
Thanks to social media, people today are relatively open about their lives. They document what they eat for breakfast. They boast about their upcoming travel plans, including when they are leaving and where they are going. They even post videos of their birth stories for all to see. But when it comes to paying and how much they make, this is when people start to clam up.
Despite individuals opening up about their day-to-day lives, talking about their paychecks isn’t a conversation they necessarily want to have. There is often a sense of pride, or maybe even embarrassment, about what they make. And for years, people have been told talking about money is taboo, and some employers even forbid it. While it can be disappointing to find out a coworker is making significantly more than you or vice versa, honesty is important.
There are many reasons to talk about pay openly. It can bring coworkers closer together. It can also benefit those underrepresented and underpaid to have information to be able to stick up for themselves. Curious to learn what other benefits there are to pay transparency? Keep reading to discover four worthwhile benefits.
1. Aids in the Hiring Process
A company that talks about salaries freely is often more attractive to candidates than a company that only discusses compensation behind closed doors. Pay transparency is related to company culture. Talking openly about salaries may show candidates that the company is committed to their employee’s well-being. Moreover, these companies may also be more transparent overall and perhaps more attuned to the market when cost-of-living raises are necessary.
Some cities like New York City have recently passed laws mandating employers to include a “good-faith” salary in new job postings. This means they have to post an honest salary range with open positions. The impact of this is to be determined, but it demonstrates how this topic is becoming increasingly important. Candidates need to know their potential compensation to make the best decision for their livelihood.
When a company includes a range of expected pay, they are setting itself up for success in the hiring process. Candidates are less likely to drop out of the interview journey if they know about compensation upfront. This is especially important for high-demand jobs, such as engineers. If you’re hiring or working with engineering staffing agencies, advertising a pay range can help sort through candidates. If an applicant knows they want a higher salary, they won’t waste time applying, and you save time when only interviewing compatible applicants.
2. Increases Job Satisfaction
Employees who know they are paid well are going to perform well. And they will work happily, too. Pay transparency can positively affect an employee’s overall perception of the employer’s fairness and trust. This makes sense, as disclosing salaries is essentially opening up the previously closed executive boardroom for all to see.
An employee that knows what their colleagues are making may also see a distinct correlation in their work ethic and their compensation. So when this individual notices how hard their teammate is working, they may better understand why they are making what they are. Knowing they are being paid fairly for their output may encourage them to work harder to hopefully receive a raise.
3. Reduce the Need for Negotiations
Raises are sometimes given based on gut instinct. A manager sees one of their employees complete a stellar project, and they give them a bonus. But that manager might not know the number of employees it took to get that project to where it landed. They could unknowingly be overlooking the actual work that this particular employee completed compared to others on the team. With pay transparency, pay negotiations are less necessary as there are strict pay ranges.
When salaries are revealed there is a certain level of data that needs to go into it. Ranges can’t be given just based on prior expectations. Rather, the executive team needs to take into account and analyze comparison markers for similar jobs. This is why revealing compensations can be a way to keep pay consistent across job functions and levels. While this doesn’t mean raises and bonuses shouldn’t be awarded, they should be granted fairly.
4. Reduces the Gender Pay Gap
Pay transparency can make a difference in reducing the gender pay gap. This gap refers to the difference between what men earn and what women earn, which has remained consistent for the past 15 years. The Pew Research Center analysis from 2020 noted that women earn 84% of what men earn. This translates to women working 42 more days than men to make up for this difference.
Companies that openly disclose salaries will have to take this pay gap into account and adjust accordingly. When a female realizes that her co-worker with the same title and experience is making 16% more, she will likely start looking for work elsewhere.
Companies like Starbucks, who are transparent with salaries and don’t ask for prior compensation, have achieved pay equity. This positively affects women and employees who are Black, Indigenous or people of color. Of course, many other companies have a long way to go, but pay transparency can make a difference over time.
Takeaways
While you may not want to reveal your salary in your next TikTok video, it could be a viral topic for discussion! It will be a while before people are openly discussing their paychecks. Yet, pay transparency can be beneficial for both employers and employees. It can move the needle toward equality and fairness for all workers everywhere, and that’s something worth pursuing.