A growing number of organisations are publishing their salary ranges in order to promote pay transparency in a drive towards equality. Dee Coakley outlines some of the pros and cons.
There is, quite rightly, more attention than ever on equal pay. Companies are working hard to close gender pay gaps and the #shareyoursalary movement – where people reveal what they are paid on social media – is making waves.
Last month, the UK government announced a new pilot in which employers will list salary details on job adverts and stop asking about salary history during recruitment, hoping this will generate an approach where pay is decided based on the work on offer, not on employment history.
Pay equality doesn’t come easy – not least due to a rise in remote work and global recruitment, where staff are now more likely to have different salary expectations be operating under wildly different labour laws.
The quest for equality, together with the desire to foster an open environment where people want to work at an organisation for the long-term, has led some companies to implement pay transparency policies. Some commentators suggest that if we want a fairer approach to remuneration, the issue of pay must not be shrouded in secrecy.
There are plenty of examples of organisations being transparent about what they pay. GrantTree, an organisation that helps businesses access funding, became one of the first companies in the UK to adopt pay transparency and even go as far as making their employees responsible for their own salary review.
Another example is Whole Foods, where its CEO John McKay reported that publishing salaries stoked ambition among employees as they saw a clear progression path with a route to bigger rewards. Buffer, a social media start-up, published all employee salaries publicly on its website.
Companies that have embraced pay transparency have found it has streamlined salary negotiations with candidates – there is no room for confusion or misconceptions. It also helps when it comes to reviews and promotions – employees can see where they sit currently, and understand the potential for future rewards too.
What about the fallout?
But it’s not all plain sailing. While there are many proponents for pay transparency, many companies fear that the practice will cause divides and ill feeling among employees – even stoking envy among a company’s lowest earners.
Before Buffer began publicising its pay data, company leaders feared it might make it easier for its competitors to poach employees.
Although transparency is ultimately a good thing and fosters more open and trusting relationships with employees, it may come with some fallout. It might even cause businesses to initially lose staff who find out that they’re paid less than their colleagues.
While there are many proponents for pay transparency, many companies fear that the practice will cause divides and ill feeling among employees – even stoking envy among a company’s lowest earners.”
This initial attrition is likely to be short-lived though, and those who stay are likely to be those who fit better with a culture which prioritises open and transparent communication.
What’s most important is that employers need to implement a formal fair pay strategy for both new recruits and existing employees. And, when it comes to defining a policy, the key to success is remembering that there’s no ‘one size fits all’ approach – it’s about finding the level and flavour of transparency which works for an individual business, its culture and which reflects wider trends in their industry.
It’s worth remembering that it’s not all or nothing. While Buffer went the whole hog by publishing the salaries of all its staff, there’s a middle ground where employers can be transparent about how pay is calculated – providing the methodology rather than the detail. Some firms find a way through by publishing salary bands and others look to aggregated data on pay equity to show how they’re tackling any gaps.
It’s likely that the debate around pay transparency will rumble on for the foreseeable future. But it’s heartening that many companies are considering adopting the practice as a way to ensure fairness and so that they can ‘do better’ when it comes to equality. It can only be a good thing when employees and employers alike are striving to be open and honest with each other.