Cheer, Don't Fear Pay Transparency

I was honored to participate in a panel discussion regarding pay transparency with Curo Compensation - compensation and pay equity specialists who provide HR technology (Saas solution) that make compensation decisions easy and fair.  This topic of pay transparency has become a global conversation – what does that term really mean and how far do we really need to go to be “transparent”?  Does it mean sharing everyone’s salaries openly or just salary ranges?  

Organizational culture dictates a company’s comfort level with pay transparency.  Additionally, industry can also play a big part.  Government contractors in the US tend to be traditional and have a philosophy that pay ranges should not be communicated outside the management team.  Conversely, tech companies have a more open view to visibility of their compensation program methodology and employees’ expectations on pay.

Organizations that remain silent on their compensation programs may witness employees taking matters into their own hands.  Websites like levels.fyi have done just that.  A couple tech company employees were tired of not understanding the different job levels at various high-tech companies and where they fit in decided to create a website, post their own salaries and job level information from their employers, and ask other techies to do the same.  The website has become such a hit that at least one of the founders runs the website full time now.

Younger generations live in a time when their every move is tracked and broadcast via social media for all their friends and contacts to see.  To them, compensation should follow the same rules.  They don’t understand why knowing a salary range or even what someone else earns is a big deal.  Just another data point.  However, those of us that have been working for more years than we care to mention were brought up that compensation was personal and private.  How does an employer reconcile those two pillars of thought?

Personally, I think more than an employee wanting to know how much their colleagues earn, our workforces want to understand how the company came up with their salary.  Does my employer look at market data?  If so, which surveys?  What companies are we compared against?  Why those particular companies?  How do I get promotions and pay increases?  When do I receive them?

When our compensation is not discussed, employees become distrustful.  They feel something is being hidden from them.  Organizations are better served offering a level of transparency - explain their compensation philosophy and how they map their jobs to market data.  Post salary grades and ranges, as well as job families and sub-families so that employees can see their career path.  Inform employees on who is eligible for bonus and equity programs. 

As much as employers fear their employee population being upset about their salary being low in the range or bonus program ineligibility, these programs can also act as carrots.  I remember working hard during the early part of my career to get to a level where I could become a management incentive program participant and later an equity grantee.  Use compensation as a motivator.  Don’t fear it as a demotivator.I