Breaking the Taboo of Salary Secrecy!

 According to the BBC, pay secrecy is a phenomenon backed by a combination of long-standing taboos and company policies that keeps people from discussing their salary. Employers have a long-standing tradition of not discussing salaries with anyone but the employee in question. They are also very cautious about disclosing that information to others in their work environment. 

However, in recent times salary information has become more transparent. Many public institutions and small employers are now openly disclosing overall and individual salaries. 

A lot of publicly traded companies are now adopting this transparency. In addition, many private-sector employers believe that transparency in salary can improve trust, reduce misinformation, and help employees make better job decisions. Still, these numbers are few and far between, and a lot more effort is required to break the taboo of salary secrecy. 

If one dives deeper into the salary secrecy issue, there are these 6 major reasons, management doesn't want their employees to discuss their salaries.

1. Information asymmetry keeps employers on advantage.

Salary secrecy forms information asymmetry, which is a phenomenon where one party holds loads more information than the other. In other words, by not disclosing the salary information, employers want to take advantage of the employees. 

Employees probably don't know what they are worth, so they can't negotiate effectively and end up earning less than their colleagues. Even in some cases, the company gets away with the minimum wage. 

2. To avoid ugly confrontations, most employers keep salaries a secret.

Salary discussion is such an awkward topic; most people are unaware of handling the compensation information objectively. Moreover, with salary transparency there is always a fear of extreme responses like strikes, boycotts, and even departures. So to avoid such ugly confrontation, most employers decide not to disclose such delicate information. 

3. Some people are naturally good at salary negotiations.

No matter what field a person is working in, negotiation skills are a must to have. Some people are naturally good negotiators, so they tend to get better salaries. Confident people know how to present themselves while plenty of other job seekers settle for the first offer they get.

Most people are shy to ask for more, so they rely on employers' honesty. Therefore, when salary information is revealed, there's a lot of dissatisfaction among employees. The sense of devaluation the employees feel again leads to loads of ugly confrontational issues. Most often, employees get mad at employers for not valuing them enough. So, to keep the environment peaceful most employers keep salaries a secret. 

Note: Before going to any interview, you need to do thorough market research. Slected can help you with that. With Slected, you will know what other employees at your office are earning and your expected market value. Then, based on 50 different parameters, Slected tells you about important career steps that will aid you in advancing the pay ladder.

4. Employers intend to achieve high employee retention.

The employee's satisfaction and intent to stay are closely linked by the employer's ability to communicate clearly about the compensation. So by keeping the salaries, secret employers prevent employees from seeking better opportunities. 

"A survey by Harvard Business School revealed that an employee's intent to leave is inversely proportional to the satisfaction they feel about the company." 

The results of the survey showed that 60% of workers who thought they were underpaid intended to leave versus the happy 39% who continued to work at the same company."A survey by Harvard Business School revealed that an employee's intent to leave is inversely proportional to the satisfaction they feel about the company." 

5. To cover up Favouritism.

In most workplaces, the tradition of unjust favoritism leads to unequal pay distribution. In the Asia Pacific, nearly forty-five percent of employees feel like they are not treated fairly. This practice of unfair salary distribution based on unjust parameters is prevalent worldwide. Gender wage gaps are a living example of such practices.

If you are a woman or a member of an ethical minority, you are more likely to be paid less than your co-workers. Well, to hide such discriminatory facts, most companies keep salaries a secret. So, no one feels undervalued or discriminated against. 

6. There is an alleged assumption that salary transparency reduces productivity.

Well, it's a well-understood fact that when employees feel undervalued, their productivity will dampen. So even if the pay gaps have justifiable reasons, there is a high probability that workers will start performing worse. 

For an employee, salary is not just monetary compensation; it is more of an indicator of their worth in the employer's eyes. When an employee feels undervalued, then their morale drops. Conversely, motivation strongly affects productivity and performance; a low-performing employee is quite the opposite of what the management wants.

Breaking the taboo of salary secrecy

 Most employers think that with pay secrecy, all hell would break loose. People will fight, strike or even quit. There is also an alleged assumption that pay transparency has no underlying benefits. 

 Allowing people to know their worth and choose their salary works. 

 "According to Forbes, with employee engagement in a state of stagnation, and 79% of workers citing 'lack of appreciation as their reason for leaving a job, opening up salaries is a powerful way to show your employees they are trusted."

Revealing salary information may seem like a risky task for most employers. But if you listen to experts, doing so is a huge step toward increasing employee satisfaction and engagement.

"According to a survey by demandmetric.com, companies with more than fifty percent employee engagement and satisfaction have more than eighty percent customer retention."

Maintaining a transparent salary environment allows employers to attract the best employees. Offering the freedom to choose and reveal how much each employee earns provides a cornerstone for a transparent business environment. 

 Here are some counter-arguments for the justifications mentioned above for salary secrecy

 Salary transparency elevates an employee's trust in the organization.

At first, it may seem a more feasible option to rely on salary negotiation and secrecy to avoid conflict and save money. Still, in the larger time frame, it's not very profitable. 

"In a survey by Qualtrics, 90 percent of millennials said that they would love to develop a long-standing relationship with a company if they are certain of their salary progress. "

Salary secrecy leads to unjust pay distribution, which means that two people can be paid differently for doing the same job just because of information asymmetry. If the employee finds out about this discrimination, their productivity will deplete, or in the worst case, they may choose to walk out. 

 Salary transparency will allow business leaders to create an environment of trust and prevent internal conflicts. 

"According to Glassdoor, 72 % of people rank compensation as one of their top considerations for accepting a job."

Salary transparency prevents false assumptions about pay discrimination.

Even though it's one of the top considerations for accepting a job, most people are unaware of the fair salary for a particular role. Also, when salaries are kept secret, roughly 60 % of all employees assume that they are not paid fairly for their role regardless of whether their pay is above or below market value. Moreover, this tradition of secrecy can cause conflicts between employees based on inaccurate assumptions about their salaries, leading to an uncollaborative and hostile environment within the company. 

In the words of David Brukus,

"Sharing salaries openly across the company is beneficial not only to the employees but also to employers. When employees don't know how much salary their colleagues make, they are more likely to feel underpaid or even discriminated, which makes them unmotivated at work." 

With salary transparency, such false assumptions can easily be dispelled. Furthermore, salary transparency provides employees a fair chance to justify salary discrepancies. It creates positive competition among employees, and they will work harder to earn a high salary. 

A transparent business environment makes the employee feel more valued.

With salary transparency, everyone in the company can know their perceived value in the eyes of their employers. They will also be able to know how much money the company has to spend on wages and will be cognizant that their hard work for the company is fairly compensated.

 "Organizations with pay transparency see dramatic reductions in discrimination and increases in the perception of fairness."

As part of a wider strategy to create a more transparent business environment, letting employees know the salary of their colleagues depicts that you are valuing each individual equally. Also, they will feel like the company appreciates their work and is willing to increase their salaries with time.

Hence it is proven, that pay secrecy guarantees satisfaction at work, so both employers and employees need to advocate for openness and honesty. Transparency is the driving force for sustained economic prosperity as it creates an environment of trust and loyalty. 

We at Slected believe in full salary transparency; that's why we have developed a platform for employees where they can finally know their exact worth. We want to empower candidates to find the job they deserve and help companies recruit and hire with insight.