Open discussions about salary have long been considered a workplace taboo. The last few years, however, have witnessed the concept of pay transparency gain momentum among younger professionals. Today, several companies around the world are embracing pay transparency policies and practices as a means of building a positive work environment and narrowing the gender pay gap.
Simply speaking, pay transparency refers to a policy wherein an organization voluntarily gives employees access to pay-related information. Such information may pertain to the actual pay level or range, the process of the pay system, or even the practice of not restricting employees from freely sharing information about their salary.
Pay transparency can work well in organizations where the pay is standardized across levels – for instance, every employee at the entry level draws the same salary. At one level, it is reassuring for individuals to know that their co-workers have the same salary as them. However, this can easily transmute into negativity if there is a wide gap — a peer or manager drawing much more — engendering disgruntlement and eventual demotivation
Large MNCs and corporations understand how pay transparency works. However, the policy can easily become a bane in companies that lack a clear philosophy around the pay structure. Basically, the value system around employee compensation should be ingrained in a way that the pay structure becomes cogent, articulate, well-meaning, and standardized. Otherwise, pay transparency would only trigger chaos and problems.