In most companies talking about pay is taboo, especially between coworkers. However, it certainly is not illegal. Employers cannot require employees to refrain from discussing pay rates, but some would love to because there is such a huge gap between pay rates, even among employees on the same level or with the same job title (depending on the situation, this could be considered discrimination, by the way). Most employees find out what their coworkers are making through the water cooler talk (gossip) around the office.
But, more and more companies are creating increased transparency about the company when it comes to employee wages. Companies such as Whole Foods and Buffer are leading this transparency trend by going as far as posting employee wages and the formula they used to calculate individual wages online…for everyone to see.
Here are six reasons why a company should have wage transparency (and why companies like Whole Foods and Buffer already do):
1. Social networking/public personal information – with the increase in social networking, individuals are becoming more comfortable with sharing personal information online.
2. Some sites already provide this information – several websites already share pay information, such as Glass Door, Salary.com, and Pay Scale.
3. Recruiting and hiring – with a standard pay for specific positions and experience, it takes the guess work out of the salary part of the recruiting and hiring process. This allows recruiters to work with applicants quicker and more efficiently.
4. Reduce differences in pay for men and women – we still have a discrepancy between pay for men and women at all levels of organization. By creating this transparency, this difference will reduce significantly, if not disappear.
5. Trust – the more transparent the company is, the more the employees will trust the company. This also creates a sense of fairness among employees as they will be able to see that they are being paid what they are worth. Trust is loyalty.
6. Motivating employees – allowing employees to see the methodology behind wages at different levels of the organization can help motivate employees to increase their education, experience, and level of involvement with the company to increase their pay.
There will still be wage disputes, inquiries from employees on why someone else is making more than they are, etc. But at the end of the day if the formulas are public as well then that can be explained to the employee and the employer can maintain a level of fairness and ethical business practices.
Personally, I like this trend as it truly does make sense, especially with the millennial generation coming into the workplace.
Now, there are different levels of transparency. A company can choose to share all employee wages internally and/or externally. Or, a company can choose to only share wage ranges for specific positions and how the specific wages are determined. Or, a company can choose to share certain job wages, such as union wage jobs, but not other job wages. Each company should choose the type of transparency that best suits their business and culture.