Rethinking the Salary Transparency Taboo & Compensation Philosophy
[Updated July 2023] Workplace culture and norms are in an incredible state of flux. As more companies are activating DEI principles and taking actions to prioritize workplace equity, anti-racism and allyship, employers are starting to ease up non-inclusive rigid dress codes, promote flexible work hours, speak out about political and social issues and more.
Similarly, Salary and Pay Transparency Are in a State of Evolution
In 2019, Colorado was the first U.S. state to require all employers hiring at least one employee to include the actual hourly or salary range to job postings. Since then, many states and several localities have enacted salary range transparency measures with even more introducing legislation.
Despite this, many employers still create a culture of salary secrecy, discouraging employees from having honest salary conversations with each other. Some argue that salary transparency is unwise because it creates toxicity, workplace drama, resentment and dissatisfaction.
Well… If you’re operating a business or working in HR outside of the growing list of states with salary transparency laws, now might be time to consider if your approach to salary transparency will make the cut if (when?!) legislation is introduced.
Is Salary Transparency a Good Thing?
Besides, beyond any legal obligation, open conversations about salary effectively force organizations to be clear and prescriptive about employee compensation.
Talent professionals have to make data-driven decisions on a compensation philosophy and process, which reduces the effects of unconscious bias in base-salary (and even more when we ban salary history asks), negotiation, raise and promotion decisions. Salary transparency is an essential part of a holistic diversity, equity and inclusion program and a piece of the employee engagement puzzle, whether it’s legally mandated or not.
The impact of a well-defined and equitable compensation philosophy is tangible inside and outside of the organization:
- Openness cultivates a sense of fairness and an environment where employees are more likely to trust their leaders, driving commitment and the motivation to do their best work.
- Advertising pay ranges in job postings has been shown to cut recruiting costs by increasing the amount of interest in postings.
- Clearly explaining base-pay decisions and raise and promotion criteria makes it easier for employees to understand and accept their salary.
- Research shows that initiatives that improve salary transparency are likely to help equalize opportunities, and helping to ensure equal pay for women and people of color would reduce poverty for working women by more than 40 percent and increase earning power for people of color to help alleviate generational wealth disparities.
What Does Salary Transparency Look Like in Practice?
Of course, local and state legislation will enforce salary transparency differently, so it’ll be important to make sure your approach is aligned if and when you’re impacted by new legislation. Until then, there are a few different approaches to consider:
At Brilliant Ink, we practice partial salary transparency – all employees are made aware of the salary bands for each role across the company, and compensation ranges are included in all full-time job postings. This awareness includes information on how decisions are made, which contributes to a culture of openness and trust. There is a neutral attitude about salary conversations between colleagues, giving everyone the freedom to discuss or not discuss their salary based on their level of comfort.
Where Do We Go From Here?
If you’re an individual employee, consider what your goals are in sharing your salary with a colleague, and make a plan for how you can appropriately respond if you learn something unexpected (here are some tips on how to talk about money). Be realistic and practice emotional intelligence. Know that everyone brings different relevant skills that may increase their salary. Acknowledge that your salary defines what your job is worth, not what you are worth.
If you’re a leader or talent professional, check out these resources on salary transparency, pay equity and compensation philosophy:
- State by State: Salary History Bans and Pay Transparency Laws (SHRM)
- Gender Pay Gap in U.S. Hasn’t Changed Much in Two Decades (Pew Research)
- How to Ensure Pay Equity for People of Color (HR Magazine)
- 9 Management Tips for Clear Compensation Communication (Lindenberg Group)
There is no one right way to approach salary transparency, but it’s clear there’s a huge opportunity to be a few steps ahead of ongoing legislation changes around salary transparency. How does your organization approach salary transparency now, and how could an intentional, transparent approach help amplify existing positive cultural attributes?