Should Your Company Implement Pay Transparency?
Over the past few years, more and more companies are implementing pay transparency. Even the president has taken notice of the potential benefits of wage transparency with the signing two executive orders in April intended to encourage compensation data disclosure. The idea of pay transparency isn’t as radical as it seems and has the potential to greatly benefit your organization. Here are a few of the benefits:
Removing the Gender Pay Gap
There’s no denying that there remains the problem of unequal pay between women and men. Forbes’ Lisa Maatz reports that women still only earn 77% of what men do. Even if your organization does not have a wage disparity between men and women there is still the assumption that one could be present. The disclosure of everyone’s salary will diminish the gender pay gap and demonstrate your company’s efforts to remove this problem from the workplace.
Eliminating Haggling and Facilitating Trust
No one likes to spend the time negotiating salaries. It is a high stress process that often results in unequal and unfair pay among employees. Salary negotiations cause employees and employers to play a haggling game that can often leave the employee with a sense that they are not earning what they’re truly worth. In addition, if people do discover that their colleague is making significantly more than they are, their work could suffer and moral could plummet. On the flipside, making everyone’s income transparent facilitates employee/employer relationships based on trust that most likely will lead to optimal work performance.
Fostering an Open Dialog
NPR’s Lisa Pollack recently interviewed Dane Atkinson on the success of pay transparency at his tech firm SumAll. In the interview, Dane discusses that one of the many benefits of pay transparency is the opportunity to discuss with employees what they make and why. This concept cannot be as easily achieved if employees are constantly wondering how their salary stacks up against their coworkers’ salary. By implementing open wages at your company, you will have the opportunity to enable an open dialog that empowers your employees rather than holds them back. What are your thoughts on pay transparency? Do you think your organization could benefit from this model of salary reporting?