Pay Transparency – Are we ready yet?

HR Voice
HR Voice
7 Min Read
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There has been a lot of chatter around pay transparency in various industries and how it will affect employers and employees. 

As is with every trend that shows up in the market, there are pros and cons of taking such a big step.

The kind of transparency in conversation will provide a window to people inside and outside the business to see your employee’s salary structures.

It is one thing to discuss numbers with friends, family, or co-workers as an individual and an entirely different ball game when everyone has access to this information.

On the other hand, one can argue that with increased awareness around gender equality and racial & classist pay gaps, the introduction of pay transparency is a wave of positive change. It is a step towards making the workplace an equal playing field for all employees.

But the question remains, “Are we READY to accept salary transparency in our enterprise work culture?”

The Benefits

Strategic changes in the work culture and functioning of a business are those that benefit both the employee and employer. So let’s see if pay transparency falls in this very bracket.

1.     No More Pay Gaps:

Employees prefer working for enterprises where they are paid fairly, depending on their skill set, experience, and qualifications among other factors. Knowing what a co-worker earns with the same resume as them may drive employees to increase their own performance and skills to fill in the pay gap.

Additionally, pay transparency will compel companies to come up with learning and development strategies that can help in closing the pay gaps. This would directly create healthy competition among the workforce.

2.     Contended Employees:

One of the best ways to ensure satisfaction among employees is to introduce salary transparency in your organization. Being able to compare salaries with fellow colleagues gives employees a chance to evaluate their skill sets and performance.

Every company will have a group that is satisfied with their pay and work. Their expertise in the industry helped them land the job and salary packages.

For the group of employees who are dissatisfied with their pay and now have a chance to know what their colleagues are earning also have the scope to develop their skills. The company can provide these employees with learning opportunities and training sessions, allowing them to close the pay gap.

Pay transparency removes anxiousness from people’s minds and drives employees to keep track of their colleague’s social profiles, activity streams, cases, and tasks to see how they can improve their efficiency.

3.     Controlling the Narrative:

Rather than having a rival company or the market decide what is said about your enterprise, it makes sense to introduce salary transparency within the organization. Showing people that as an employee you do not discriminate among employees because of their race, class, or gender can considerably increase the trustworthiness in the market.

By opening up your company structure and adapting to pay transparency you can control the narrative in the market and guide potential candidates on how they perceive the business culture.

Before moving further, it must be understood that instead of implementing a fully transparent pay system, companies can also opt for a partially transparent salary structure. Rather than sharing the exact numbers, employers can reveal their pay principles, salary ranges for different positions, etc.

The Downsides:

Employees want more information from their employers. But does it work in favor of the business?

1.     Explaining the Pay Difference:

Too much information can be harmful, even when intended to be used or given out for the right reasons. The same can be said for companies whose pay scales are based on subjective determinations. It might be tough to explain to employees how they are evaluated for their jobs. Currently, employees can justify their pays to themselves however they see fit. But pay transparency has the potential to put employers in a tough spot.

2.     Division among Employees:

While the ideal scenario may be such that employees will improve their skill set to fetch higher pays and be at par with their colleagues, there’s also a chance of things going bitter. There could be environments where performance might be tough to measure which may trigger employees. Shifting to pay transparency has the potential to spark jealousy. Employees who earn less than their equals might feel like it’s necessary to quit.

3.     Hiring or Retaining Slump:

Employers are reluctant to reveal compensation numbers as it might become difficult to hire talented people with lower budgets. Businesses would prefer it if the market didn’t know what people are paid so that they can hire more employees at lower pay scales. Once people have been hired, retaining them would be difficult if pay transparency policies were implemented. It would become easy for the competition to poach dissatisfied employees. It would be a nightmare for HR personnel to try and retain employees.


To foster an atmosphere of transparency, employers can consider introducing a platform that allows employees to connect easily. A platform where managers, HR personnel, and team members can have access to discussion forums, tasks and timelines, shifts, social profiles, etc.

While the implementation of pay transparency might not seem like the best idea as of now, it is something that can be explored in the future. It is for the management to decide how they will handle target achievements and determine the performance and dedication aspects of employees in their roles.

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