Time to lift the lid on employee salaries

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It’s an unquestioned norm: salaries are not open for everyone in an organisation to know. It’s generally accepted that mayhem would ensue in the workplace if people knew what their co-workers, their managers or – gasp – the CEO was making, according to a leading workplace commentator.

If an employee finds out that their colleague, who seemingly performs the same tasks, holds the same responsibility and has a comparable level of skills and experience makes $1,000 more per month, presumably there would be a good and fair reason – one that the employee is capable of understanding and accepting.

“The main reason may precisely be that they’re not currently fair and therefore making them open seems dangerous to many workplaces,” says Alexander Kjerulf, author of Happy Hour is 9 to 5 in his online blog. In the absence of any reasonable explanation over the pay discrepancy, the employee inevitably becomes resentful and looks to move on, Kjerulf adds.
According to Kjerulf, there are three reasons why keeping salaries a secret is damaging:

  • It frustrates employees because any unfairness (real or perceived) can’t be addressed directly.
  • They’re not secret anyway. People talk.
  • It perpetuates unfair salaries which is bad for people and for the organisation

In organisations where salaries are kept secret, employees inevitably become aware of how much their colleagues earn, but may feel they can’t address it with their HR manager or direct manager, because they aren’t supposed to know. “When a company sets up a situation where people can see the unfairness but can’t address it directly, or even discuss it openly, they’re rigging the system for maximum frustration,” Kjerulf says.

See also: Ignore Commission's pay equity drive at your $100m peril

The case for open salaries

Making salaries public (inside the company of course) has some major advantages according to Kjerulf:

•    Salaries will become more fair. The system gets a chance to adjust itself.
•    It will be easier to retain the best employees because they’re more likely to feel they’re getting a fair salary.
•    The pressure is on the people with the high salaries to earn their keep. Everybody has to pull their weight – the higher the salary, the larger the weight.
•    Employees will be made aware of the factors that influence their salary. If their salary is a reflection of customer satisfaction, hours worked, quality, sales figures, seniority, skills, commitment to the company and/or education – being made aware of the figure they could earn with additional skills or results is a source of employee motivation.


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