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In Company Culture — by Dave Anderson
Even though it has become common for companies to attract top talent with unique employee perks, most people value a solid and fair salary the most. Everyone has bills to pay and financial goals in mind and the right compensation is more often than not the main reason they accept a new job or stay with a company.
Since money is so important to people, compensation can be a divisive topic in the workplace. On one hand, an employee can feel they’re underpaid compared to their peers and let the ill-will affect their job performance. But on the other, someone can believe they’re paid fairly and even do great work in hope of earning more down the road.
Because attitudes about salary vary, companies take different approaches in revealing how much everyone earns. There are generally three levels of salary transparency that each have specific advantages and disadvantages.
It’s rare but there are a handful of well-known brands that allow every member of the staff to see what their fellow team members earn. Buffer, a social media scheduling tool company, is perhaps the most publicized company that has fully-transparent salaries. In 2013, they released a spreadsheet containing the compensation details for every employee, not only internally, but to the general public as well.
While Buffer is more publicized for their salary transparency, Whole Foods is the most popular brand that provides fully-transparent salary information. They’ve followed the practice since 1986 but compensation details are only available to employees, not the general public. Here are the advantages and disadvantages of fully-transparent salary information:
Companies that practice full transparency are hard to come by but there aren’t many disadvantages to it. Employees can focus on their job responsibilities without a doubt in their mind that they’re underpaid compared to their peers. They can also see what the people who make up the upper echelon of their company earn so they have something to aspire to.
Salary information for the vast majority of companies is partially transparent. Most don’t actively publicize compensation details but the pay ranges for specific positions are available on job descriptions or can be shared on Glassdoor reviews.
Partial transparency is far less structured than full transparency. There are no spreadsheets or other documents outlining the ranges of every position. In many cases, compensation information won’t be available for every position, especially if the role is held by a small number of people in the company. Here are the advantages and disadvantages of partially-transparent salary information:
Most companies practice partial-salary transparency. It gives the company room to maneuver when determining the proper amount to pay each employee, while also giving employees some idea of how their compensation compares to their colleagues.
It’s less common than companies that practice partial salary transparency but some companies actively try to keep employee compensation under wraps. Their leadership can believe salary information is only the company and each individual employee’s business and sharing any details can cause problems.
While these companies won’t post any compensation details on job descriptions or share information internally, details can still leak out. It might seem like a lack of salary transparency requires no effort on the company’s part but it can often be a challenge to keep this information private and deal with the problems that come up if someone learns they are underpaid. Here are the advantages and disadvantages of providing no salary transparency:
Providing no salary transparency can seem like a good idea at first. Money is often the source of conflict and problems can be avoided by keeping that information private, right? That might be true to some extent but people talk and candidates and former employees can share information online, making it nearly impossible to keep salary information 100 percent private. When the details get out, serious problems can arise if the company has been unfair.
Every company has its own philosophy on salary transparency. The key is to always ensure you have the necessary budget before hiring a new employee so you can fairly compensate them based on what you pay their fellow team members and the skills they bring to the table.
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