The Pros and Cons of Salary Transparency / by Lewis Lin

There has been a flurry of talk recently about the words “Salary Transparency”. At first glance, it seems intimidating. Salary transparency? As in my salary will be transparent? That’s exactly what it means. Everyone’s salary in the company is available for everyone else to see.

Sound dreadful? 
Well, it doesn’t have to be. In fact, there are a lot of great aspects of salary transparency that might not be too obvious.

Pro 1: Allows discussion of salary

You can’t improve the wage gap or even increase your own salary if you can’t talk about it with your manager. With salary transparency, it invites people to look over their own salary, compare it to others, and encourage people to talk about it. Once it’s no longer taboo, people can start to fix wage inequalities.

Pro 2: Will clear up any suspicions that they’re being underpaid

If they see that other employees of the same position are being paid more, they can bring it up to their supervisor. Without the transparency, employees may not know that they’re not getting a fair deal. If the higher paid employees are being fairly paid more, the supervisor can explain why that is the case. If employees know why they’re being paid a certain salary, it will also lead to more job satisfaction.

Pro 3: More job satisfaction

If employees can talk about their salaries and get explanations for their wages, they’ll know that they're being paid a fair salary. Once they know that, they can focus on their work and have greater job satisfaction.

Pro 4: Encourages competition

Everyone wants a better salary, so lower paid employees will strive to be more productive in order to get higher wages if they know what skills translate to more money. By opening up the company to salary discussions, employees can talk with their boss about how they can improve and move up the ranks.

While there are some great pros of salary transparency, there are some negative aspects that need to be considered.

Con 1: People might feel embarrassed

If your company has operated with confidential salaries for a long time, suddenly switching to a transparent salary system may be too shocking and embarrassing for current employees. Salaries need to adjust before revealing them or else there may be a riot over disparate salaries.

Con 2: Time consuming

Transparent salary cultures tend to take more time discussing salary than companies with secret salaries. While it is a positive aspects that transparency encourages discussion, it also means that the company will take more precious time than usual to talk about salaries.

With the world and the workplace changing, companies need to consider non-traditional ideas to implement into their culture and business.

With both pros and cons to consider, should new companies implement salary transparency? 

While you’re there, check out our salary negotiation cheat sheet with tips about salary negotiations.

Photo credit to Mast3rod