The Guardian recently wrote an article about the increase in the number of small businesses that are practicing open salary policies. Rather than pay being kept a secret between each employee and employer, companies are now deciding to release this information among workers, which means everybody knows what their colleagues are earning. There are two small US companies that are well-known for doing this: Buffer and SumAll. There are also other larger businesses that are using the same method, like Whole Food Market, which has over 90,000 employees.
In the UK, salaries are understood to be a private matter. It is only in an informal and secretive context that a conversation comparing and discussing the salaries of co-workers would take place. But the CEO of SumAll, Dane Atkinson, is a proponent of open salaries for this very reason. He argues that companies which refuse to be open probably have something to hide. His argument is that this nature of openness forces top executives to pay themselves a justifiable wage.
Another benefit of this system, according to Atkinson, is that it allows for enhanced performance management. By making performance and results the key factor in deciding someone’s salary, as opposed to a candidate’s negotiations skills at interview, everybody is motivated to work harder and more effectively with the hope that the end result will be a pay increase. The underlying premise is that a culture of meritocracy is ingrained into working life.
In an article for Tech Crunch, the CEO of SumAll writes: “Let’s say a marketer is making $10,000 less than his peers – he finds out over drinks at the bar. Normally, he can’t speak up because it’s supposed to be a secret. So instead, he gets “sick” more often, or asks about his next performance review a little too often.” According to the SumAll CEO, his system offers workers the opportunity to evaluate their performance against other employees and come forward with any salary-related suggestions or issues. Rather than simply becoming disgruntled, individuals are able to participate in the process of their wage being determined. If managers disagree with a proposed salary increase, they are able to have an open discussion with the employee about “why they stand where they stand.”
His system is also a useful tool not just for the company, but also for its employees: “The marketer might discover that his peers make more money because they take leadership roles in company blogging, charitable initiatives and other tasks that went beyond standard expectations. Whatever the case, employees learn exactly what they can do to increase their value to the company.”
According to the Office for National Statistics, the pay gap between UK male and female workers was 9.4% in April 2015. Open salaries could be the solution to bridging this, since being forced to reveal the wages of employees – at least among other workers – pressures executives to pay staff from minority demongraphics fairly, and acts as a check and balance to ensure that those who are most likely to be discriminated against are paid a salary that equals their true, professional worth.