Of Pay Transparency

Lately there is a belief regarding how employees are discouraged from sharing their salaries because they want to maintain an unfair or unequal pay.

This made me raise an eyebrow because of an earlier situation years back where another student had a similar mindset that by sharing their salary with their colleagues in a bid to be transparent, would force employers to pay their staff a fair wage.

Now I may be a relic of the past, but this is a relatively silly stand to take on so while unpopular, here I would try to explain it from the perspective of someone that have worked for and also employed people.

The main culprit is the false assumption that all employees have the same value to the company, which is ridiculous unless one is working at very menial type of job or something that is highly quantifiable. If in doubt, just recall all the times you were put into a school project where you had to put in extra effort to fill in for an ‘absent’ teammate. If you do not recall such an event, you were probably the dead weight in the team. Different people have different levels of commitment and that is natural, and even if your teammates dropped the ball and you ultimately earned that higher grade that everyone shares, there is bound to some level of discontent.

Now bring that forward into the workplace. In a school setting, someone who did not deserve it earning a good grade by riding on your coattails is still palatable, but in the workplace, that is magnified and leads to discontent. Consider these scenarios, if everyone had knowledge of each other’s salary amounts and we shall figure out the outcomes.

Scenario A – Transparency with Equal Pay
Worker A is a hard-working and dedicated staff who earns RM2500.
And Worker B is less hard-working and isn’t of the same dedication, and also earns RM2500.
The outcome is relatively straight-forward, Worker A will gradually feel demoralized that both are earning the same amount whereas they are contributing different levels of work. This leads to either Worker A dropping their efficiency or eventually being demoralize for not being recognized and leaving.

Scenario B – Transparency with Unequal Pay

Worker A is hard-working and earns RM2500.
Worker B is lazy and therefore earns RM2000.

Worker B will be discontent and feel they are being unfairly treated REGARDLESS of how much work they are doing and how much value they are providing as staff. This is because NO ONE would ever feel that they are doing less work than expected.
Worker B would never consider their performance to be less than Worker A, regardless of the situation. This could only lead Worker B to feel that they deserve the same pay as Worker A and if failing to obtain it, would:

• Perform even poorly in comparison to before.
• Leave entirely.
• Or worse, actively work against Worker A by engaging in potential workplace politics.

Both scenarios and outcomes are undesirable to say the least because the reality of the workplace is, different people provide different value to a company or organization. And different value is rewarded differently by employers if they want to retain high-performance staff.

As a business owner, I too would not want staff to disclose their salary scale because it should be the owner’s discretion of how to remunerate their staff according to value. If a company is nepotistic or biased in their evaluation of staff, the only sensible option would be to look for employment elsewhere because bais in the workplace eventually leads to organizations that are heavy in incompetent management and lack of leadership.

If Worker A performs well, I would want to reward Worker A for their contributions to retain them. Worker B can still maintain their work but cannot really expect equal pay for unequal outcome. I wouldn’t want my decisions to be dictated by an arbitrary notion of ‘fair-pay’ when as the employer, I may not be getting ‘fair’ return.

Psychologically

The habit of wanting to find out what someone earns also does not bode well for an employee psychologically. We again look at the following scenarios where you learn of a colleague’s current salary:

Scenario A – Higher Pay

Worker A is earning more than you, if Worker A is more hard-working or provides more value than yourself, if is highly unlikely that you would feel that you deserve less than Worker A regardless. It is human nature to feel deserving of more.

In this scenario, the outcome would generally make you feel discontent and less motivated more often than spur you to work harder.

Scenario B – Lower Pay

If Worker A is earning less than you, it too does not benefit you from knowing. At the most, if might give you a sense of superiority which is also a negative thing which might breed problems with narcissism.

In both scenarios, it either does not benefit you, or it causes negative outcomes. Hence, it does not bode well for an employee to try to evaluate oneself based on the value that others have.

Self-Evaluation

A healthier outlook an employee could take is to evaluate one’s own value. If a Worker is earning RM2500 a month. This means the Worker is being paid RM30,000 per annum for their time. Now if the same worker feels that they deserve a RM500 raise per month, that comes up to an increase of RM6000 per annum.

The question the worker must consider is, has the worker provided RM6000 worth of equivalent value to the company? If the worker has repeatedly been doing the same thing that has been done daily for the past year, it is not justifiable for the company to provide the increase because ‘fairness’ goes both ways. (Having said that, companies would usually provide smaller increments based on cost of living and inflation.)

Some workers feel justified that they deserve an increase merely because they have been serving for a long duration of time. This largely disregards considerations of value that they provide.

In terms of value, some employees work hard, some perform well, some innovate and show leadership skills, some are just reliable and trustworthy. There are several ways to increase one’s value in a company but their value = worth to the organization = justification for any increments.

This is a big part of what a lot of the younger members of the workforce seem to forget having a very strong ‘worker’s mindset’ instead of an ‘entrepreneur’s mindset’.

If you feel strongly that you do provide added value to the company, that should enable you to justify the increment and if the company is one that values its employees, it should find no problem in rewarding a valued member of staff financially. Do not expect your salary to increase merely because a colleague is earning something higher than you unless you clearly have provided more value.

If you feel ready, then do take the leap to approach your employers with a request for increment but also do prepare the justification for such an increase. Negotiation is part of being an employee after all.

tldr: Full salary transparency ultimately does yourself no good to share your salary information with others. Just focus on increasing your value and finances will follow.