What Your Lack of Pay Transparency Says About Your Company Culture

There is a national conversation right now about the gender pay gap, particularly as it relates to women of color. So much of this conversation is based on individuals sharing their pay information with coworkers and colleagues in similar fields. The thought is if individuals are transparent about what they make, it will help reveal inequities and help people advocate for better wages. This is true, transparency leads to action. I am 100% on board with this movement, however it puts the responsibility to share compensation on the individual and not the organization.

Why is that? Why are so many companies unwilling to be open about their pay practices with their employees?

Many organizations feel that opening up pay information and having open communication about pay decisions with employees can lead to a culture of politicking, division, and disengagement.

If your organization is pocked with strife, infighting, and division, there is understandable caution to implementing pay transparency. Transparency of any kind, but particularly pay, can create canyons in what was a crack when implemented in an organization in cultural chaos or confusion. Communicating clearly about compensation can expose inequities that people assumed were there but did not have evidence of. It could push people with low morale to have the evidence they need to shop around for a better fit. And, of course, it could expose you and your team to legal ramifications that could have devastating effects. (Does the Ledbetter Act ring a bell?)

But what if you have a culture that eschews politicking and embraces unity at all levels? Would simply being honest about how pay is determined and how employees compare amongst their peers ruin that? If your organization has cultivated a culture of high trust and engagement, would your employees go running for the hills if their cubemate made more than them? If your employees are regularly hearing about the state of the business, would they feel surprised by the percentage of a raise?

I don’t think so.

Transparency can strengthen a great culture and provide engaged employees a deeper level of understanding of how the business is run. In fact, according to those that study pay and pay transparency, forgoing pay secrecy can have transformative effects. Payscale, a salary and benefits research center, ran a survey in 2015 asking 71,000 people about their pay and job satisfaction. They found that those employees who were paid below market for their jobs were actually more satisfied with their organization if their employer was transparent about pay decisions. Having knowledge on how their pay was determined increased their job satisfaction from 40 percent to 82 percent.

When you have a strong foundation of trust, arming your employees with the information on how their pay was determined as well as their earning potential, only helps build on that foundation. You are showing employees that you indeed trust them with this information, and that you value transparency, even when it is difficult. Your actions are also showing that decisions made within your organization are equitable and done with care. Your commitment to creating an inclusive environment goes beyond diversity meetings extends to achieving actionable and measurable results.

Contributed by: Katie Augsburger, Partner and Employee Experience Strategist