The Transparency Revolution – why we NEED transparency in pay
But don’t think it is only uncomfortable for the employee – bosses and HR departments can be equally uneasy on the topic, worried that their staff may have over-inflated demands that they are not in a position to meet, which may end up in losing a much-valued team member.
It is a fact that remuneration is still a dark art for both employers and employees. This is mainly due to our cultural perceptions that discussing money-related matters is vulgar, so we all abide by this long-established taboo in order to avoid appearing nosy.
Employers do have access to some tools that will give them a notion of the market rate for employees, ranging from headhunter surveys to job-boards ads, but these tools are limited. They won’t know precisely what Joe Bloggs in Accounts, who has been with the firm for 3 years, might make if they moved to the competitor next door, and as an key member of the team they certainly don’t want to risk frustrating Joe come review time.
As for the above-mentioned Joe, and most employees globally, he can only rely on hearsay, anecdotal evidence and an amount of guesswork. The lack of transparency in pay is detrimental to both Joe and his employer, wasting resources and energy on both sides – the employer delivering the news can’t be entirely convinced of their own case, while the employee can feel underpaid and unloved. Fortunately, improving career related tools and access to information, mentalities and cultural barriers are now starting to shift, all for the better.
One of the obvious reasons why more transparency in pay is urgently needed is the amount of time both employees and employers spend trying to pinpoint the going market rate. Hours of trawling job boards, speaking to headhunters, buying drinks for peers and colleagues in the hope that they will divulge what they are earning, agonising about making a case for a raise based only on scraps of evidence… surely all that time and energy would be better spent focussing on growing the business, closing deals, brainstorming and simply doing a better job.
The current lack of transparency in the workplace can create anger and frustration, and often leads to confrontational situations – or even worse, bottled-up resentment – which damages corporate culture, creates tensions between colleagues or even awkward silences when bumping into HR at the water cooler.
Employees would certainly benefit greatly from more transparency if they are contemplating moving abroad or to another city. Broadening horizons and experiencing new things is often the main motivator behind in such decisions, but in order for them to happen, it is vital to know what you may be leaving behind or looking forward to in terms of lifestyle and earning potential. Transparency would be a trigger for geographic mobility for individuals everywhere.
When it comes to making career decisions, students and young graduates are particularly disadvantaged, as not only do they sometimes struggle to understand what their chosen career might entail, but they currently have very little information as to what it might mean for their earning potential long term. Looking ten years down the line, would they make more as an accountant, a lawyer or a banker?
Of course compensation is far from being the end all when choosing a career, but it is still a key piece of the puzzle. That also applies to more seasoned professionals being offered to switch departments – while they may base their decision on their general perception of the new job, they will probably have very little inkling as to the impact on their earning potential 5 years down the line.
So while it is clear salary transparency helps put employees in a stronger position, there are also many cases of employers overpaying their staff. Imagine the situation, your key account manager strides into your office claiming they have an offer from your top competitor and wants a 30% pay rise in order to stay put – with so little visibility and so much at stake it is difficult to resist accepting the deal, but with proper transparency you could make an informed choice protecting the firm’s resources and weighing up the pay rise against the employee’s contribution.
Transparency in remuneration should become an essential part of professional life and career management. More than just a tool to save us all from all the awkward squirming at appraisal time, it will allow us make financial concessions with our eyes wide open, aim to realise our top market value as a professional and take control of our own destiny.
Thomas Drewry is the co-founder of Emolument.com, a leading salary benchmarking site that compiles data from crowds to provide information that helps motivated professionals make more informed decisions. For more information or for your own salary report, go to www.emolument.com