Top Tips for Improving Pay Transparency

Top Tips for Improving Pay Transparency

Steven Cox, chief evangelist at IRIS FMP, shares his pay transparency advice with Finance Monthly.
Pay transparency has long been a controversial topic. According to research carried out by company review website Glassdoor, 70% of employees across the world believe that pay transparency is good for employee satisfaction. 72% think it’s good for business. And yet the question of who gets paid what remains a very taboo subject for many, particularly in the UK. Many business leaders feel that revealing staff salaries will only lead to division in the workplace, rather than a trusting and open business culture. Below, we examine when pay transparency works and how to implement it in your business.
Pay Transparency – The Pros
Looking at Glassdoor’s statistics, it’s clear that most employees want the companies they work for to reveal all staff salaries; but why?
Knowledge about job opportunity
The research also revealed that more than half of employees believe they need to find a position elsewhere in order to obtain a significant increase in salary. This perhaps illustrates one of the advantages of pay transparency. If staff salaries are public knowledge, employees can easily recognise their financial worth within a company. They can see what the person in the position above them is being paid, and therefore what they can potentially aspire to.
Trust and openness
Another big plus is that pay transparency leads to an open and trusting business culture. Wondering what colleagues and seniors are being paid can quickly create a toxic work environment, as staff members conclude – rightly or wrongly – that they are being paid less than they are truly worth. When one employee feels undervalued, they will likely confer with others, which can then lead to discontent and low morale. In this case, employees are unlikely to put 100% of their effort into their work and may even seek to leave.
70% of employees across the world believe that pay transparency is good for employee satisfaction. 72% think it’s good for business.
Attracting new talent
It’s clear that employees want companies to be transparent with their pay, so companies that do offer this are arguably more likely to attract new talent. Having knowledge of the salaries of all staff is likely to make a new recruit keen to work and progress, as well as work hard from the outset under the clear understanding of their financial worth in a company.
Pay Transparency – The Cons
In spite of the positives of pay transparency, many company leaders argue that the negatives outweigh them, for a number of reasons.
Highlighting pay differences
There are a significant number of companies that do pay different salaries to staff members, even if they perform the same duties. This can happen when a promising applicant negotiates a higher salary, or when budgets change as the years go past. In these instances, if salaries are public knowledge, those on lower salaries are likely to become upset and put less effort into their work – or seek new employment.
Revealing information staff don’t want to share
Another problem can occur when salary details are shared when employees don’t want them to be. Many people feel that their salary should be confidential, and that it almost represents their worth in society. Therefore, if it becomes public knowledge, they may feel exposed and even betrayed by their employer.
Employees may not appreciate all types of compensation
Pay transparency gets even more complicated when you also consider other types of compensation, such as company benefits in kind. These can be anything from a company car to health insurance and may be offered as part of a salary package or negotiated by the employee. Pay transparency tends only to relate to the sharing of salary figures, but some members of staff may also enjoy particular benefits which others don’t. If a company does not share this information too, there is more room for ambiguity and potential doubt about fairness.

Is Pay Transparency Right for Your Business?
The most helpful way to determine if pay transparency is right for your business is to ask yourself if you are comfortable with the salaries you pay your staff. If you know that people in the same positions are paid different amounts, you need to be confident in explaining the reasons why before sharing the information.
Most businesses find that pay transparency leads to a content and trusting work environment, in which staff understand their part in the company cog. It’s not only about weighing up colleagues’ financial worth to a company, but also about appreciating the bigger picture. If a company’s budgets and spend are common knowledge, everyone knows where they fit into the overall goals and future of the business.
If you do decide to implement pay transparency, it’s vital to ensure that the information is communicated clearly and accurately. If it will be a new policy, make sure all staff are aware and have had time to digest the memo, and approach management with concerns.


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