Is salary transparency a good idea?

Guest blog by Croner pay and reward expert Clare Parkinson

A recent survey undertaken by YouGov on behalf of the jobs website Indeed has revealed that 56% of workers would support making personal information such as monthly salary and tax returns publicity available. With more focus on gender and ethnicity pay gaps in the workplace, some employers may be left wondering whether salary transparency will help them achieve pay equality or cause more divides in the workplace.

Disclosing individuals’ salaries and tax returns is common practice in many Scandinavian countries and there have been growing suggestions that the UK would benefit from doing the same. Currently firms with 250 or more employees are required to publish a gender pay gap report each year, however these reports can be difficult to interpret compared to the relative accessibility of salary disclosures. Therefore, many feel introducing this requirement may encourage employers to be more proactive in addressing pay inequality in order to avoid reputational damage.

From an employer’s point of view, publically disclosing salaries can help attract attention to an organisation and enhance its appeal.  Naturally, those who offer competitive salaries will benefit the most from this, especially when it comes to recruiting and retaining top talent. On the other hand, providing this information may encourage staff to look for work elsewhere if they discover that they are being paid below the market rate for their role.

Employers should also consider how publicly disclosing salaries may reduce the likelihood of staff speculating on the issue, thereby ensuring productivity and morale remain high. It may also encourage existing employees to go in the extra mile at work if they can see the salary they are likely to receive if they qualify for a promotion in the future. Alternatively, having this information readily available may simply encourage workplace discussions about pay, potentially resulting in an increase in grievances and equal pay claims from disgruntled employees. 

Organisations often struggle with unconscious bias when it comes to offering salaries during recruitment, allowing pre-determined ideas on issues such as gender and age to influence their decisions. Whilst there are certain measures to avoid this, the thought of salaries being made public could be another way to keep on top of unconscious bias by making employers more aware of their behaviour during the recruitment process.

In summary, employers looking to increase their salary transparency should take time to consider the pros and cons and determine if this is suitable for their business. Whilst employers need to be wary of the GDPR implications when disclosing individuals’ salaries, those interested in the idea could look to categorise jobs using a clear banding system, giving staff a good idea of what salary accompanies each job role without sharing any unnecessary personal data.

Author: Editorial Team

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