This week saw LinkedIn post a controversial question: “Should colleagues know your salary?”
The response to the question was mixed; in a poll with over 15,000 responses (at the time of writing) 59% said that there needs to be cultural change and colleagues should know each other’s pay, while 41% said that wages should be private.
Commenting on the post, Karen Ginsbury GMP / Quality consultant to the pharmaceutical and allied industries, pondered: “If you are earning a fair wage – why does it need to be hidden?”
Fractional CRO and startup advisor, Filippo Chisari, also sided with the need for wages to be transparent and commented: “We definitely need cultural change!! Not sure if being able to see what’s under everyone’s hood is best.
“Either way good initiative. When women are paid less it is as if they are being told their work isn’t as valuable… We’re are all equally valuable and we should be paid equally!”
However, Marko Heikkuri, a machine driver at Harsco Environmental, claimed “I believe that this kind of chance will remove the possibility to negotiate your own salary”.
This poll was timely since, as many readers will know, today is Equal Pay Day: a symbolic day dedicated to raising awareness of the gender pay gap.
The day is selected as it represents how far into the year the average US woman must work in order to have earned what the average man had earned the entire previous year, regardless of experience or job type.
What the experts think
Safe to say, we need to talk about pay transparency and inequality. So, UNLEASH sat down with HR professionals around the world to answer two key questions. Firstly, should there be pay transparency? And secondly, why is Equal Pay Day important?
Roberts explains: “Pay transparency is something that often presents itself as a desire when there are other issues at play – economic challenges, such as the rising inflation that we are seeing, ethnicity and gender pay gap reporting, and a perceived lack of fairness in remuneration.
“A key reason for pay dissatisfaction is unfairness, and not receiving equal pay for equal work, or pay awards being out of line with the organization.
“We’ve seen this in the past few years with lower increases for workers in frontline roles that were critical in the pandemic, and some widely publicized pay cases in charity leadership or CEOs of failing businesses.”
These issues can lead to serious problems for businesses. Teresa Boughey, TEDx Speaker, CEO of award-winning Jungle HR, and founder of Inclusion 247, explained the negative impacts that pay secrecy can have on a business.
Boughey states that: “Not including salaries within job adverts could mean you miss out on key talent because they cannot benchmark the role against others in the industry or against their requirements.
“Similarly, being known as an employer who is not transparent is likely to circulate around potential candidates and prevent them from applying.”
She adds: “A lack of pay transparency can leave employees feeling that the salary negotiation process feels more like a game of poker rather than an informed discussion on the value of the role.”
On top of that: “A lack of transparency could lead to animosity between team members who might not understand what progression looks like at the organization or how the salary bands work, leading to lingering assumptions.”
As a result, Claire Brummell, creator and founder of the educational business company The Universal Needs, noted: “In this time of pay inequality, colleagues should absolutely know each others’ wages, as it is one of the ways that will hold organizations accountable to closing the pay gaps.
“The only reason for people to not know each others’ wages is if a company is not fairly valuing and paying their employees, and this can be a real problem as undervaluing team members is one of the things that will cause staff to be dissatisfied at work, to underperform and eventually leave their roles.”
There is also a legal precedent for those in the US to ensure pay equally.
Edie Goldberg, president of E. L. Goldberg & Associates explains: “Thanks to the Lilly Ledbetter Fair Pay Act of 2009 individuals who face pay discrimination can sue their employer for pay discrimination under this federal anti-discrimination law. “
Nonetheless, the law may not always help businesses: “Should companies make pay fully transparent to demonstrate their compliance with this law and engender them to their employees as a “good employer?” There is limited evidence that this practice will aid in attracting and retaining top performers.”
Goldberg notes: “Pay determination is a complex issue which takes into account the employee’s skills, experience, current performance, market-rate pay for a position, internal equity, and other factors such as retention risk and potential to advance in the organization.
“Making pay fully transparent is likely to lead to more problems of perceived fairness than it solves. “
Evidently, the issue of pay transparency is complex. But the fact that the average woman earns less than the average man will lead to questions of bias within organizations.
Equal Pay Day
Boughey discusses the importance of Equal Pay Day: “Equal Pay Day marks the day in the year where women effectively, on average, stop earning relative to men because of the gender pay gap.
“The Gender Pay Gap is not a myth – it’s real! It’s a global problem with over 145 countries having documented a gender pay gap. Equal pay for women can help end poverty.”
In terms of addressing the problem that the day symbolizes, Boughey notes: “Employers need to own their pay data, even if it’s an uncomfortable truth.
“They need to acknowledge that pay gaps exist and set out their commitment to closing any gaps as well as publish action plans against which they can be held to account.
“Organizations need to recognize that equality of pay is not only a legal requirement, but an important step towards a fairer society.”
Drilling down on this point, Roberts claims that companies need to “have some good, basic reward processes that are rigorously applied and understood.” Roberts says that this is “the absolute minimum” and “undertaking an equal pay audit is another important step.”
Roberts adds: “We’ve seen some recent court cases that could have been avoided, with the associated reputational damage, had these been conducted.
“An equal pay audit is specialist work, and should be carried out independently to have credibility, so getting a good partner to really understand the business is critical. And communicate your findings with an action plan of how to address these, and regularly review progress.
“Transparency and fairness in all pay-related dealings can make all the difference in engaging your workforce and really making them feel valued.”
Equal Pay Day is an important day, and it is time that businesses acted on their inequalities. However, could full transparency be a dangerous move in a time when businesses are concerned about staff retention?