Two Sides: Pay Transparency or Not?

April 25, 2019
Publication
MRA Edge
Communication
Compensation Planning
Read time: 2 mins

This is a hot debate. Should companies be open and transparent about what employees are paid … or not? Two MRA experts each take a side to cover the whole story.

Transparency Is Trouble.
  • Pay is personal. Deeply personal. Salary shouldn’t be public knowledge.
  • People compare their worth to the organization based on what they get paid. Finding out what others make will leave some reconsidering what the organization actually thinks of their efforts. How can Bob make that much? My job is more important/takes more skill/is higher profile…
  • Pay transparency = employee morale issues. It’s inevitable. Finding out someone who is considered a “lesser worker” is getting paid more than you will affect your motivation, productivity, and performance.
  • Companies don’t train their managers to effectively communicate with each employee why they are being paid what they are open themselves up to risk. Managers who aren’t equipped with the skills to explain the company’s compensation philosophy and reasonable factors for pay differences (such as performance or work experience) may give the impression of favoritism or bias.
  • When a workplace doesn’t have a fair and equitable compensation plan, communicating who-gets-paid-what will expose all the dirty laundry.  
It’s Time to Be Transparent.
  • One major benefit of wage transparency is that it will help close the pay gap with a push for a more even playing field for men and women in the same positions.
  • When employees find out they’re making more than someone on their team, they may work harder, thinking that the organization must really value their efforts.
  • Most federal contractors must have a pay transparency provision in their handbooks that says the employer will not discriminate against employees for inquiring about, discussing, or disclosing their pay.
  • Employees are allowed to engage in conversation about their pay. Discussing wages and working conditions is an employee’s right under the National Labor Relations Act.
  • Employees want more information. And sharing that kind of information grows a culture of confidence within the company. Employees will know that the organization isn’t hiding any “secrets” and that they are compensated fairly.

Pay transparency works for some companies, but not for others. It functions best where the culture is open and trusting, where pay transparency is seen as a benefit for everyone who works there.

Have questions about the ins-and-outs of pay transparency at your workplace? Call and talk with an HR Advisor today at 866-HR-HOTLINE (866.474.6854) or email infonow@mranet.org.

Source: Deb Larsen, SPHR, HR Business Advisor and Michael Hyatt, Director, HR Government Affairs, MRA - The Management Association

Read the full issue.