HT Shine, May 2014
Do employees have a right to access salary details and information on performance review of their colleagues? Read on to know more about the consequences of sharing salary details at the workplace. Recently, US President Barack Obama, while initiating efforts to create more transparency at the workplace, said, “Pay secrecy fosters discrimination and we should not tolerate it.” According to news reports, he even passed an executive order prohibiting federal contractors from taking action against employees who share information about their salaries and other work and performance related remunerations. In another interesting incident, New York Times editor Jill Abramson reportedly revolted against the newspaper owner when she came to know she was being paid less than her predecessor, Bill Keller. The organisation fired her. The truth is out. Salaries of employees are weapons that human resource departments invariably hide in the closet.
Some Western studies have shown that non-transparency in salaries causes a disconnect between compensation and performance, which eventually leads to dissatisfaction and demotivation at workplaces. According to a research done by the London School of Economics, which used a quasi experimental research design to study the effect of giving workers feedback on their relative performance, “The setting is a firm in which workers are paid piece rates and where, for exogenous reasons, management begins to reveal to workers their relative position in the distribution of pay and productivity. We find that merely providing this information leads to a large and longlasting increase in productivity that is costless to the firm.” So the question is: should employee salary and appraisals be made known to everyone in the organisation? The corporate world seems to be divided in two camps — while some experts feel that pay secrecy provides a shield to hide the inefficiency of the appraisal system others link it with the issue of individual dignity and privacy. “If there are no skeletons in the cupboard and all employees are paid as per their worth and value generated, why do most of the senior professionals from HR shiver at the mere thought of making salaries public and showing a clear linkage to appraisals?,”questionsJappreetSethi, an HR expert.
According to him, employees expect the companies to follow some logic and not pay on the basis of favouritism, ability to negotiate a better deal and short term exigencies. Asks Sethi, “If you pick any employee satisfaction survey globally, the employees have expressed maximum dissatisfaction with non–transparency in salaries.” Once salaries of employees are made known to all, it gives an opportunity to the employees to know why some jobs are valued higher and they can also think of improving their own level, argue experts.However, experts like Pankaj Bansal, co-founder & CEO of PeopleStrong, view that open pay system can be objective only in target-oriented profiles such as sales and marketing but some profiles such as designing, writing etc, which are based on creativity, are difficult to objectify and hence subjectivity comes into play. Agrees Rajesh Tripathi, vice president and head HR, Gujarat Heavy Chemicals Ltd, “We need to respect the dignity and privacy of each employee. Keeping such things confidential also diminishes animosity among the employees. ”According to P Thiruvengadam, senior director, Deloitte India, many firms have conducted polls asking the opinion of the employees and interestingly a sizeable majority has indicated that they would not like their pay to be made public and feel that keeping salaries under wraps is a better idea.