In the last few weeks there have been a number of stories about pay, from the decision by Co-op boss Richard Pennycook to reduce his own salary by 60% to today’s news that pay ratios between employees and managers are under scrutiny. Transparency is the buzzword of the moment, but should you do it in your business?

Should you introduce pay transparency in your business?

With recent research showing that 70% of employees think pay transparency has a positive impact on employee satisfaction, is now the time to open up about salaries? It certainly seems to be a focus this year. So what better time to look into the detail and whether you can and should do this in your business?

What the research shows

Glassdoor’s global salary transparency survey, which was conducted in the UK, US, Canada, Switzerland, Germany, France and the Netherlands, found:

• 69% of respondents would like to have a better understanding of what fair pay is for their position and skill set at their organisation and in their local market.
• 61% of UK respondents believe they have a good understanding of how employees are compensated at all levels in their organisation.
• However, only about half of people think they have a good understanding of how that pay is determined. The figure was higher for men (59% for men, 51% for women).
• 36% say their employer shares salary information internally.

The benefits

The advantages of sharing information can be huge, increasing retention, helping people to understand what they need to do to get a rise and ensuring people feel valued. It allows employees to check if there’s a gender pay gap and, if more companies shared the data, to understand how their salary compares to others in the market.

It also ensures the information comes out in a managed way, rather than in office gossip or down the pub after work.

The challenges

Opening up about pay seems like a positive approach, but it does come with challenges. These include:

• How to share pay information if there are only one or two people in a specific role
• How to explain scales and bonuses clearly and any weighting that comes through service or experience
• Resentment from those on lower salaries. Research showed that those who felt undervalued were more likely to try to even the score by cheating.
• Getting it to work for everyone. Research shows that those who worry about others’ salaries underperform if pay information is not shared, those who are unconcerned about pay transparency underperform if it is.

Should you share?

Opening up about salary is a decision that only your business can make. With so many factors involved, you’ll need to take a careful look at the pros and cons.

Looking into the issue can be a good motivator to ensure the rates of pay are equal, and competitive within the marketplace. You can also decide if you want to share how the salaries are calculated and how scales are set, even if you don’t want to share the pay scales for individuals.

The time of automatically keeping salary information private is over. Whichever approach you take, it pays to ensure that you have a strategy behind it.

Let us know your initial thoughts right here. What would your main concerns be? Is this something your business is thinking about right now?