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Keeping salaries secret: Is it time to end the silence?

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in HR Soapbox

What would happen if you walked into the hallway today and posted a listing of every employee's salary, from highest to lowest?

Mayhem? Fistfights? Certainly a lot of questions.

While secrecy shrouds pay levels in most businesses, Alexander Kjerulf says it’s time to bring salaries out into the sunlight. In a recent guest column in The HR Specialist newsletter, the consultant and author of Happy Hour is 9 to 5 says open pay can benefit organizations and their people.

Kjerulf argues that the main reason salaries are under lock and key is precisely because they’re not currently fair in many organizations. Going public (inside the company, of course) has three major advantages, he says:

money

1. Salaries will become fairer. The system gets a chance to adjust itself.

2. It will be easier to retain the best employees because they’re more likely to feel they’re receiving fair pay.

3. The pressure is on the people with the highest salaries to earn their keep. Everybody has to pull his or her weight.

Open salaries would work, he says, only if employees know which factors influence salaries. Are they based on customer satisfaction, hours worked, quality, sales figures, seniority, skills or education? If the company has not clearly stated the criteria, comparisons are meaningless.

Kjerulf said that, in his company, they agreed that customer service and commitment to the company were the most important factors. “We put this on our intranet. It almost made salary a nonissue,” he said.

COUNTERPOINT: On the opposing side, public pay scales make it a whole lot easier for employees to spot wage differences that could trigger discrimination lawsuits based on age, sex and race.

Plus, what about morale and productivity? A 2010 study by professors at the University of California at Berkeley said that when wages are made public, employees with the lowest paychecks report lower job satisfaction and greater desire to jump ship.

So what do you think? How would public pay work in your organization? Could you ever see your organization moving in that direction? (Leave comments below)

{ 4 comments… read them below or add one }

Vicki Bartelt September 30, 2011 at 1:37 pm

Until you clean up any major discrepancies, it might be ill advised to do so for the very reasons already mentioned. Perhaps just publishing a wage range is best, as employees with the same title may have different experiences and talents they bring to the job. Public (government) agencies post wage ranges; so this could be done; but to publish individuals’ wages might be considered a breach of their privacy.

When I previously owned a staffing company, I had a few employees who didn’t want me to share with others or my contracting client what they made because they had accepted less than their usual rate because the job they’d contracted to do was less demanding and the economy was slow. They didn’t want it known in case they received a better offer down the road.

Perhaps we should continue to let the employees discuss their salaries with each other, if they wish, as they have done. Non-exempt employees, at least in CA, have the right under the Labor Code/Wage & Hour Law to discuss their wage rates. To not allow this would be a violation of the law because it is one of the ways an employee can learn of pay discrimination.

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Mary September 29, 2011 at 4:41 pm

This would make for very interesting water cooler talk for sure.
I would like to see something like this happen within our organization – I think our salaries are relatively fair. Our biggest problem is that no one really has an understanding of what others do – and this wouldn’t solve that problem.

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Ronda September 29, 2011 at 4:31 pm

As HR I also know everyone’s wage. I personally do not think this is a good idea. In addition, our hourly staff is union and they would have a hayday. They would look at management salary and want the same pay however we may work many hours over 40 and still get the same pay but they get OT. I personally do not think our salaries are fair (some slackers make two much) but I work in a male dominated busines and I do not think this will change.

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Victoria September 29, 2011 at 1:59 pm

This would never fly with our CEO. Personally, I’m the HR person here and I see a lot of our managers playing games with salaries of their “favorites,” so part of me would like to see that come to light. But I see more downside than up.

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