It’s time to lift the veil from salaries

Last week, I wrote about the power of transparency in my weekly newsletter. One of my readers saw this and asked me if I believe transparency should extend to the sharing of salary information in a company.

Unequivocally, yes.

Let’s look at both sides of the arguments. Salary secrecy has been the norm for the majority of industrialized society.

Conventional wisdom says pay secrecy is necessary to prevent jealousy and resentment among employees, preserving team cohesion.

Advocates of pay secrecy also believe that if an employee has no reference point for their pay, they’re less likely to ask for a raise. And pay secrecy spares managers, HR, and employees from difficult conversations or confrontations about pay.

These arguments don’t really hold up. According to a Gallup poll, in 2022, employee turnover metrics reveal 20% of U.S. employees left their company for better pay or benefits, up 6 percentage points from 2021.

And whether it’s intended or not, salary secrecy hurts every other group other than white males. According to the U.S. Census 2020 data, for every dollar a white man makes, this is what these groups earn:

• Women overall: $0.83
• Black workers overall: $0.76
• Black women: $0.63
• Latinx women: $0.57

I could keep going, but you get the idea. Not a lot to be proud of there.

At the last company where I was CEO, I wanted to be open and transparent with the team about how much each person was making.

To me, it was a sign of honesty, openness and respect. And I truly believed that people could handle knowing this information.

Would it be possible that Bob is making more than Sam for jobs which appear very similar? Certainly. Perhaps Bob negotiated better than Sam - or we think Bob has more leadership potential in the future.

I ran this idea past the HR team at our holding company and they flatly turned me down. “Sorry, we just don’t do that in Denmark.”

My arguments that this was becoming common practice in other Scandinavian countries fell on deaf ears.

I went back to my team and told them that I had tried to bring salary transparency to the company, but our owners wouldn't allow it.

The general response I got was along the lines of: “Oh, that’s ok. We all know each other’s salaries already. We talk.”

And that, in the nutshell, is how the new generation of workers communicate.

Ultimately, pay transparency delivers major employer benefits including improved performance, reduced pay discrimination, and better recruitment.

It creates a culture of openness and honesty where you can move beyond how much each person is paid and focus on the important issues - how to grow and retain customers.

Thanks for reading - and be sure to keep an eye on your inbox tomorrow. I don’t normally reach out two days in a row, but I’ve got something REALLY exciting to announce.

Best,

Peter