Rethinking the Salary Transparency Taboo & Compensation Philosophy
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.
Salary and pay transparency, on the other hand, is still pretty taboo.
Fifty-one percent of talent professionals say their organizations don’t share and are unlikely to start sharing salary ranges with employees, and many employers 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.
That said, 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, 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.
So, what if we viewed the negative outcomes of salary transparency as an opportunity, and a signal for the need to conduct an internal analysis on pay equity and compensation practices?
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.
- Clearly explaining base-pay decisions and raise and promotion criteria makes it easier for employees understand and accept their salary.
- 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 this look like in practice?
At Brilliant Ink, we practice partial salary transparency – all employees are made aware of the salary bands for each role across the company. 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.
Companies that practice full salary transparency allow every member of staff to see what their colleagues are making. This approach is understandably seen as radical, but it does work for some.
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:
- 2019 Global Talent Trends – Pay Transparency (LinkedIn)
- How to Ensure Pay Equity for People of Color (HR Magazine)
- The Racial Wage Gap Persists in 2020 (PayScale)
- What Is a Compensation Philosophy? What Should Be Included in a Compensation Philosophy? (SHRM)
- 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. How does your organization approach salary transparency now, and how could an intentional, transparent approach help amplify existing positive cultural attributes?