The Downside of Full Pay Transparency
4th December 2017
Such pay transparency has many proponents, who argue that it can help motivate employees, close the gender pay gap, and attract new talent by providing a clear picture of how achievement in the company is rewarded.
But it can also have the opposite effect, demoralizing employees and driving valuable talent away, especially when it isn’t clear why some people are paid more than others.
Note that the heart of the problem is not transparency per se but the arbitrary and capricious way some companies pay their employees — a classic ‘shoot the messenger’ scenario. Employees are only ‘demoralized’ when they learn that there is no rhyme or reason to the way the company pays certain people. If that ‘drives valuable talent away’, that’s because said ‘valuable talent’ would otherwise be paid less-than-market rates. Keeping pay rates secret is merely another tool in a company’s kit for cheating employees.