For generations, asking the question “How much do you make?” has been a surefire way to bring a conversation to an uncomfortable pause. Whether for fear of judgment or simply because of cultural conditioning, Americans typically shy away from revealing their salaries and peg someone who inquires as rude. Today, however, salary transparency is becoming more common, as many view it as crucial to issues such as fair pay and career decision-making.
More businesses are getting in on the trend, as well. In fact, 82 percent of employers say there should be transparency of pay in the U.S., according to CareerBuilder research. But does salary transparency make sense for your small business? Here are reasons to consider salary transparency and what you need to know.
1. Salary Transparency Can Aid Recruiting Efforts.
Savvy job seekers want to see what they stand to earn at your small business. The growing number of web-based sources of salary data make finding out increasingly possible. Millennials, who are accustomed to information being at their fingertips, especially seem drawn to companies that are open about compensation. Likewise, accessible salary information oftentimes increases the number of female applicants. Considering nearly a third of women do not think they are making the same pay as men in their organization who have similar experience and qualifications, if salary information was accessible, they'd likely be more confident that they’ll get a fair shake.
A few companies have gone so far as to post what individual employees make to their corporate websites. While such “radical transparency” sounds scary, some small businesses have reported extraordinary results in terms of number and quality of applicants. Experts reason that this may be due to elimination of guesswork. Potential candidates can judge whether the figures fit in with their current and long-term expectations. And better matches from the start increase retention odds for your small business.
2. Employee Satisfaction May Increase.
Workers commonly overestimate what others at their office earn. This misconception can lead to higher levels of job dissatisfaction. Salary transparency sets the record straight. If your small business uses a salary formula, sharing it can be especially helpful. Employees will see how factors such as seniority, education and performance affect pay. They’ll have a clearer understanding of the reasoning behind their current salary and a solid idea of how to increase it moving forward. In fact, research has shown that switching from pay secrecy to transparency can boost productivity.
3. Openness Contributes to an Atmosphere of Trust.
Finally, if your small business prides itself on honest communication, salary revelations can seem natural. A team that sees commitment to fair compensation feels more appreciated and loyal. And with a common base to reference, conversations about salary can become more objective. The large raise a co-worker hired during an economic downturn receives to catch up with current standards will probably be viewed as warranted, not contentious. Trust that your small business employees want to make your workplace as great as it can be, and they likely won’t let you down.
Want more salary advice? Check out What to Offer Your Employees When You Can’t Offer a Raise