How much money do you make? How about the person in the cubicle next to you? Your manager? Do these questions make you feel a little uneasy?
Many of us are uncomfortable with the idea of other people knowing our salary. However, David Burkus, associate professor of management at Oral Roberts University and author of the forthcoming book Under New Management, questions whether that obsession with secrecy might do a company culture more harm than good.
In his recent TEDx talk, Burkus argues that our preference for pay secrecy could be doing damage to corporate and collaborative culture, and reveals that sharing salary information may be better in the long run for employees, organizations, and society at large. Yes, it's possible that making everyone's paycheck public could cause envy among peers, but some leaders have found that keeping it secret could be generating even more dissatisfaction, and even facilitating pay discrimination.
The reason, according to Burkus, is information asymmetry, which is a situation where one party in a negotiation has a lot more information than the other. During initial hiring, annual raise, or promotion discussions, that information asymmetry gives an employer the advantage--and they can use that advantage to save a lot of money. This also means that peers who are doing similar jobs might be receiving very different pay.
However, pay transparency isn't just good for employees in a negotiation. Burkus argues that it's also good for the employer. In a 2015 survey of over 70,000 employees, an astonishing two-thirds of people who were paid at the market rate believed they were actually underpaid, and the majority of those who felt they were underpaid intended to quit, even when they were being paid at the market rate. However, transparent conversations about salary dramatically reduced employees' intention to quit. When people know where they stand and how to move up in the pay range they're more motivated to work to improve their performance and their standing within the organization.
According to Burkus, there are different methods for experimenting with pay transparency. Some organizations post all salaries while some just post the formula for calculating pay. Some only share internally, while others broadcast it publicly. There is no single method that will work across the board, but all methods can help eliminate the ambiguity around how pay is calculated, and thus improve overall morale and equity.
Watch Burkus' TEDx talk and see if you find his argument persuasive. At the very least, it's an innovative way to think about compensation, and one possible path toward eliminating pay inequity and discrimination.