Can Productivity Increase If You Tell All On Payroll?

27th June 2016

Productivity increases pay informationIf you published everyone’s pay information what would be the impact on your business? Research suggests that knowing what your peers earned could be motivational driving a productivity increase, and similarly not knowing could lead to a decrease in productivity.

The silver bullet for any business is maximising employee performance.

Of course it would be suicidal to just publish the information without first understanding how your company has been set up, and you would need to overcome the fear from internal stakeholder or owners that doing something like this would send pay rise requests into a frenzy and see employees leaving in droves.

Everyone talks in business about being transparent but payroll information is one of the last taboos, closely guarded by owners.

The 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.

Of course employees pay needs to be fair across the business, with relative values aligned according to job roles, performance requirements, and industry pay scales. Whatever you do, don’t publish if you have no system in place. The first step in this process could be to review how you recruit and pay people.

So everyone’s on board. What’s next?

1)    Start with Pay Scales – The introduction of pay scales can help with your communication process, giving a range of values across position and experience levels. Having a range is very important, as it helps employees to understand where they can get to. Publishing a range is also great in terms of recruitment.

2)    Publish the detail – if you decide to publish details it has to be everyone, including the owner and directors. Not to publish all would engender mistrust and break the motivational value you’re seeking to instill.

3)    Break the taboo – Let your people know that it’s okay to discuss how their compensation compares to each other should they want to. It’s also okay to choose not to discuss. The more its talked about the better the result.

In business terms anything that improves the bottom line needs to be embraced. Would you publish salary information at your company?

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