Employee Pay: Should It Be Public Or Private Knowledge?

Employee Pay: Should It Be Public Or Private Knowledge?

When the topic of whether employee remunerations should be transparent is discussed, it is often hard to come to a consensus. Today, an increasing number of employees are requesting for a more honest and open approach to sharing information about everything from company financials to hiring decisions to employee salaries. On the surface, it may feel like it is a good idea to make employee salaries public, but there are certain factors you should consider beforehand and decide whether revealing the salaries of employees is good for your business.

Will it be motivating or demoralizing?

When employee pay matters are made transparent, this move can help to motivate your employees. They can see that there are obtainable and clear rewards when they put in extra effort in their duties and work activities. The idea of being able to increase overall productivity is definitely a huge plus as what you need to do is simply to make their salaries public. However, this may also create an opposite effect if certain employees feel that the extra effort they put in is not being rewarded in the form of monetary compensation.

How will your employees feel about pay matters being made public?

As every company has their own unique corporate culture, it is safe to assume that not all employees will be thrilled about the idea of having transparency around payroll matters. Some of them may feel that the big reveal is an invasion of their privacy. It will be wise to conduct an employee survey or speak to them individually to find out exactly how they will feel about salaries being made public before proceeding with any plan you have in mind.

Do your employees understand the different components of their salaries fully?

Many companies will have some sort of structure in place to determine how much an employee earns, whether it is based on factors like skill or seniority. While many employers may feel that the salary structures are straightforward, not all employees can understand the said structure and may become more disappointed when their salaries are made public. If you decide to make salaries public, you will have to be prepared to explain the pay structure as well as its gaps to your employees to help them understand better and prevent any potential resentment.

The issue with fairness

You may encounter instances of employees feeling slighted when they find out that some of their peers are earning more than them. While you as an employer understand how the salary structure works and that everyone is paid fairly as well as receives fair employee benefits, some employees may not agree with you. If you are going to go ahead, you must be prepared for backlashes. This is understandable as your employees are struggling to come to terms with their salaries being lower than others.

What about the state of things in your business? Has your company made salary information public? Do share with us in the comments!