Show me the money 💸
Does pay transparency have benefits for companies?
Happy Twos-day! Although it's probably Wednesday already for a bunch of you, it's still the very cool 22.02.2022 in some places in the world as I write this. Today's date is a palindrome, and something like this won't appear for another 400 years!
In a complete coincidence (no, really, I'd planned it for the last Tuesday of Feb, but it's quite poetic), here's part two of my exploration into pay transparency.
Even though this piece can stand alone on its own, I'd highly recommend reading part one, where I talked about why pay transparency is the first step towards creating equitable workplaces.
Did you know that in Norway, everyone's salary is public?
Yeah, everyone’s.
It's been like that since 2001 — more than two decades ago, and here global superpowers like the US are still figuring out pay transparency laws (state by state at a snail's pace, might I add).
Pay transparency in Norway means that people know what their colleagues are making, how much they're paying as taxes, and what's the right salary to quote/ask for during job interviews. In fact, I'd venture that since the information is public and easily accessible, companies share salary info on job descriptions or in the first interview itself — making it easier for people to know if a particular job is right for them or not.
In fact, "wages in many sectors are set through collective agreements, and pay gaps are relatively narrow."
This also means that women cannot be paid lesser than men — it's probably why Norway ranks third out of 144 countries in terms of wage equality. When salaries are public, you really can't get away with paying (already rich) white men more money than their female counterparts and people of colour. A recent study even corroborated this if you think this is specific to Norway or something.
"The gender pay gap was reduced by up to 45% in transparent organizations compared to those in the study that didn't disclose such data.Inequality of pay also dropped by about 20%."
We already have an example of why pay transparency is beneficial. But that's for us as individual employees. So what reason would a business have to state their pay upfront? Surely, it'd cause envy or allow their best employees to be poached with higher offers, right?
What's in it for them?
Early research shows that where there's pay transparency, there are deeper and more fruitful collaborations, and there's no appearance of reduced productivity.
"People start collaborating more in environments where wages are more similar, and there's less social comparison both upward and downward, meaning less envy and [more] compassion."
From my understanding, most companies prefer pay secrecy because it allows them to pay some people more than others. But, whether it's performance-based pay or implicit gender-biased pay, more information about salaries can mean more people asking for their worth.
But suppose salaries were public and employees were being paid fairly. In that case, I'd venture that the workplace would be a better one — more understanding, less competitiveness, and just a general sense of harmony. There's no need to outdo someone with nefarious tactics to get that bonus if the onus is instead of working together and succeeding as a team.
Most companies preach a lot about how their employees are family and that work is home. But when it comes to fair pay practices and transparency, suddenly, they fail to see the benefits.
Think about it — if I know that another company will match or even give me a better salary, why would I continue in my current role if there's no potential for growth? The information about the pay and growth opportunity at the next level inspires me to continue working with my current company instead of interviewing elsewhere.
Pay transparency improves performance and, by extension, improves the business' profits and revenue. "Disclosing salary ranges could also offer managers a chance to improve relationships with their existing staff." This leads to better teamwork and more trust among team members.
"When we know we're getting paid fairly, we can all stop worrying about whether we're getting screwed over and get on with the work we were hired to do."
"[Pay transparency is] a great move. It levels the playing field. Ultimately, applicants are going to appreciate that and be more attracted to these companies as well." —Felice Klein, a management professor at Boise State University who studies workplace compensation and inequality.
After all, if you're part of a family, shouldn't the company care for you and compensate you as much as you work to bring them profits? We take care of one another in families and are generally (encouraged to be) transparent about finances and money.
We're not a family, not really
Turns out, you're only family if you keep your head down and don't ask questions.
As more than ten cities gear up to change and improve pay transparency laws, companies are fighting back in the US. For example, Colorado introduced pay transparency laws last January, and since then, businesses have been very creative in evading it.
The most common way — they've refused to hire from Colorado anymore. That's right, as someone said, companies would rather not hire talented people from a whole state instead of simply stating the pay for the open roles. And it's not small companies either, the ones who might be shy to disclose their salaries because they're startups or whatever.
No, it's the big ones. From Spotify to Accenture to Johnson and Johnson, 195 companies have been using loopholes to avoid sharing salary details. Makes you think, doesn't it?
As New York steps up and introduces its pay transparency laws, companies are making funny excuses trying to stop it — apparently, it gives off the impression that New York is unfriendly towards businesses.
Boohoo.
We’re all in this together aka we need collective effort
This lack of pay transparency didn't really strike me when I worked full-time. However, when I went freelance, the first huge change that hit me was the complete openness around rates and fees. From sites telling you how much you could tentatively charge to freelance groups and forums where you could ask your peers for pricing help, money is often discussed openly within freelancing.
Of course, this openness is hard-won and is fuelled by continuous open talks about money despite pushback and discomfort. Folks like Sonia Weiser and the people behind @WritersofColor and @fwiopps make it a point to ask for rates every time they come across a pitch call or an opportunity. I'm sure that's exhausting to do. But they do it every time because rates are essential — a prospective applicant needs to know if the pay is $1 a word or $0.010 a word.
This allows us as freelancers to make better decisions with our time and energy — we can choose to apply for opportunities that pay us what we think we're worth. The rest of the time and energy can be applied towards other things — instead of churning out content like a mill, we can do in-depth work and upskill ourselves with choice assignments.
The same basic principle applies to full-time jobs. When the pay is stated in the posting, you know if it's more than your current salary. Sometimes it may be less, but you might want to switch for the experience, for that company's culture, or even just for a change but with the knowledge about how much you'll make.
I'll say it again — pay transparency is integral to making workplaces equitable. It reduces the gender pay gap to helping people of colour and Black folks charge correctly. All of this contributes towards making the company better for your employees, who are the backbone of most businesses anyway.
Honesty and transparency are the way forward if businesses want to attract the right talent.
Take five seconds to share what you thought? How did you like Part 2 of the Pay Transparency Problem?
Your anonymous feedback helps me improve. TIA!
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That’s all for this week — thanks for reading!
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I turn a year older on Sunday so the next time you hear from me, I’ll be a year wiser. I think.