Pay Transparency Survey Results: Part 1
Posted on Sunday, February 22, 2009 by Frank RochePay transparency are words you’re going to be saying a lot this year. One element of the Paycheck Fairness Act (H.R. 12) opens the door to pay transparency:
{The Act] Prohibits retaliation for inquiring about, discussing, or disclosing the wages of the employee or another employee in response to a complaint or charge, or in furtherance of a sex discrimination investigation, proceeding, hearing, or action, or an investigation conducted by the employer.
I’ve been very interested in pay transparency for a long while. My specialty is pay communication. I’ve written a lot about getting pay right. In fact, Women Make Less Than Men: 5 Things HR Needs to Do Right Now to End Pay Inequality is one of the biggest drivers of traffic to this site, almost two years after it was written.
I’ve done compensation communications or a long time and have seen the spectrum of pay revelations. Some secret. Some revealing. Some with the books flung open. With all the talk about pay transparency these days, I was curious about what KnowHR readers thought about opening the pay books for everyone to see.
Here’s what 609 KnowHR readers thought about pay transparency. (Special thanks to Chris Kelley of KnowledgePay.com and Ann Bares of Alutra Consulting Group for helping get the word out.)
Question 1:
Question 2:
Question 3:
Question 4:
I’m assembling the hundreds of written comments we got into a report. I’ll get that to you soon. Here’s one of the answers to the question, “If you opened the books on everyone’s pay and everyone knew what everyone else was paid, what problems would you anticipate?” that merits some long and hard consideration. (There are so many great responses. I’m grouping them by theme.)
There’s an old saying that people are satisfied with what they get paid right up until they find out what the next guy makes. If everyone knew what everyone else makes, then productivity would drop like a rock while people sat around complaining that they weren’t treated fairly (as if there is any real definition of fair). Companies should focus on setting a pay policy and paying people accordingly. If the policy is to pay at median, then do so. If it is to pay higher performers better, then do that. But there is no magical definition of fair and I think it is naive to think there is. Pay is not as simple a subject as this survey implies.
KD
Feb 28th, 2009
Frank –
Nice work – how does this post only have one comment?
Appreciate you doing this and the balanced approach. I’ve been thinking a lot about this lately, and while I’m worried about the employee relation impact of this, I’m open to the conversation. Thanks again for putting together, good stuff…
KD
Frank Roche
Feb 28th, 2009
Thanks, Kris. Yeah, it’s funny…this blog doesn’t get a ton of comments…I’ve never really sought a bunch. Gathering the data was fun…there’s more coming.
Chris Young
Mar 2nd, 2009
Great work on the survey Frank! I really enjoy learning what active professionals are thinking on these issues!
I’ve shared your post with my readers in my weekly Rainmaker ‘Fab Five’ blog picks of the week (found here: http://www.maximizepossibility.com/employee_retention/2009/03/the-rainmaker-fab-five-blog-picks-of-the-week.html) to let them know about your findings.
Be well Frank!
SJDelaney
Mar 5th, 2009
As in almost any situation you can think of, lack of transparency can be a shroud of abuse. The best example of transparancy in pay is of course the military. In 12+ years of service in the US Army and Illinois National Guard I never had a problem with someone knowing what my paycheck look like. It never impacted my dedication or effort, and I don’t recall ever hearing someone complain. I don’t think General Powell was too concerned that I knew what he was making. -sd
Frank Roche
Mar 5th, 2009
@SJ, you make a good point about how pay transparency works in the Army. Perhaps it’s true that your dedication and effort didn’t waver…I’m sure that’s the case. And I’m sure it’s the case for a lot of people in the military. But I’m sure that it doesn’t apply to everyone — not everyone performs at the same level.
I’m not sure the military model works well in general business. I mean, we want people to challenge leaders, we don’t ask people to follow the rank system or risk censure. I’m not being critical of the military, far from it, but I am saying that it’s regimented (of course) and it’s rules driven and it’s all about chain of command. That’s one aspect. The second is that people in public or private companies didn’t sign on for the same deal. Most didn’t want to be judged by time in service. Most didn’t know what pay others made…and pay is a measure of self worth. In the military, everyone knows about rank, but there must be instances of people asking, “How in the hell did he end up with Oak Clusters?” or “What do I have to do to get ahead? I can’t stay a Private forever.”
I know this is a bit jumbled. Exposing pay without any other criteria — performance over time, background, education, extra effort that people have taken over time, etc — is going to cause a firestorm that even a military intervention couldn’t tamp down. I think when pay transparency works it’s in union or military environments. I’m not sure that’s what we want everywhere.
As with all things, I could be wrong.
PM
Mar 4th, 2010
Just came across your website and find it very interesting. I work in a government where all salaries are public record and compensation practices are governed by various laws and administrative rules. Employees as well as the public has access to salaries through a website: http://mapyourtaxes.mo.gov/MAP/Employees/ This information is used by some employees to question any raises granted to other employees and to complain about perceived inequalities or “unfairness” in salaries. The complaints are not that the employee feels undercompensated because of effort expended, production levels, or labor market conditions, but because the employee is paid less than a co-worker. I believe that since compensation is rule-driven, complaints are kept to a minimum and pay transparency does not affect morale or performance to any significant degree.