5 Reasons Why Companies Should Publicize Salaries
Over the course of my professional career, I’ve seen some pretty tense situations involving salaries. One of the most awkward ones was a situation where when it was time to disburse annual bonuses, one co-worker was vocal about the fact that he didn’t receive one. It sparked a domino effect where other people also starting sharing their bonus amounts. And then annual pay raise increases. It resulted in a blanket reprimand from management; and a lecture that sharing individual salary information was a violation of the company’s ethics policy.
And in my opinion, that’s when it went too far.
Regardless of whatever company policies that you create, there is nothing “unethical” with sharing your salary with a co-worker. In American society, it is not considered to be in good taste socially. However my personal opinion is that this is an outdated way of thinking. Here’s why:
1. Income Inequality Issues
We are way past the point of being able to deny that we have serious issues with income inequality in the U.S. Women only make $0.82 for every $1 that men make; and Black women only make $0.63 for every $1 that White men make. There are a lot of confounding factors that come into play with these numbers. But publicizing salaries would help to minimize the “Good Ol’ Boys” club effect; where those who are most like management are the ones who are hired and more regularly promoted. Or at least if it happens, it is more apparent.
This can also help alleviate inexplicable disparities in pay among those in similar roles with similar seniority levels. Yes, it is understandable that some people perform better than others, and should receive pay raises to support and encourage this. But these people should also be promoted eventually. If they choose to decline the promotion, then they’ll understandably be limited salary-wise, which would allow lower performing employees to even out the salaries over time. So overall, the pay differences due to performance alone, should be negligible.
2. Because The Internet Exists
The sooner that companies recognize and embrace the fact that job candidates are taking a more proactive role in HR, including sharing salary, benefit and interview information on sites such as Glassdoor, the better off they will be. The unfortunate thing is that it is usually the disgruntled people who take the time to go online and review and rate your company. But companies still need to recognize and own this feedback. If not, it speaks volumes about the company’s leadership. The workplace is changing and employers no longer hold all of the cards. Today’s workforce is flexible and quite frankly, not that loyal. If your company cares about turnover (and they should), encouraging and participating current and former employee reviews and salary information online is something that will help in regards to attracting new talent. Trust me 🙂
3. Compensation Is More Than Salary
If you are an employer, I’ll let you in on a little secret; salary is not the only compensation factor that there is. So don’t feel like you’ve put all your bets on the table by making your salaries public. And don’t be intimidated by higher salaries offered by your competitors. The only time you should be worried is if you honestly do not have much going on in your employee benefits package other than salary. For example, I have peers that work for one of the competitors in my industry and will most likely stay with them because they offer flexible schedules and remote work options. Their salaries are lower across the board, but for many people, they will forego that for the work-life balance.
Be confident about your company….your culture….your mission. What you have to offer to anyone who joins your team. If you do this, I promise you, you will not be intimidated by how the salaries you offer compare to your competitors. However, it should (and rightfully so), keep them high enough so that you can be seen as a serious option by the best talent.
4. It Will Regulate Management
We’re being real today, right? Ok, so let’s just admit it. There are (too) many managers out there who misuse their authority. I’m not talking about gross abuses like filling every job opening with incompetent friends and family members (although that does happen in some places, sad to say); but little things, like under-cutting salaries to make yourself attractive to a client. I’m not saying that it is always wrong to do this; but it is wrong if you didn’t seriously look for other ways to save costs that wouldn’t have such a direct negative impact to your direct reports.
Part of being a manager is looking for ways to save and make money. I’ve done bookkeeping for plenty of small businesses, so I know how painful it is to look at your salary expenses, and to see the toll that payroll takes on your bank account. But it is wrong to just go to salaries by default, and they are first on the chopping block every time money needs to be saved. Sorry, but that it is not good management to constantly be cutting salaries and cutting positions to save money for the company!
5. It Adds An Aspect of Trust To Company Culture
Whenever I notice that a company publicizes their employee salary information, it imparts a feeling of transparency and trust. Often times, non-profits are expected to do this…mainly for this reason.
Here’s a short list of some of the employers out there who publicly list employees salaries:
- Florida Gulf Coast University (a state university — many public service and government agencies make salaries public)
- Whole Foods
Due to the fact that current compensation amounts may have the residual effects of less than ideal salary policies from years ago, it seems that the best candidates for public/open salary policies are companies that were founded less than 20 years ago.
Regardless of how I feel on the issue (which can be summed up as, “If you have nothing to hide, then why are you hiding something?”), there are still critics of the idea of making salaries public. They have some good arguments. However, some of the pitfalls, like employees nitpicking over why another co-worker makes more than they do, can be easily alleviated if you use a range, and not a discrete number for the public salaries. Either way, even if companies would rather keep their salaries confidential, that information still invariably comes out anyway. In a nutshell…you can’t stop the world from turning….and people are going to talk (online).