What counts as pay transparency? Depends on who you ask
Americans have a cultural aversion to discussing personal income. A 2018 Capital Group survey found that “salary or household income” was the top conversational taboo for Americans, ahead of “marriage issues, mental illness, drug addiction, race, gender, politics. and religion ”. And when it comes to the corporate world, many companies have a policy of keeping the reality of who’s how much locked in a figurative safe; According to a 2021 study by the Institute for Women’s Policy Research, “almost half of full-time female workers said they were discouraged or banned from discussing pay or wages” between 2017 and 2018.
But workers’ willingness to share and even demand wage details may be on the rise, as employees in various industries spanning tech, publishing, media, and human resources have collected their own data on wages. wages, with the aim of highlighting what they earn and, if necessary, holding their employers accountable.
Organizations that ignore employee demands for greater transparency can struggle to retain loyalty. A 2021 report from Beqom found that the pressure for pay transparency is especially strong among young workers. “Our report found that more than half (58%) of employees would consider changing jobs for more pay transparency, and for Gen Z the number jumps to 70%,” said Beqom founder Tanya Jansen, at Inc. earlier this year.
Laws versus company policies versus workers
Supporters of pay transparency argue that pay secrecy perpetuates unequal pay among employees. The lack of transparency notably contributed to wage inequality for women, who earned 82 cents for every dollar earned by men in 2020, according to data from the Bureau of Labor Statistics. A 2021 LeanIn survey found that “black women in the United States are paid 37% less than white men and 20% less than white women,” while 2019 census data shows Hispanic women earned 53% of what white men earned that year. , the lowest recorded population.
While the Equal Pay Act of 1963 outlawed gender-based wage discrimination at the federal level, additional laws were enacted in 19 states and Washington, DC that prohibit companies from preventing workers from discussing wages. , according to a Ministry of Labor. tracker, and Barack Obama signed an executive order in 2014 banning retaliation for workers discussing compensation. Colorado and California both passed additional laws in 2021 specifically targeting pay transparency. .
“If you make pay transparent in its extreme form, it clearly highlights inequalities, like gender inequalities, or other kinds of inequality,” Todd Zenger, professor of strategic leadership at the University of Utah.
And some workers insist on talking openly about money. Salary spreadsheets compiled by anonymous employees in the publishing, media and human resources industries have been circulating online for years, and at least one worker-initiated effort tries to highlight the pay gap for people of color in tech.
Taylor Poindexter, software engineer and co-founder of the Black Code Collective, recently told Bloomberg how her efforts to collect data on the wages of her peers transformed her idea of fair compensation: “I realized that as a woman and person of color, maybe I am not paid as well as I could be, ”she told the store.
“It’s this cultural thing in our country, or in the West… where we just don’t talk about it,” said Scott Morales, editing coordinator at Oxford University Press in New York City, who recently won a vote. to unionize with the News. Guild. “I just think we’re kind of like ignorant of wages in this country… knowing more about that stuff and having honest conversations with each other is extremely telling,” he told HR Brew.
Some organizations are heeding the call for more pay transparency, albeit with their own ideas of what that entails. Chris Savage, CEO and co-founder of video marketing company Wistia, spoke to HR Brew about his company’s version of pay transparency, which was implemented when workers continued to express uncertainty over the way to develop their career. Wistia’s system includes seniority levels that correspond to a salary scale updated annually, in accordance with market data purchased from comparable companies. In the company, the ranges are not shown to everyone, only to workers of the same level.
Revealing a range, rather than a specific number for each employee, “encourages people to compare themselves to the job requirements, rather than to others,” said Aleksandra Paszkiewicz, personnel manager at software company Netguru, which uses a similar model.
Justifying pay against market norms should inspire confidence in at least some semblance of fairness, but it’s a flawed system because it often overlooks the relationship between performance and pay, Zenger said. “You can tell me what my market salary is at the start, but then I stay five years, and [if] I make all kinds of very specialized and business specific investments in the business that I can’t take anywhere else now, what is my market salary? “
On the financial platform Expensify, there is a kind of internal marketplace: “Your compensation is determined by your peers,” David Barrett, CEO of Expensify, told HR Brew. Everyone in the company has their compensation determined by a vote, in which a worker’s performance is assessed against the value they create for the company. “You can do something that doesn’t have a lot of value — or people just don’t recognize the value—[but] it’s not going to make a lot of money, ”Barrett said.
The kind of sweeping transparency in which all salaries within an organization are made fully public is rare, but not totally unheard of; tech company Buffer, for example, has all of its employee salaries listed on its website. Still, showing wages for all to see can make workers envious. When wages are prominently displayed, Zenger noted, workers can “respond with envy, which is emotionally taxing, but it’s also distracting. This can be taxing for the business in that it reduces effort.
More standardized in the future?
It’s not as if transparency, or simple promises to end pay inequality in the workplace, suddenly overcome any semblance of a pay gap. For example, 2020 research by Zenger and HEC Paris professor Tomasz Obloj found that pay transparency achieves more equality in all areas, but does not ensure full pay equity or employee satisfaction. workers.
With websites like Payscale and Glassdoor giving job seekers the ability to research average salaries for specific occupations in the blink of an eye, a cultural shift in pay transparency expectations is to be expected, says the company. career coach Judith Gerber.
“People’s idea of privacy has changed… the web has changed all of that, technology has changed everything,” she told HR Brew.
Young workers want a “fair and just workplace where people of all ethnicities [and] gender identities are treated fairly. And so a certain degree of transparency is needed to instill confidence in employees that “their employers care,” Zenger said.
Scott Morales, for his part, said that “this is a very important time for our industry and many industries, to be able to have this conversation of, ‘Well, maybe, maybe we should talk about this. that we are making, maybe we should share this with other people so that we can realize that we are all being exploited.
Do you work in HR or do you have information about your HR department that we should know about? Contact Sam Blum through the Telegram encrypted messaging app (@SamBlum_Brew) or simply by email [email protected].