Although wage transparency is not new in the business world, more companies are choosing to be open about their wages to all of their employees. Keeping hush-hush about wages has been the norm for many years for most businesses but some are choosing to operate at the other end of the spectrum through wage transparency. Here are the basics on what it means to be honest and upfront about wages as well as the good and bad that could come with this honesty.
The concept of wage transparency is quite simple. All information about how much each employee gets paid is available to everyone in the business. There are no secrets about anyone’s wages. Businesses who practice wage transparency hope to foster an environment of trust and honesty in their workplace. Since everyone knows what everyone else is making, all employees are on an equal playing field and no one can make incorrect assumptions about their co-workers’ wages.
There are many reasons why businesses have been going the way of wage transparency recently. Although there haven’t been any official studies done on the benefits of wage transparency, business who practice it have observed some positive changes among their employees. When wages are kept a secret, employees tend to speculate about their pay versus their co-workers’ pay. This can cause dissatisfaction, which often lowers performance, and higher turnover rates if employees believe that they are underpaid. Businesses that practice wage transparency have seen an increase in dedication and collaboration among their employees. Wage transparency can help employees become more dedicated to their careers by looking to their higher paid co-workers and adopting some of their positive workplace behaviors. Employees can feel empowered by wage transparency because they have a more accurate way of judging where their work performance falls in with their co-workers and what they need to do to improve.
Wage transparency is not without its issues, however. Having access to everyone’s wages can create an environment of equality and motivation in an ideal situation, but there is potential for this knowledge to breed jealousy between co-workers. This can lead to discord and decreased productivity in the workplace. Employers might also face problems with wage transparency when employees question the company’s pay structure and why some people in the company are paid a certain amount while others aren’t. These conversations, however awkward and uncomfortable they might be, will be necessary to have when practicing wage transparency. Employees may become dissatisfied with their job if they know that they are being paid less than some of their co-workers.
Business are continuing to revolutionize their operations and try new practices, one of them being wage transparency. There are certainly some interesting benefits that could come with a philosophy that supports openness about pay but wage transparency does come with problems of its own. It is also important to note that wage transparency doesn’t have to be all or nothing. There are many creative ways to share information about wages, such as only discussing pay grades or showing how performance scores translate into merit-based raises.