What are the pros and cons of discussing your salary?

Salary transparency is generally a good thing for businesses, but handling it clumsily can sow unrest among employees.

Of all the taboo topics to stay away from in the workplace — sex, religion, politics, etc. — one isn’t so much off limits as it is awkward: discussing salaries with your co-workers.

Talking about what you make isn’t strictly prohibited and you can’t get fired for comparing compensation. That’s illegal. However, as more companies offer some level of salary transparency, how that information is handled can cause problems if not done correctly.

For employers, compensation is a critical component of recruitment and retention, so it’s important for employers to benchmark salaries to ensure they’re paying competitively and fairly, whether or not their company has an open salary policy, notes Jim Jeffers, metro market manager of Robert Half in Madison. But for employees, comparing your salary with co-workers isn’t the only, nor the best, way to find out if you’re being paid fairly.

survey by The Creative Group, a division of staffing firm Robert Half, found that 77 percent of hiring managers said their company offers some level of pay transparency. The top benefits of an open-pay policy are helping close the wage gap (23 percent) and creating an atmosphere of trust and collaboration (21 percent), according to employers polled.

“Some companies choose to be transparent with their pay because they want to establish an open conversation around performance and compensation,” Jeffers says. “[But] compensation can be a touchy subject.”

Some companies may be sensitive to the fact that people don’t want their salary information shared, according to Jeffers. Other employers may be hesitant about publicizing salary information because it can bring inequities out in the open, prompting difficult or awkward conversations.

“They may also worry competitors will poach top talent by offering higher pay,” explains Jeffers. “It may be easier for professionals to discuss pay with contacts outside their company because they aren’t comparing their salary with team members’ salaries, which may create tension and resentment toward management if disparities are uncovered.”

Of course, it’s inevitable that employees will talk about salaries with each other. Jeffers notes compensation information that is not tied to specific individuals is readily available in online resources such as salary guides. Because it’s so easy for professionals to find out if they’re being underpaid in comparison to their peers or market standards, companies need to stay up to date on salary trends. Otherwise, they risk losing top talent to other offers.

“Employers should not wait for their employees’ next performance evaluation to benchmark their salary,” says Jeffers. “Ideally, employers should be reviewing staff pay throughout the year. Compensation resources, like salary guides, can be used to compare employees’ salaries with local industry standards. Benchmarking salaries and giving raises or bonuses can help retain star performers.

“When employees know their work is valued and they’re compensated fairly, they are more inclined to stay with the company,” Jeffers adds. “This is especially important in today’s job market, where talent is in high demand and professionals may be looking elsewhere for new opportunities.”

That said, there are pros and cons to salary transparency.

One significant benefit of sharing salary information is that it helps keep companies honest and encourages equal pay among employees. Since women in the U.S. will still only earn, on average, 79 cents for every dollar men earn in 2019, or about 21.4 percent less, that’s a big deal.

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When done right, such as sharing salary information for employees based on different seniority, experience, or education levels, companies can provide employees with an explanation for the organization’s compensation practices without revealing individual salaries.

Transparency also helps gain the trust and loyalty of current and prospective employees, and lets everyone know where they stand without any secrecy.

The flipside of transparency is that knowing what your co-workers or bosses are making can cause tension or divisiveness among a staff. Much of that is based on a lack of understanding among workers, who will be making comparisons to fellow employees who may make more without having all of the information at their disposal. You might think you’re making an apples-to-apples comparison, but you don’t know all the facts.

How to handle the salary discussion

For managers, when an employee asks to discuss compensation with you, Jeffers recommends scheduling time to speak with them privately. Tell the person that you will take his or her request, past performance, skills, and experience into consideration, as well as industry standards and the department budget, and see if you can award a raise.

If you can’t give a raise, offer to revisit the conversation in six months. In the meantime, consider offering other no- or low-cost perks, like flextime, remote work options, or more vacation days.

For workers, tread carefully if you find out a colleague is being paid more than you for the same work.

“This knowledge alone does not give you a bargaining chip to argue for higher pay,” advises Jeffers. “Your jobs may be less alike than you think, or the person may have more years of experience than you or a particular set of skills that you lack. It’s generally a bad move to base a request for a raise on a co-worker’s salary. Any request for added compensation should be based on your work alone.”

If you are going to discuss compensation and a raise with your manager, make a strong case by doing the following:

  • Do your research. Ideally, you should have an idea of the average salary range for your position in your city. Ask your manager if you can discuss your recent performance and career opportunities.
  • Expand on your experience. Start the conversation by highlighting your recent accomplishments, increased responsibilities, or how you’ve helped the business. Prove to your manager that you deserve a raise.
  • Avoid giving a hard number in terms of your salary requirements. You don’t want to price yourself out of a job or lowball yourself. Present your research to your manager and then ask what range is possible given the company’s budget.
  • Take a thorough view of compensation. If your manager cannot give you a raise, ask to revisit the conversation within a reasonable timetable or discuss other, non-monetary perks.

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