Why pay transparency will happen whether we like it or not

Tech giants continue to work on pay transparency technologies

Pay process transparency is becoming the norm, with many Silicon Valley companies adopting this approach.  

What is pay process transparency?

It’s when a company makes the process for calculating salaries known.  For example, Buffer uses a salary calculator that is available for everyone to view on the web.  It takes into account job role, skill level/experience, location and equity option to calculate a salary.

So what does this mean in practice

Everyone (internally and/or publically) can work out exactly the rate of pay for each job role. In fact, Buffer goes further and lists everyone’s pay rates (referred to as pay disclosure)!

Why do this

Competitive base pay is essential to attract and retain talented techies in a tight labour market.  Pay process transparency ensures you are consistently paying in-line with the market for skills, location, job role.

Lack of pay transparency often creates trust issues and a feeling of unfairness – even if salaries are actually fair!  

Furthermore, if pay is calculated using non-discriminatory factors, it actually protects against inequality and ensures the team is rewarded for development.

A Ted Talk by David Burkus tells how the results are clear. Studies have repeatedly found that when people know how they’re being paid, and how that pay compares to their peers’, they’re more likely to work hard to improve their performance. They are more likely to be engaged, and they’re less likely to leave.

Pay transparency makes for a better workplace for both employees and the organisation. Burkus believes the time has come for pay transparency and urges organisations to deliver. He concludes:  “How much do you get paid? And how does that compare to the people you work with? You should know. And so should they.”

Why companies don’t do it

In our experience, tech companies embrace this idea but it often doesn’t happen in practice due to lack of HR expertise to advise and implement this way of working.  As a result, the annual pay review happens in an irregular, inconsistent way – without the correct salary benchmarking data to support decisions.

As companies scale, this approach becomes harder to implement, as pay inconsistencies become clear.  Resulting in rises and cuts in pay rates!  Our advice – implement when you’re starting out (i.e. before you have 10 people in your team).

What if we don’t do it

The way we work is transforming!  

Payscale already provides visibility of real time salary data.  It holds over 54 million salary profiles and is updated nightly to reflect the most detailed, up-to-date compensation information available.  

LinkedIn salary also enables people to explore real time data.

Google is following this trend with ‘Google for jobs’ that will reward pay transparency with higher search rankings.  

While we were out in Silicon Valley top reward specialists confirmed top tech giants are continuing to develop this technology

So ultimately, technological advancements will force transparency whether we like it or not.  

We’ve helped a number of high growth tech companies implement a transparent pay process. Get in touch if you’d like some more information about how we can help you – info@teamango.com.