we’d all like to know what our bosses and friends make, but equally we might not want the world and their dog to know exactly what we make. That’s why it’s been pretty much a non-issue until recently. In general, salaries are not made public and that’s the way it is. And every one falls in line with this idea, don’t they?
Well, they did until recently when Buffer, a social media management service located in San Francisco, decided to publish its employees’ salaries online in a process known as “Open Salaries.” The company published both the salaries and the formula for calculating those salaries. Now, this is perhaps as much a PR led exercise as an HR led exercise because the company’s brand mantra is about sharing information and transparency (it releases earnings and user numbers every month). And so the next step for it was to move this transparency into the HR and reward arena to help the company move toward its vision of being an “open company.”
Now, this sparked a lot of debate in the media and I have seen this discussed on Entrepreneur.com, CareerBuilder, Business Insider, The Huff, etc. The main question arising was should wages be made public or was this open salaries initiative a case of “open source” gone too far?
Well, one answer is, “Only if you have pay equity” and this does not mean that everyone is paid the same. It is based on the idea of ‘equity theory’ that people will be most engaged if they believe that they are being fairly paid in relation to their efforts and that they are being paid fairly in comparison to their co-workers.
As you can see, if you follow the link above, Buffer didn’t just post salaries online, it also published the formula for how salaries are calculated so you could see that everyone had a similar opportunity to be matched for their efforts. You in theory won’t get the situation of one employee who earns $5,000 more than the other for doing the same work as it will be noticed and flagged immediately. We know this is a problem as this is why there is equal pay legislation in both the U.S. and the UK, and one of the reasons that equal pay audits have been introduced in the UK as a way of exposing inequity in the pay process in business from a discrimination point of view.
Sunlight is the best disinfectant
So to borrow a well known quote from Supreme Court Justice Louis Brandeis, when referring to the benefits of openness and transparency, “Sunlight is the Best Disinfectant.” I do believe that if organizations did choose to publish their salaries online there would be a whole lot of rushing around prior to that act, where the company ironed out inequities and devised (and implemented) a transparent and fair pay system to support the salaries.
So, I believe that if a company took the brave move of making its salaries public, it would most likely mean that there is a much more equitable and transparent pay process present in the company, which should enhance the company’s brand image and could make it more appealing to both customers and talent.
So, it certainly could prove to be a positive business strategy to make salaries public.