What counts as pay transparency? It depends on who you ask

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Americans have a cultural aversion to personal income. A 2018 survey by Capital Group found that “salary or household income” is the number one taboo for Americans to talk about, ahead of “marital problems, mental illness, drug addiction, race, sex, politics and religion.” And when it comes to the corporate world, many companies make it a policy to capture the reality of who earns how much in a visual vault; According to a study by the Institute for Women’s Policy in 2021, between 2017 and 2018 “almost half of full-time employees said that they were discouraged or prohibited from discussing wages or salaries”.

However, workers’ willingness to share and even request salary details can increase as employees from various industries – engineering, publishing, media, and human resources – have collected their own salary data to highlight what they deserve and, if necessary, their employer to be held accountable.

Organizations that ignore employee demands for greater transparency may have retention issues. A report by Beqom from 2021 found that the drive for pay transparency is particularly strong among younger workers. “Our report found that more than half (58 percent) of employees would consider changing jobs in order to achieve more pay transparency, and at Gen-Z that number rises to 70 percent,” said Beqom founder Tanya Jansen at the beginning of the Year opposite Inc ..

Laws vs. company policies vs. employees

Proponents of wage transparency argue that wage secrecy perpetuates unequal pay between workers. The lack of transparency has particularly contributed to wage inequality for women, who made 82 cents for every dollar men made in 2020, according to data from the Bureau of Labor Statistics. A LeanIn survey from 2021 found that “Black women in the US earn 37% less than white men and 20% less than white women,” while 2019 census data shows that Hispanic women earned 53% of what white men that year earned the lowest demographic coverage.

While the Equal Pay Act of 1963 banned federal gender wage discrimination, 19 states and Washington, DC, made it illegal for companies to prevent workers from discussing wages, according to a Department of Labor, according to Tracker and Barack Obama signed an ordinance in 2014 on retaliation for workers discussing compensation. Both Colorado and California passed additional laws in 2021 specifically aimed at wage transparency. In California, most companies with at least one state employee are required to report salary information to the Department of Fair Employment and Housing, while Colorado companies are required to disclose salary ranges for vacancies.

“When you make pay in its extreme form transparent, inequalities such as gender inequalities or other types of inequalities become apparent,” Todd Zenger, professor of strategic leadership at the University of Utah, told HR Brew.

And some workers insist that money must be openly discussed. Pay scales created by anonymous people in the publishing, media, and human resources sectors have been circulating the Internet for years, and at least one employee-driven initiative seeks to highlight the pay gap for people of color in tech.

Taylor Poindexter, a software engineer and co-founder of the Black Code Collective, recently told Bloomberg how her efforts to collect salary data from her peers changed their perception of fair pay: “I realized that, as a woman and a black, maybe I am not paid as well as I could be, ”she told the point of sale.

“It’s this cultural thing in our country or in the West … where we just don’t talk about it,” said Scott Morales, a publishing coordinator at Oxford University Press in New York, who recently won a vote for the News Union Guild ” I just think that we are something of a wage ignorant in this country… learning more about these things and having honest conversations with one another is extremely enlightening, ”he told HR Brew.

Opacity of transparency

Some organizations are responding to the call for more wage transparency, albeit with their own ideas. Chris Savage, CEO and co-founder of video marketing company Wistia, told HR Brew about his company’s version of payroll transparency that was implemented when workers continued to express uncertainty about how to advance their careers. Wistia’s system includes seniority levels, which correspond to a salary range that is updated annually in accordance with market data from comparable companies. In the company, the assortments are not shown to everyone, but only to workers at the same level.

Specifying a bandwidth rather than a specific number for each employee “encourages people to compare themselves to job requirements, not to others,” explains Aleksandra Paszkiewicz, Head of People at software company Netguru, which uses a similar model.

Justifying compensation packages against market norms should at least create some semblance of fairness, but it’s an imperfect system as it often discounts the performance-pay ratio, Zenger explained. “You can tell me at the beginning what my market wage is, but then I’ll stay for five years, and [if] I’m making all kinds of very specialized company-specific investments in the company that I can’t do anywhere else now, what is my market wage? “

The Expensify financial platform has a kind of internal marketplace: “Your compensation is determined by your colleagues,” said David Barrett, CEO of Expensify, to HR Brew. Everyone in the company has their wages determined by a vote in which the performance of a worker is assessed according to the value he creates for the company. “You can do something that isn’t very valuable – or people just don’t see the value -[but] it’s not going to make a lot of money, ”Barrett said.

The kind of radical transparency in which all salaries within an organization are made fully public is rare, but not entirely unknown; Tech company Buffer, for example, has listed all of its employees’ salaries on its website. Still, the salary revelation can make all workers jealous. When salaries are shown in full, Zenger said, workers “can react with envy, which is emotionally stressful but also distracting. It can burden the company in the sense that it reduces the effort. “

More normalized in the future?

It is not that transparency or mere promises to eliminate wage inequality in the workplace suddenly eliminate any semblance of the pay gap. For example, a 2020 study by Zenger and HEC Paris Professor Tomasz Obloj found that wage transparency contributes to more equality across the board, but does not guarantee full wage equality or employee satisfaction.

Since websites like Payscale and Glassdoor offer job seekers the opportunity to search for salary averages for specific occupations if necessary, a cultural shift in expectations of salary transparency is to be expected, argues career coach Judith Gerber.

“People’s idea of ​​privacy has changed … the web has changed all of that, technology has changed all of that,” she told HR Brew.

Younger workers want a “fair and just workplace where people of all ethnicities” [and] Gender identities are treated fairly. Therefore, a certain level of transparency is required to instill trust in the employees who are important to their employers, ”said Zenger.

For his part, Scott Morales said, “It is a very important time for our industry and many other industries to be able to have this conversation, ‘Well, maybe, maybe we should talk about what we’re doing, maybe we should share with other people so that we can see that we are all being exploited. ‘”

Do you work in HR or do you have information about your HR department that we should know? Contact Sam Blum via the encrypted messaging app Telegram (@SamBlum_Brew) or just send an email [email protected].

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