A while back, I encouraged everyone who would listen not to drink the entire pitcher of Kool-Aid regarding pay transparency. My main point in that Workforce article? While it's trendy and seems progressive to call for full transparency in pay rates and pay practices in organizations, the folks who are calling for it don't have to live with the employee fallout.
In my experience, employees generally don't want their co-workers to have exact or directional information regarding what they are making.
Ann Bares at Compensation Force threw up a post that has the best quantitative data supporting my view:
"How willing are we to share pay information with family and friends? How nosy are we about the pay of our colleagues? How comfortable are we asking for a pay raise? An interesting study released earlier this year by Ceridian sheds some light here.
A few highlights:
We are reluctant to share our own salary details. 89% of respondents say they are reluctant to share salary information with colleagues, 85% say the same thing about their friends. No real surprise here. Interestingly though, I thought, 53% are reluctant to share these details with family. Depending on how (or whether, and this isn't clear to me) the survey defines "family", this could be shocking ... or not. Sharing pay details with at least one's spouse or partner would seem to be a necessary precursor to any kind of budgeting or planning of personal finances. Beyond that (in-laws, etc.), I'd be inclined to agree with most (88%) of survey respondents who claim "it is nobody else's business".
Nearly half of us, however, are interested in our colleagues' salary details. While generally unwilling to discuss our personal salary information, many of us (46%) are nonetheless interested in learning what the guy/gal in the next cubicle or office makes. No real surprise here, chalk it up to human nature. What I did find noteworthy, though, is the strong relationship with age in these findings. The younger we are, the more interested we are in our colleague's pay, as detailed below. To me, this is strong evidence for the importance of pay system transparency to younger workers.
18-24 year olds: 73% are interested in seeing their colleagues' salary details
25-34 year olds: 70% are interested in seeing their colleagues' salary details
35-44 year olds: 43% are interested in seeing their colleagues' salary details
45-54 year olds: 39% are interested in seeing their colleagues' salary details
55+ year olds: 29% are interested in seeing their colleagues' salary details
In other words, we want to know what other people make, but don't want anyone else to have the same data on us. What's that mean? Full pay transparency is still going to cause more problems than it solves.
Before you attack me in the comments, just know that conceptually I like the idea of pay transparency from an intellectual point of view. Sadly, I've got too many years in the business and know all the employee relations issues that transparency would cause. Until the 89% figure goes WAAAAY down, transparency isn't supported by the general employee population.
Expectations and guilt. Many people don't feel like they really earn what they make, or at least don't know why they make what they make other than luck and good negotiating.
They don't know what they're actually worth to a company. Fair enough, most companies (read: managers) don't know either. So of course no one wants their pay to be known. Then it will be challenged and they won't be able to answer those challenges. Too much hassle and fear.
Part of pay transparency is knowing what people are worth to the company and why they are worth that much to the company. This requires frank conversations, not always pleasant ones.
I like pay transparency, but very few will be comfortable with it until they know the what and why of their business worth.
Posted by: Bohdan Rohbock | December 03, 2008 at 02:06 PM