The recent escapade in which the outgoing Italian government put everyone’s tax returns on the Internet (here we just loose the disks in the post) has spawned a rash of articles and radio discussions about the benefits of open salary details within companies and organisations. Some claiming that such a policy would improve motivation and team spirit (less suspicion) and others that it would help reduce the gender pay gap. That last point assumes that differences between individuals in the same organisation make a significant contribution to the ‘gap’. I have my doubts. But should pay be a secret personal to you and your employer?
There are, of course, many organisations where all pay is known. In some cases (posties and MPs, for example) there is a standard rate of pay. If you know someone’s job there is just one rate of pay that goes with it. Overtime may affect the total earnings (posties but not MPs in this case) and even then some organisations will publish the amount of overtime individuals work to avoid accusations of favouritism in allocating the extra work. Traditionally, public sector pay would increase through a known pay range on the basis of service. In central government this has mostly gone now. A few organisations with highly individualised pay structures do publish all salaries and I know of at least one where everyone’s expenses claims are published. But they are the exceptions.
Difficulties could arise in those many companies where part or all of pay is based on individual performance assessments often linking pay increases or bonus payments to an appraisal rating. In these systems publishing salaries is, in effect, publishing appraisal scores and that is a much more sensitive issue. Most appraisal schemes incorporate a large element of manager judgement into the rating. Generally, staff go along with this unless the judgement is wildly unjust. They will be less accepting if everyone is going to know how they are rated. Will your appraisal system stand up to everyone challenging their ratings? When an otherwise saveable employee has a bad year and has to be given a not-up-to-scratch rating will it help restore his or her performance if everyone finds out?
At a more pragmatic level many organisations (including much of the Civil Service) will slot new recruits into the salary range on the basis of their current earnings, estimated ability and urgency of filling the job. Unless handled well this has its risks for both team morale and equal pay claims. Publishing all salaries may well mean missing out on the only good candidate.
Without doubt salary secrecy does provide a cover for those managers who are lazy, or worse, and many organisations probably would be more effective with an open salary system. But before you rush, headlong, into this brave new world make sure procedures are robust and managers and recruiters compliant. Otherwise you had better have a good grievance procedure and a good employment lawyer to hand.
