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Salary Transparency: Should Salaries Be Made Public?

She's got her bribe readyFrom abolishing job titles to creating bar raisers, employers — in an effort to raise morale, increase productivity and foster employee engagement — have been making some pretty controversial workplace decisions lately.

Perhaps the most controversial trend to emerge is salary transparency. Though the practice isn’t new, having a policy where every employee knows what every other employee makes is still rare. So when social media management company Buffer announced recently its decision to post its employees’ salaries online, the move had media outlets everywhere asking, “Should companies make employee salaries public?”

“Transparency breeds trust, and trust is the foundation of great teamwork,” Buffer CEO Joel Gascoigne wrote in a blog post announcing the decision.  While few would argue with his statement, not many companies extend this philosophy to include salary.

Chris Charman, director of reward and talent management at professional services company Towers Watson, is one person who has his doubts about the benefits of salary transparency. “I understand why it’s good for employees to have a full understanding of their own salary,” he said in an article on CNBC. “But their colleagues’ salaries? I’m unconvinced.”

That opinion is not stopping other companies from adopting the practice, however. In an interview with The New York Times, Dane Atkinson, CEO of SumAll, a Manhattan-based data company where every employee knows every other employee’s salary, Atkinson called the practice “pure transparency, which manifests itself with a much greater level of trust.” The company also believes that people work more efficiently when “freed of the doubts about salary.” 

Creating Transparency

Though she understands the philosophy behind salary transparency, Rosemary Haefner, vice president of human resources at CareerBuilder, believes organizations can still be transparent without open salaries. For Haefner, true transparency is about organizations being open and honest with their employees about how they make decisions and the impact of those decisions.

In other words, when it comes to transparency, context is key. “Sometimes people just want to get some context of how decisions are made, and what is expected of them in order to move forward,” Haefner says.

How Much Do Employees Really Want to Know?

While salary transparency may work at companies like Buffer and SumAll, conversations around compensation remain a touchy subject for many employers to address –  for good reason. “For a lot of companies, they view their employees’ compensation as their personal business, and they don’t want to compromise that confidentiality,” Haefner says.

Furthermore, like Charman, Haefner is skeptical of how much employees really want open salaries. “Employees may say they want to know what their colleagues make, but will that satisfy them?” Oftentimes, employees don’t understand – and it’s difficult for organizations to articulate – the many variables that go into deciding individuals’ salaries, and when that happens, “it can really bother them. Their pride gets hurt.”

How to Talk About Compensation

Still, it’s human nature for employees to be curious about what those around them make, and employers can’t stop employees from speculating what their co-workers make and forming “conspiracy theories”; however, Haefner says ignoring the issue completely will only aggravate the problem.

“A lot of companies, in their employee surveys, ask, ‘Are you satisfied with your compensation?’ but that’s not a very effective way to address it, because almost everyone will tell you they want to be paid more.” A more effective question to ask, Haefner says, is, “Do you feel decisions around compensation are made with clarity?”

By asking this question, organizations can understand if they are communicating with their employees enough and providing enough clarity around what goes into salary decisions and why.

“The most de-motivating thing is to not tell your employees what’s going on. Give people the chance to know what they need more or less of in order to help them get where they’re trying to go.”

Mary Lorenz

About Mary Lorenz

Mary is a copywriter for CareerBuilder, specializing in B2B marketing and corporate recruiting best practices and social media. In addition to creating copy for corporate advertising and marketing campaigns, she researches and writes about employee attraction, engagement and retention. Whenever possible, she makes references to pop culture. Sometimes, those references are even relevant. A New Orleans native, Mary now lives in Chicago, right down the street from the best sushi place in the city. It's awesome.
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