Is is time we're OK with talking pay?
Jenny Roper, November 18, 2016
As individuals and businesses we hate talking about wages. But in an age of oversharing nothing stays secret
It’s the ultimate dinner party faux pas. The dessert’s been served, the drinks are flowing, and everyone’s in a suitably jovial mood. And then the person next to you utters those fateful words: “Do you mind me asking how much you get paid?”
Disaster. Of course you mind. As everyone falls silent out of sheer horror (and more than a touch of curiosity), things have become rather tense.
But why are we so sheepish about pay? Thanks to social media many of us now share everything; from what we ate for breakfast to who we’re angry with (albeit often in the form of cryptic passive-aggressive Facebook posts…)
We’re also living in a climate of ever-heightening interest in pay transparency. In 2018 all companies of 250 employees or more will be required to publish their gender pay gap figures online. And intensifying scrutiny on, and dissatisfaction with, executive pay seems to be coming to a head with Theresa May calling for businesses to reveal the ratio between chief executive pay and the average worker’s.
So could it be, in an age of increasing transparency and social sharing generally, that we’re all on the road to becoming much more au fait with talking pay?
The final taboo
“Salary is one of those things that I think everybody wants to know but few people want to talk about openly. It’s still very much a taboo,” says Joe Wiggins, head of communications for Europe at company review website Glassdoor.
“What you get paid will determine more or less how you live your life. People knowing your salary means they know whether your lifestyle is you living above or below your means, and there’s a lot of judgment associated with that,” feels Hailley Griffis, a Canadian PR specialist at global tech start-up Buffer, on why pay is still such a taboo worldwide.
Griffis has had particular cause to contemplate this taboo. She works at one of a handful of companies – Whole Foods, Salesforce and SumAll being the other oft-quoted examples – that have decided to open everyone in the business up to this judgment. As of November 2013, the salaries of all 80 of Buffer’s employees have been published in a Google spreadsheet for anyone to find – and judge – online.
But the reaction from staff was a far cry from the horror you might expect. The rationale behind co-founders Joel Gascoigne and Leo Widrich taking this radical step, and why it’s so appreciated by colleagues, is that it takes away the distraction of wondering if you’re being paid fairly. “There’s no mystery around ‘are my colleagues getting paid more than me?’” explains Griffis. “I’ve worked at a couple of start-ups before and that’s a conversation that always happens. A lot of start-ups are full of young people and that turns into gossip and a negative environment. It’s nice to have that all out in the open. I know I’m not the only one who feels that way.”
The start-up also makes all company financials public, which boosts trust and engagement further still, feels Griffis. “I think people are quite proud we’re transparent because it is unusual; it makes you feel there aren’t secrets being kept from you,” she says. “When that salary spreadsheet first went live applications [to jobs at Buffer] doubled that month, so it’s definitely something a lot of people are interested in.”
Appetite for openness
Recent research from Glassdoor confirms this growing appetite. Its Global Salary Transparency Survey found that 70% of employees across seven countries (Canada, France, Germany, The Netherlands, Switzerland, the UK and the US) believe salary transparency is good for employee satisfaction, and 72% think it’s good for business.
“If you have the choice to work somewhere very closed and hierarchical, or somewhere open, dynamic and transparent you’re going to choose the open one,” confirms Daniel Tenner, founder of GrantTree, a London-based start-up that helps businesses access government funding, and that has always (as part of an overall culture of transparency) published salaries internally.
Organisations must catch on to the fact that tomorrow’s workforce will not see pay transparency as just a ‘nice to have’, agrees Annamarie Petsis Jones, HRD at fast-growing energy provider Opus Energy. “Young people are very forceful about knowing things and dealing with information, and they share that information quite readily,” she says. “I think transparency is a requirement now for any business and the sooner we get our heads around that the better.”
But just what do different people mean by ‘salary transparency’? Is it always the same thing? And is the kind of total pay transparency the likes of Buffer and GrantTree have bravely gone for realistic for all companies in all sectors – and perhaps most pertinently, of all sizes?
Petsis Jones would say not. For her the journey Opus has recently embarked on is about making pay ranges much clearer and publicly available. Most crucially perhaps, it’s about ensuring the rationale behind where you as an employee sit within a banding is as transparent as possible.
“In our most recent annual survey we had a lot of feedback that people don’t understand the pay scales in our business, and there’s a real lack of transparency around if you’re pursuing a certain pathway what that means from a pay perspective,” explains Petsis Jones, regarding her largely millennial workforce (the average age at Opus is 31).
“We’re doing a huge amount of work on equal pay to prepare for [gender pay gap] reporting so that immediately throws up anomalies where you have to look and think ‘how has that even arisen’?” she adds. “It starts to make you appreciate that this lack of process then leads to anomalies that have nothing to do with gender, but could easily be construed that way.
“People are moving so rapidly at the moment; the market has sped up dramatically and so people don’t care – if they’re offered £1,000 [more] they’re off,” Petsis Jones adds, of the imperative to have a rigorously fair and well-communicated system to retain today’s more mobile worker. “So there’s even more of a requirement to say ‘actually if you stay with us this is going to be your progression path’.”
But the idea of publishing salaries in all their gory detail is something Petsis Jones “would be panic-stricken to do”. And for her there’s no extra benefit. “I don’t know what you gain from it,” she says. “I can understand why companies do the whole ‘I’ve had enough, here we go…’ but what about the people who absolutely don’t want their pay revealed and are aloof to all of the gossip going on? It’s a very big paintbrush to solve the issue.”
Dow Scott, professor of human resources at Loyola University Chicago and specialist in compensation, incentive pay and high performance organisations, is similarly of the mind that publishing the exact amount everyone takes home is not the only, or indeed the best, way of reassuring employees.
Scott has been at the receiving end of both full transparency – with his previous employer a public university obliged by US law to disclose all staff salaries publicly – and a frustrating lack of transparency at his current private sector employer. “Every year I would go over to the library where they kept this big bound volume that listed what every employee was paid and check if the department had treated me fairly,” he reminisces.
“Now I’m at a private sector university that doesn’t share any information on pay. I find it sort of frustrating and in some ways I imagine the worst,” he says, neatly encapsulating a major issue with pay secrecy – that the imagination is prone to dreaming up far worse things than are actually true.
What Scott craves, however, is not full disclosure but a sense of the logic behind pay decisions. Research in this area confirms he’s not the only one to feel this way. It consistently shows “you don’t actually have to publish people’s salaries to give reassurance; you just need to explain the why and the structure,” Scott reports.
Publishing individual salaries could actually be quite harmful, feels executive director of HR at homelessness charity St Mungo’s Helen Giles. Giles’ motto is “keep pay simple, keep it fair and then leave it well alone”, along with: “have a system, have a process and then stick to it”. All pay scales are available to view on St Mungo’s intranet.
“When you put exact figures to things people start to say ‘well that sounds like an awful lot of money; that’s six times more than what I get’,” she says. “Maybe people lose sight of [the fact] that [that figure] is not a lot, it’s what that person is worth within the agreed parameters. I’d prefer to keep people’s focus on that.”
Psychology around money is a complex beast, Giles points out, with very few having a clear fixed idea of ‘what they’re worth’ in isolation to how much others get paid, or how much their company can afford.
“There’s this belief that people are motivated by money above all things, which of course simply isn’t true,” she says. “The stuff they remember is: does somewhere feel like a good place to work? And one of the things that makes somewhere feel like a good place to work is a sense of fairness. So people need to believe that pay is fair.”
What alarms Giles when she’s working with other businesses as managing director of HR consultancy Real People, however, are the many who still have “completely random” approaches to remuneration, never mind a fully transparent trust-enhancing stance.
Driving this point home, Glassdoor’s transparency survey found that more than a third of employees (36%) lack a good understanding of how people are compensated at all levels of their company, with 69% wishing they had a better understanding of what fair pay is for their position and skillset.
Scott explains that this widespread, globally occurring lack of transparency has persisted for a long time, and continues to baffle him: “I’ve researched this topic for 20 years, and virtually every time compensation professionals say it’s a good idea to communicate pay and be more transparent. But they don’t do it. Huge numbers of organisations don’t even tell people what the pay ranges are. So [employees] have no idea when they get their pay cheque or raise how that relates even to themselves, let alone anybody else. I’m really confused why companies seem very resistant to doing this.”
The obvious reason would be inherent unfairness in a firm’s approach to pay – inconsistencies that would make even publishing pay ranges and being more transparent about pay rationale all but impossible. “The most common mistake I see with organisations is that they have parameters for pay but they breach them,” confirms Giles. “Somebody might be leaving and they’re worth an awful lot to the business, then you get something known as grade drift. It’s as common as anything and it’s because organisations give too much discretion around pay.”
A picture hardly suggestive of a brave new world of pay transparency. But GrantTree’s Tenner is encouraged that UK PLC is moving (albeit slowly) in the right direction.
“I think as long as the dominant model in society is closed top-down organisations, large companies will not be [more transparent about pay]. But once there is that shift in the way businesses are run in general the large ones will follow suit,” he says.
For Tenner, moves by the likes of professional services firm Accenture to engage in more open dialogue with staff through continuous appraisals rather than annual reviews, signals a move in the right direction. “That allows people to overcome the barriers of feeling like pay and performance is a very difficult conversation they can only have once a year,” he feels. “That’s a massive building block to a more open culture.”
The bottom line for many will be that some form of transparency is going to be increasingly demanded by employees. So employers will have no choice but to provide this if they want to compete for talent with other more agile organisations.
And there’s certainly strong incentive for getting on board before the demand really reaches fever pitch. Transparency on most matters is undoubtedly good for staff engagement and so ultimately for business – and pay is no exception. In the words of Opus’ Petsis Jones: “Transparency leads to a stronger, engaged workforce and that’s what HR is here to do at the end of the day.”