Compensation information is often a taboo topic to discuss in the workplace, but this doesn't stop people from wondering how much their colleagues make.
For some employees, it makes sense to trade salary information because this knowledge can help them understand where they are on a scale compared with their colleagues. However, discussing such an explosive topic with someone who's technically your competition in the company could stir up some jealousy or distrust issues.
This is why a lot of companies make it a priority to protect salary information. Once it becomes transparent, the people on the lower end of the pay scale may end up feeling like they aren’t valued or being treated fairly by their employer.
When Salary Information Gets Out
Nearly a decade ago, this exact situation happened to SurePayroll, an online payroll service company, and in order to stop his frustrated employees from quitting, Michael Alter, co-founder and CEO of the company, had to step in.
Alter says that the incident started innocently during work breaks when people would sit around and chat about the job. This eventually resulted in almost all of them disclosing their compensation information with one another.
"At the time, a couple of our sale reps had lower-based salaries, and they were frustrated because they said they were doing the same job as their colleagues who were getting paid more."
Alter had one-on-one conversations with each employee to explain to them why they have the salary they have. Aside from work experience, Alter also made sure each individual understood that their salary is related to the market, and this governs how and what companies pay their workers. Furthermore, each employee's pay is directly related to their own work experience and not the experience of anyone else.
"You have to bring it back to them and their specific situation and not allow the conversation to focus on other people," Alter says. "When we do come up with the salary, we’re very mindful of experience."
In these meetings, Alter also laid out plans and goals that each employee would need to meet to get to the salary that they want. After the internal crisis, SurePayroll was able to keep all of their workers.
Choose to Be Transparent
To deter from a sticky compensation-related scenario, some companies prefer to disclose all of this information from the beginning.
Namasté Solar, a company that installs solar panels based in Boulder, Colo., actually discloses everyone's salary package so that the company is responsible for explaining "why they're paying one person more than another."
"Usually, salary is an emotional and sticky situation,"says Blake Jones, co-founder and CEO of the company. "In the end, people actually waste more time and energy wondering how much Bob or Jill is making and thinking the worst."
The disclosed information includes all benefits in the salary package, which is converted into dollar amounts.
Whether you choose to disclose salary information or protect it, communication is essential, Alter says. Everyone in the company should know that they are valued, and upper-management needs to deal with each person on an individual basis in order to have a clear understanding of what each person’s career goals are, and what benefits they care most about.
How do you feel about disclosing salaries at your company?