The Practical Implications of Pay Transparency

One solution to closing the gender pay gap is pay transparency. Publishing compensation clearly shows both employees and management where the disparities lie. Yet, the entrenched belief that salary information should be kept private may prevent the use of a powerful tool to ameliorate pay disparities.

A study from the University of California at Berkeley found that publishing compensation, over the short term, decreased employee satisfaction for those who made less, but employees who earned more were not happier, either. The study found that the longer-term results of pay transparency were beneficial because pay disparities were often rectified over time. However, it’s the short-term drawbacks that might prevent employers from publishing compensation. Fog Creek, a small technology company, took incremental steps toward transparency by first surveying their employees to see what they would feel comfortable revealing. The company ended up using anonymous salary ranges for each position, with C-level executives revealing their compensation directly. They also supported individuals sharing their compensation with each other. The end result allowed a gradual shift towards pay transparency. The company’s CEO, Anil Dash, says that since the move toward transparency, the employee review process has become simpler. He says, “If anything, it makes it easier for us to do reviews or raises because everything is predictable. And salary transparency helps in hiring because people know exactly what they’ll earn.” 

Adobe Systems, a larger company, has taken a more structured approach. Realizing that true pay equality might be a harder goal to reach, they have set pay parity as the goal: individuals in the same job should be paid fairly relative to one another.  They have implemented a three-step process to achieve this:

  1. Define jobs: Review job roles and functions to ensure comparisons are being made effectively.
  2. Review and adjust: Once job responsibilities are standardized across the board, reviews of actual compensation levels can occur.
  3. Maintain pay review practices on an ongoing basis. 

Adobe emphasizes that pay parity is not a one-time achievement. It requires monitoring and established best practice deliverables.  While the first step toward pay transparency might be difficult, there really is no excuse not to address this issue. Salesforce CEO Marc Benioff said at the World Economic Forum, “Every CEO needs to look at if they’re paying men and women the same…We all have modern human resource management systems, but as a CEO are you willing to step up and say I pay men and women the same?”

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By |2018-07-16T08:21:37+00:00July 16th, 2018|Gender Balance|Comments Off on The Practical Implications of Pay Transparency

About the Author:

Ellen Kinlin is an internationally recognized recruiting specialist in Asset and Wealth Management. With nearly three decades of experience, her market expertise and global candidate base are the most comprehensive in the industry. In 2012, Ellen launched WE – Women Executives, a division of The Kinlin Company specializing in the recruitment of senior-level female executives in Asset & Wealth Management. Read More