Pay Transparency: Culture is Key

Posted on March 14, 2014 by Chris Kelley Posted in Compensation Consulting, KnowledgePay

There’s still a lot of talk lately about the idea of pay transparency, but many organizations still not willing to take the plunge. Why the hesitancy? One argument I hear is that pay information is personal and it’s a private matter between the organization and employee.  Others respond with view that employees just don’t have a need to know what coworkers earn. Or, my favorite, employees can’t be trusted with this kind of information. Therefore, when social media management company Buffer recently announced it was posting salaries online, you can imagine the uproar.

However, as Buffer CEO Joel Gascoigne emphasized in a December blog post, “Transparency breeds trust, and trust is the foundation for great teamwork.”

Buffer isn’t the only company choosing to share ‘confidential’ information. Thirty-employee SumAll chose to make performance reviews as well as salaries public. They say the program is a success. This may be due to how well they implemented the program. Specifically, they built the right culture as well as developed complementary policies and programs that are transparent as well as defensible.

While employees may be curious about what others make, it’s more important that organizations prepare them for why someone earns a particular amount. Too often, the focus is just on the salary. Line managers need to be prepared with information about the how’s and why’s of the company’s pay programs, but they also need to practice the skills needed to lead conversations back to the context of the overall pay philosophy.

To get it right, according to a New York Times interview with SumAll CEO Diane Atkinson, “culture makes an extreme difference.” For SumAll that includes a 45-day trial period for new hires, and a lot of “hard” peer-to-peer conversations about performance.

Having a culture built on trust and candid dialogue starts at the top and reaches in to every part of the organization, but when it comes to the compensation function, there are specific areas where what you do will help facilitate a more open approach to pay.  What it all comes down to is how you:

  • Design your compensation programs so they are clear and easy to understand
  • Value your jobs consistently
  • Administer salary as if everyone was watching (they are)
  • Communicate to line managers and employees early and often

For more information about how the KnowledgePay compensation software tools and consulting services can assist in your efforts, visit our website, read our blog, and be sure to download a copy of the white paper, Pay Transparency: The Future of Compensation Management. For further assistance or questions, contact us.