“How much do you make?” Pay transparency is coming

Together with politics and religion, talking about how much money you make has generally been considered a no-no in polite conversation, especially at work. But the world has changed and the norms around what it’s ok to talk about have changed as well. In the age of radical transparency and the sharing economy, people today feel like they can and should discuss salary.

A recent Korn Ferry survey of professionals found that nearly one-quarter of respondents (24 percent) think it’s appropriate to share their salary information with colleagues. And more than a third (37 percent) believe it’s more acceptable to talk about pay today than it was five years ago. But only 16 percent of respondents admitted to coughing up the actual details of what they make.

These numbers show that, while not yet an expectation, attitudes around pay transparency are moving. And it’s clear that people want to know more and are starting to share more. Increased transparency creates a new management challenge for leaders. But unlike when the conversation turns to politics, leaders can’t just change the subject. Instead, organisations need to embrace the benefits of transparency, like the focus it puts on pay equity, and work to build new levels of understanding and trust around the way work is rewarded.

Fear of the known

It’s perhaps unsurprising that millennials, who have come of age in the sharing economy, are driving the shift towards transparency. They’re also more vocal in their rejection of gender pay inequity and they know knowledge is power.

In contrast, members of previous generations have mostly spent their careers actively upholding the pay taboo and are in no hurry to change. Many are concerned that openness may erode morale and negatively impact engagement, or impact the organisation’s reputation.

In truth, these concerns are well founded. But only if pay transparency is poorly handled. Increasing openness doesn’t mean everyone must be paid the same amount. This would in fact be manifestly unfair in many cases. Rather, pay transparency means that in each and every case, leaders must be clear on the reasons why individuals are paid differently. And these reasons must be based on clear and objective criteria.

Planning for transparency

Implementing pay transparency requires careful planning. It involves cultural change that hits at one of the most sensitive - and until now, private - aspects of an individual’s working life. Anything less than a thoughtful and comprehensive roll-out will likely create the exact discord that many fear. But it can be done. In our experience, pay transparency must be built on two pillars:

  1. A robust approach for measuring jobs and salaries. This is essential for diagnosing, understanding and addressing salary variance in your workforce as your organisation moves towards transparency and forms the basis for all future salary decisions.
  2. Communication, communication, communication. Transparency can only be effected successfully if everyone commits to talking about pay, from the CEO down. It starts with disclosing your pay policies and with a robust discussion and agreement on what pay equity is. And it must continue, in order to build understanding about the changing demands of your workforce and how these affect salaries. Speak openly about the skills needed and the skills you expect you’ll need in the future and how this will affect wages. And keep talking from there.
To learn more about other remuneration trends for 2020 and beyond, register for our Global Salary Forecast 2020 webinar.