Any business with a corporate culture that suits you includes flexible hours, a training budget, and other incentives. All these play a role in choosing the best employer for your services. In any case, the wage remains decisive. We don’t have to bother about that. Everyone has to pay their bills and often even maintain a family.
It is, therefore, no wonder that wages are a topic that lives in the workplace. Certainly when colleagues who do the same job suspect each other that they will be paid less than the other. This influences the motivation and therefore the performance of your staff.
The benefits and risks of salary transparency
On the other hand, they might do their best just a little more when they know that they are being paid correctly, with the aim of receiving more compensation when they take big steps. In contrast, when employees are underpaid or not receiving their wages on time, this results in employee demotivation especially when they will have to seek other sources of cash (get a quick loan here) to bridge the gap in wages.
Not everyone is equally transparent, but some companies consciously choose to give their employees insight into the wages of their colleagues. Some employers do that partially, others fully. This naturally has disadvantages, but also benefits.
More freedom, but stiff recruitment. Many employees feel that they and their employers are the only ones who know how much appears on the bill each month.
- Employees will feel more at ease because they feel their privacy is protected.
- You pay each employee tailor-made, based on their skills, experience, and performance.
- Employees will doubt whether they will earn enough and as a result – consciously or not – will do their best less.
- Wrong information about wages will circulate. If there are very large differences and someone comes to know this in one way or another, this can lead to major internal problems.
- Wage negotiation is more difficult when the candidate does not know what normal wages are.
Bear in mind that sensitive information often becomes known in one way or another. Are there major differences regarding wages? Then that can cause problems at such a moment. The question then is whether the problem lies with the unequal wages or the lack of transparency about it.
You can also choose to make wages partially transparent. We are then talking about wage scales instead of specific amounts.
- Are there colleagues who actually perform better than their teammates but currently earn the same? Then you can give them some increase without much ado.
- This also applies when you hire someone. You have more resources to convince a candidate with something extra.
- Some candidates will immediately aim for the highest levels of the wage scale during the wage negotiations.
- People can still suspect that their colleagues with the same position earns more and is therefore not 100% committed.
It is not common, but there are companies that give employees the opportunity to know exactly what their colleagues deserve. Sometimes the information even spreads outside the company. The disadvantages are easy to guess, but there are also interesting benefits associated with full pay transparency:
- No wrong information or gossip in the teams.
- You do not create situations where the wages of people with the same duties and responsibilities differ greatly.
- Knowing what managers deserve can motivate employees at a lower level to do their bit.
- Much easier wage negotiations.
- There will be situations where someone who has been with the company for a long time and has a lot of experience with the way things work deserves the same as someone who is just starting out, which will not always be appreciated.
- Someone who works harder or has more developed skills may earn better than someone who is on the same pay scale and does no more than is expected from him or her. You must adjust here if necessary. (calling on the less performing colleague or rewarding the hard-working employee)
Full transparency can certainly be considered because, since they will not be underpaid, they will be better able to concentrate on their duties. And knowing what managers deserve, they have a goal to pursue. You may encounter problems if there are too large differences between the performances of team members who earn the same.