When speaking of transparency, the general feel right now is that more is better. Most employers are striving for a more open and honest approach to everything from hiring decisions to company financials. On the surface, it may seem like making employee salaries public is a good idea, but certain factors should be considered when deciding whether full transparency will be good for your company.
Will Employee Salaries Be Conceived as Fair?
The most obvious issue with making employee salaries public is that some employees may feel slighted when they see that others are getting paid more than they are. While you may understand why employee salaries differ and feel that everyone is getting paid fairly, employees may not agree. If you do decide to make salaries public, be prepared for some backlash-and possibly even turnover- at first as employees struggle to understand why their salary may be less than others’.
Do Employees Understand Their Own Salaries?
Most companies have some sort of structure that helps to determine how much each employee should get paid, whether it is based on seniority, skill, or other factors. While salary structures may seem straightforward to employers, employees may not understand the structure and may become disenchanted when salaries are made public. Making the salary structure public along with salaries and being prepared to explain gaps may help employees to better understand their own salary and can prevent issues of resentment.
Will Salary Transparency Foster or Damage Trust?
One of the main reasons that making employee salaries public is a good idea is that it can foster trust between the employees and the employer. When employees see that they are getting paid a fair wage and that salary promises that are made are being upheld when it comes to other employees, it can boost morale and encourage greater job satisfaction. If the reverse is true and promises are not being upheld or employees are not being paid fairly, however, salary transparency can be damaging.
How Will Employees Feel About Payroll Transparency?
Every company has a different culture, so it is not enough to assume that employees will be thrilled about payroll transparency. Some employees may feel that making their salary public is an invasion of their privacy and may be outraged at the prospect. It may be helpful to take an employee survey or speak to employees individually to find out how they will feel about making salaries public before moving forward with any plans.
Will Making Salaries Public Be Motivating (or De-Motivating?)
Salary transparency can help to motivate the workforce if employees see that there are clear and obtainable rewards for putting extra effort into their work. In some cases, this can help to increase productivity without even making any other changes besides making salaries public- a huge plus! However, if employees see that the opposite is true and extra effort is not being rewarded in the form of compensation, it may have the opposite effect and decrease motivation and productivity.