More companies across the nation considering transparent salary policies
By Brian Pedersen
BridgeTower Media Newswires
The trend toward transparency recently turned to the role it can play in pay.
Now more than ever companies are being more open about their culture, paying more attention to how they treat their employees and are making strides at building inclusive workplace environments.
In addition, in companies across the nation, there’s a growing trend to make known, either internally or externally, the salaries of their employees. Some see it as a way to build trust, pay equity and motivation for increased productivity in the workplace. Nevertheless, there are drawbacks to consider.
“It’s a newer concept that I never saw when I first started,” said Jeanie Sharp, regional manager for Robert Half and Accountemps in the Greater Lehigh Valley and Delaware. Sharp, who started at Robert Half 22 years ago, said she is seeing that younger workers tend to feel more comfortable discussing what they make with other workers.
Robert Half recently conducted a survey on this topic and found some companies reporting benefits from the practice.
“Some companies believe that it’s advantageous to have honesty and trust and that’s the best way to bring trust,” Sharp said. “They were able to boost their recruitment efforts and retain their employees. Trust was built, productivity was improved and retention and recruitment efforts were also improved.”
Companies in the survey said having transparent salaries would increase productivity, she added.
However, a transparent salary policy is not without its drawbacks for employees. Some employees may not want their salaries published and sometimes companies publish those figures not only internally, but externally as well, so the public can see them, she said.
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Small business risks
Transparent salaries could also give a hiring edge to the competition.
“Some companies worry that competitors could poach their top talent by paying more,” Sharp said. “Some companies are sensitive to those drawbacks. It’s a really really competitive market.”
In addition, having transparent salaries might not allow employees to negotiate for a salary increase, she added.
“Our suggestion is that both employees and employers benchmark salaries,” Sharp said.
People can search these guides, which evaluate salary ranges according to size of company and tenure of employee, she added.
“This concept of publishing for all the employees to know their salaries, I think personally, it leaves you open to issues especially in small to mid-size companies,” said Tina Hamilton, CEO of myHR partner Inc., a human resources firm in Upper Macungie Township. “If in fact you pay for performance and you have a market that is so tight, that’s where the animosity can come up.”
Friction can come if a new hire is paid the same as a long-term employee in the same position.
“Not everyone is clear on the reasons why you need to pay more...certain people come with a boat load of experience,” Hamilton said. “It’s a hard decision for this market now.”
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Pros and cons
A healthy company could publish a pay rate and list achievable goals for getting there, but should not focus only on skills but also attitude, she said. As an example, an employee could be a high achiever but demonstrate a poor attitude toward others at work.
In addition, transparent salaries should not affect an employee’s ability to negotiate for higher pay, said Hamilton.
“Somebody who is savvy will try to negotiate anyway or negotiate time off, a bonus or something else important to them,” Hamilton said.
Education is key, too; employees should know why the pay rates are the way they are. Hamilton’s company recently hired someone right out of school. If that person has certain high-value skills, there’s flexibility in what the salary will be.
Transparency can also save time and money. If a company flies a candidate out for a job interview, the person may decline the offer because the salary was too low. The scenario wastes time and money for both.
Posting salary ranges can also eliminate some pay-equity issues and hold managers accountable for making sure everyone who gets hired falls within that range.
“Hopefully that would help to eliminate some of that,” Hamilton said. “I’m open to seeing what’s going to happen.”
In a tight labor market, companies have to try many things they may not have considered 10 years ago, said Susan Larkin, vice president at Allied Personnel Services in Allentown.
“I think a company, if they are going to be that transparent, they are going to be transparent about everything,” she said. “I don’t see it a lot. Starting wages are advertised and mostly well-known.”
As an example, companies from Amazon to Fed-Ex often post their starting wages on online job search boards.
Transparency, in general is a trend that will continue for some industries, but probably not for professional positions.
“Companies are responding to what people want, “ she said. “It definitely could be something we see companies adopting more and more.”
