Pay transparency - is it worth it?
Pay transparency - a topic that evokes two extreme responses. Is it a thing that could help us solve the issue of the gender pay gap, which sits currently at 13.8% here in Australia? Or is it a recipe for a disaster? Many employment contract templates include a pay secrecy clause, which prohibits employees from discussing their pay with each other. However, in the public sector pay transparency is a normal part of life.
Benefits of pay transparency:
Defined pay structure takes the mystery out of it - no gossip.
Reduces uncertainty of pay increases
Easier to discuss pay, and explain why someone is earning certain amount
Consistent system
Disadvantages of pay transparency:
Pay is left open to debate, whether it is fair pay or not.
Comparing to others - those that believe they are underpaid for their role can become dissatisfied and leave.
No privacy around pays.
Can be a very rigid system - which makes it hard to reward high-performers
So, what should an employer do?
Employees should be extremely clear on how they set their pay rates, and what factors influence them. It is a conversation that an employer should bring up with the employees, not vice versa. It is important that the pay reflects the role and the responsibilities attached to that role, rather than the person. This way when an employee brings up their pay, it is easy for the employer to explain the reasons why they earn what they earn. It is also an opportunity to explain how they could earn a pay increase, for example taking on additional duties or meet certain performance criteria. If you want to reward your high performers, do so outside their standard pay.
It is important to remember that pay transparency does reduce the gender pay gap, and therefore improves pay equality. Greater knowledge about the remuneration levels may assist women in the negotiation of their pay and conditions.
