Pay and display: Would you make salaries company-wide knowledge?

A US company lets employees look up each other’s salaries and bonuses in the interest of transparency. Should Kiwi companies be doing the same thing?

Pay and display: Would you make salaries company-wide knowledge?
Would you be happy with your employees knowing how much you’re paid?

For workers at the US supermarket chain Whole Foods, company salaries are shared knowledge.

The business has an open policy where staff can look up anyone’s salary or bonus from the previous year, all the way up to CEO level, Business Insider reported.

The idea behind the policy is to encourage conversations about salary among the staff and to promote competition within the company.

So should New Zealand businesses be sharing their salaries with workers?

John McGill, CEO of remuneration and performance consulting company Strategic Pay, told HRM that while some small businesses here have adopted such a model, most large organisations avoided it.

“You open up a debate that’s very difficult to control. It almost becomes that you’re trying to transfer management to the staff and you’re asking them to form opinions on what other people should be paid. Generally, we steer clear of it in New Zealand. It’s regarded as too difficult to be a valid part of the transparency process in organisations. Also, our privacy laws would probably cut in with something like this as well.”

He said that in some organisations, the senior executives’ pay was published in annual reports, but it would be more problematic to provide salaries for lower positions.  

“It could throw up anomalies that organisations sometimes have to deal with, like legacy remuneration schemes that are the result of a merger or an acquisition.

“If two organisations merge together and one had, historically, a generous remuneration policy, you can’t reduce people’s pay unilaterally. You sometimes have to live with some people being paid at a level you don’t deem to be appropriate, but you’re stuck with it.”

McGill said the organisations he’d heard of with open policies around pay were very small and in sectors like IT.

“It might be 10 or so people and they might have only been together for a year and they don’t have any fear. I’ve heard of managers just putting the list up on the staff notice board.

“To try that in larger or more established organisations, I think you’d end up spending hours, if not weeks, discussing why someone was at a certain level and somebody else wasn’t.”

From a legal point of view, it would raise privacy issues, said Dundas Street Employment Lawyers principal Blair Scotland.

“Could an employer do that without getting everyone’s individual consent? No, is the short answer.”

He said that while a CEO might be happy for employees to know what they earn, there were likely to be others in the organisation who were not happy for the information to be disclosed.

“As an existing company, you would struggle to do it without everyone’s individual consent. If you were starting up a new organisation, could you technically make it a condition of employment that people were prepared to have their salaries disclosed? I suppose so, but you’d have to be very much in a start-up phase.”

Would an open policy around salaries work in your organisation? 

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