28th February 2017
How much do you earn? How big is your pay cheque? What’s your salary? These are all questions that are avoided like the plague. Discussing your pay with the people you work with is just simply not the “done thing”.
There are a number of different reasons, ranging from claims that it’s illegal to talk about your salary, to the fact that most people consider it to be a private matter and not something they want to share. But can you actually discuss your salary with your colleagues, if you choose to do so?
Would you feel any better knowing what your colleagues earn?
If you’re happy, and you earn enough, then does it matter what the people around you earn? Or, with the current culture of secrecy, would you prefer a more open approach to the topic?
It all boils down to whether or not you’re satisfied in your job. A study discovered that, even when employees are paid accurately according to their job title, two-thirds think that they’re underpaid. Of that amount, 60% said they are dissatisfied with their job and plan to move on within 6 months. On the other hand, research found that 82% of employees who were paid a lower wage, but had been told why, said that they were satisfied in their job and were intending to stay.
Last year, we highlighted the effects of telling all on payroll. Research from Emiliano Huet-Vaughn found that employees that were shown their earnings and how they compared with their peers on the whole worked harder and increased their performance. Interestingly however, men responded more positively than women in the survey.
A further study from Elena Belogolovsky and Peter Bamberger revealed that keeping pay secret also depressed employee performance.
Despite the research, it’s still not uncommon for companies to try and prevent their employees from talking about payroll. This is sometimes done by putting clauses in contracts which imply that it’s illegal to discuss pay, or state that it goes against company policy and will result in disciplinary action. However, in October 2010 the Equality Act made so-called “gagging” clauses unenforceable, to ensure that employees who were trying to find out if they were being discriminated against could do so.
Why do companies include gagging clauses or discourage transparency?
If a business’s culture doesn’t suit salary transparency, it may not be advisable for them to just jump in and reveal all. If your employees view compensation as being an indicator that they’re not being valued, morale may suffer. There’s also a simple logistical issue. Large businesses with thousands of employees may find the task of becoming transparent more hassle than it’s ultimately worth. Payroll transparency has no off switch, so if the business is going to face some difficult conversations in the event of a reveal, it simply isn’t a sensible business decision.
However, there are other companies that operate on total salary transparency. This means any change in pay is carefully considered, and demonstrates exactly what staff need to do to achieve a pay rise.
Everyone has a different opinion on this subject and the debate rages on. But, the trend is starting to shift in favour of transparency. In a world of uncertainty, fake news and distrust, businesses are realising that transparency might just be the best policy.