Recent media reports about Apple employees disclosing their salaries, and the company’s attempts to stop them, have ignited debate around transparency and pay equity. How does your organisation handle these issues?
You may have seen the flurry of recent media reports about Apple employees, concerned about pay equity in the organisation, sharing their pay details with each other. It’s been reported that, in response, the company tried to shut down communication, including any related Slack channels. This, of course, prompted employees to take the discussion onto a platform outside of the Apple system.
This story attracted attention not only because of Apple’s high profile but also because of the way the company was reported to have responded. Preventing employees from sharing pay information leads to the assumption that a company has something to hide, and leads to speculation about issues with pay equity.
Salary Details Poll
In the context of the media reports about Apple, I posted a poll on LinkedIn asking, should employees be able to share their salary details with each other? Over 1200 people responded, and 67% said yes, while 33% said no, employees should not be allowed to share their salary details.
In Australia, it’s pretty common for employment contracts to prevent employees from sharing their salary details. But is that the right thing to do? We’re living in a world of huge amounts of data and transparency. So it seems strange that we’re still reluctant to have transparency around pay.
Interestingly, although most of my connections are in Australia, there were some poll responses and comments on my poll from the US, including from areas in the US where it’s actually illegal to prevent employees from sharing pay information.
Some companies go beyond allowing employees to share pay details. The American company Buffer actually publish the salaries of each individual in their organisation, by first name and title. They don’t just publish it internally, they publish it externally as well. So you can go onto their website, and you can see these pay details. For Buffer, it’s all about transparency.
Many people, including me, find this idea uncomfortable. I personally would not want my name and title on a public website, with the amount of money that I earn. Maybe it’s just a cultural difference, but I feel like that’s one step too far.
While I’m not an advocate of publishing pay details, I do believe in having a structured process around remuneration that is shared with employees. Why? Because transparency around remuneration is a key factor in employee engagement.
Transparency around remuneration is a key factor in employee engagement.
Opportunity for Engagement
Unfortunately, Amplify HR data shows that not many organisations are taking advantage of this opportunity for engagement. We have a free online scorecard that business owners can complete, which provides a score and a benchmark around where they sit with their workplace culture. One of the questions is: do you have principles that are used to determine salaries and pay increases documented and available to all employees?.
Interestingly, less than one third (27%) have responded ‘most of the time’. Whereas the remaining 73% only do this ‘some of the time’ or ‘not at all’. So there’s a huge opportunity here, because businesses that have structured, documented, and transparent processes for determining salaries, and checking pay equity will dramatically increase employee engagement.
Knowing Your Value
A key part of engagement is feeling that we are being paid what we deserve. This includes our independent value, but also that we are being paid equitably when compared with others in the organisation.
We all work to pay for our lifestyles, but there are many components that make up our overall satisfaction with our pay. It’s not just what our salary is, but also how often we receive salary increases, how they are determined, how we feel our salary compares to other people in the organisation, and the benefits that we receive.
How to Develop a Remuneration Policy
The easiest way to improve transparency in your organisation, and hold yourself accountable, is to have a remuneration policy or a statement. This should be in the employee handbook and available to everybody.
This policy can be quite simple, based on just three key principles:
- We provide fair and equitable remuneration.
- We attract and retain talented employees.
- We comply with workplace laws and regulations.
How to Action Your Remuneration Policy
Once you have a fair and equitable remuneration policy, you need to implement it. How? You can do this by:
- Comparing salaries to market data The way to attract and retain talented people is to look at market remuneration data before advertising a new role.
- Comparing salaries across employees Compare what you intend to offer a new candidate with what you offer existing people in the organisation in a same or similar position.
- Checking salaries for equity Conduct a pay gap analysis to look at any gender pay gaps.
- Complying with the workplace laws When the Fair Work Commission does its annual wage review, make sure you’re applying any required increases.
- Applying yearly salary increases According to your policy.
Documenting the Policy
Whatever actions you take, they also need to be clearly documented. If I am an employee in your organisation, from day one, I should be clear on:
- how my pay is calculated
- how my pay compares with other people in the organisation who have similar roles to me
- when my salary will be reviewed
Note that having an annual salary review process in place does not mean you necessarily have to increase salaries every year. But it does mean your process is really transparent for your employees.
Mind the Gap
Recently a business owner told me that there’s a great culture within his organisation, and he didn’t need a lot of policies and paperwork in place around things like remuneration. When I asked, ‘So when do people get salary increases?’ There was a long pause before he said, ‘I guess when they ask for one.’
So next I asked ‘Do all your high performers ask for pay increases?’ And the answer was, of course, no. Because people have different personalities. Not everyone is willing to put themselves out there and say, ‘hey, I want a pay increase’. A lot of people find that incredibly awkward and uncomfortable.
We know that women are less likely to put up their hands and ask for more money, which is one of the reasons behind the gender pay gap. So by requiring people to ask for a pay increase, not only do you exacerbate the feeling that in your organisation it’s the squeaky wheel that gets the money, you also might be exacerbating a gender pay gap without even realising it.
Nothing to Hide
All this doesn’t have to be overly complicated. The key is to sit down and think about how you pay in your organisation. Your accountant will be thrilled if you undertake this process, because they will be able to forecast expenditure if they know the remuneration for each role in the company, and when these levels will be reviewed.
It also means you can be very confident in your salary processes. It doesn’t matter if your employees are talking to each other about their pay because you have nothing to hide. If you’re comfortable with your methodology, you won’t be worried about people chatting about what they earn.
You may not want to be completely transparent about pay information, but at least have a remuneration policy and a statement in place.