Time to lift the lid on employee salaries

by Stephanie Zillman24 Apr 2012

It’s an unquestioned norm: salaries are not open for everyone in an organisation to know. It’s generally accepted that mayhem would ensue in the workplace if people knew what their co-workers, their managers or – gasp – the CEO was making, according to a leading workplace commentator.

If an employee finds out that their colleague, who seemingly performs the same tasks, holds the same responsibility and has a comparable level of skills and experience makes $1,000 more per month, presumably there would be a good and fair reason – one that the employee is capable of understanding and accepting. “The main reason may precisely be that they’re not currently fair and therefore making them open seems dangerous to many workplaces,” says Alexander Kjerulf, author of Happy Hour is 9 to 5 in his online blog. In the absence of any reasonable explanation over the pay discrepancy, the employee inevitably becomes resentful and looks to move on, Kjerulf adds.

According to Kjerulf, there are three reasons why keeping salaries a secret is damaging:

  • It frustrates employees because any unfairness (real or perceived) can’t be addressed directly.
  • They’re not secret anyway. People talk.
  • It perpetuates unfair salaries which is bad for people and for the organisation

In organisations where salaries are kept secret, employees inevitably become aware of how much their colleagues earn, but may feel they can’t address it with their HR manager or direct manager, because they aren’t supposed to know. “When a company sets up a situation where people can see the unfairness but can’t address it directly, or even discuss it openly, they’re rigging the system for maximum frustration,” Kjerulf says.

The case for open salaries

Making salaries public (inside the company of course) has some major advantages according to Kjerulf:

  • Salaries will become more fair. The system gets a chance to adjust itself.
  • It will be easier to retain the best employees because they’re more likely to feel they’re getting a fair salary.
  • The pressure is on the people with the high salaries to earn their keep. Everybody has to pull their weight – the higher the salary, the larger the weight.
  • Employees will be made aware of the factors that influence their salary. If their salary is a reflection of customer satisfaction, hours worked, quality, sales figures, seniority, skills, commitment to the company and/or education – being made aware of the figure they could earn with additional skills or results is a source of employee motivation.

Push for pay equity

According to the latest figures form the Equal Opportunity for Women in the Workplace Agency (EOWA), women continue to experience a wage gap of 17.2% – a very slight improvement on the 18.5% wage gap recorded in 1984. “Women’s levels of education and length of time in the paid workforce have improved greatly,yet the gender pay gap has stayed fairly much the same,” Philippa Hall, pay equity consultant from EOWA said.

EOWA has repeatedly called on employers to make their salary policies more transparent, and provide the following checklist to ensure pay equity best practice:

  • Do your organisation’s policies and practices support pay equity? Is there a transparent performance review process and equitable access to training, promotions, and rewards and benefits programs?
  • Does your organisation have an equitable wage setting process that has been checked to ensure it is free of gender bias?
  • Are jobs fully and fairly described and valued, and work value factors such as skill, level of responsibility and working conditions consistently measured?
  • Has your organisation undertaken a pay equity audit to determine areas and occupations where gender pay inequity may exist? A pay equity tool is available from EOWA’s website. An audit usually involves a review of the payroll data to identify the areas where there may be gender inequities.
  • Is pay equity incorporated into your organisation’s business objectives and goals?
  • Does your organisation compare salaries for men and women upon commencement, yearly and on promotion to analyse where gaps exist and either seek justification for any imbalances or work to eliminate them altogether?


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  • by Amrita 24/04/2012 2:36:49 PM

    While i agree with the concept of the whole pay for performance culture being open and transparent to all - revealing individual salary details has many more legal connotations than HR - individual salary details are personal information (much like age etc) which cannot be revealed to other employees and can effect people loan/financing capabilities . Hence while the concept is good inthe current legislative enviornment it is uthopian at best

  • by Des 24/04/2012 3:05:10 PM

    Not sure salary data is so secret anyway these days with sites such as LiveSalary and GlassDoor.

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