Discussing money with others is one of society’s big taboos. Specifically discussing pay and the amount that people earn from working. It’s not the done thing to ask others what they earn, and as a result, many people don’t actually know what their colleagues earn.

This is quite common, even if they’re working in the same position as you, and it’s an unspoken rule that you don’t ask. But of course, everyone wants to know!

Studies have shown that there is very little pay transparency in the workplace. More than 53% of UK workers aren’t given information about the salaries of others in their company, some employer contracts even forbid it and it begs the question of why. With many companies’ offering performance-related pay rises each year, it is possible that your colleagues who are working in the same job position as you are getting paid a significantly different wage. So, could pay transparency be a good thing?

It could go one of two ways. Lifting the lid on what colleagues earn could lead to frustration and trigger workplace resentment. On the flip side, it could become a tool that encourages fairness and accountability among co-workers. It’s difficult to know which way it could go, and Evan Davis has recently explored this in his podcast, The Bottom Line.

One of the biggest pros of pay transparency is that it can promote fairness in the workplace, and it can help identify pay disparities associated with gender, race or any other factors that might have gone unnoticed when nobody was talking about salaries. It also removes the risk of unconscious bias in pay decisions by bosses and can help ensure employees are paid salaries based on skills, experience and their ability to do their job, rather than how much their boss likes them.

One of my main concerns in recruitment is that if people start a role on a low salary, it’s usually because it was anchored to their previous low salary. So they might be getting a good salary increase by moving, but it’s still lower than someone else who joined because they had a better salary in the first place! This can follow people for a long time and usually affects DEI hires the most.

But transparency can build trust between the workforce and improve job satisfaction. Salaries stop being a taboo topic and instead become something else that your team can discuss among themselves and connect over. It could even boost productivity and encourage friendly competition.

But it isn’t necessarily going to go that way, and there are a lot of potential cons associated with pay transparency. Revealing people’s salaries could lead to resentment in the workplace and unnecessary conflict. You are opening the box on something that has been kept quiet historically, and it could lead to jealousy, which would hurt workplace culture.

It could also negatively impact people wanting to grow within the company. When you aren’t aware of the salaries of those in leadership, it might seem like a desirable position. But if you learn that management isn’t paid what you expect, it could become demotivating. There are also a lot of perks associated with positions that won’t necessarily be reflected in the salary, so pay transparency might not actually be that accurate when these benefits are considered.

So, what do you think – Is pay transparency the next frontier in corporate responsibility? Or does the current culture of secrecy still serve a purpose? I reported on a TED talk a few years ago that also addressed this topic – read it here: https://orangemalone.com/2023/02/15/pay-transparency-were-inching-closer/

For more discussions like this one, follow our blog for regular updates.