Decades ago, topics like the wage gap in the workplace were considered taboo. However, now that there is more attention to racial and gender wage gaps, a question arises as to whether pay transparency would help companies achieve pay equality or cause more conflict among workers.
There is a difference between generations of workers open to discussing their salaries. A survey from Bankrate.com revealed that many younger workers are more open to discussing their salaries than their older peers. About 42% of Gen Z employees aged 18-25 and 40% of Millennial employees aged 26-41 have shared information about their salary with a professional contact or co-worker.
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The topic of pay transparency has become an essential point for prospective employees in choosing which company to apply for. A 2022 report from Beqom revealed that three in five employees would switch to companies with more pay transparency. However, more than a third of workers cited in the report said their companies did not disclose gender pay gap data externally or internally.
What is pay transparency?
Pay transparency refers to businesses being open about the compensation of prospective and current employees. Some people believe that publishing such data for the employee community (and beyond) reduces bias and takes a step towards pay equality. Others, however, think it can spark jealousy among workers because there are instances when those in the same position are compensated differently.
Publishing your employees' salary data doesn't mean you must post all the numbers in the open. There are various pay transparency levels, ranging from telling an employee what is owed to them to having an open salary structure. It's up to you how you will define how transparent you should be within your organisation.
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Transparency will depend on your company's type of workforce, culture, and practical realities, such as your financial standing. Countries like Sweden have enacted laws such as the 2008 Swedish Discrimination Act, which requires all companies with over 25 employees to issue annual surveys on employees' salaries. The company receives a high fine if salary discrepancies are discovered. Social media startup Buffer took pay transparency further by publishing all their employees' salaries on their website. Similarly, although on a much lower scale, companies like New York-based firm SumAll and Whole Foods have adopted pay transparency policies.
Publishing your employees' salary data will depend on your company's unique situation. However, pay transparency might just be the right step towards greater equality and fairness in the workplace.