Very Interesting – July-August 2019

T

here is a revolution
stirring. It’s taking
shape in offices,
around dinner tables
and in newspaper headlines:
people are talking about how
much they earn. Keeping a
polite silence around money
is such a long-standing cliché
that for some, simply having
these conversations cuts to
the core of how we think of
ourselves and our society.
On 5 March 2018, almost 250
staff of the BBC signed an
open letter to director general
Tony Hall, demanding “full
pay transparency”. This
followed a review of the
broadcaster’s pay, which
found that only one-third of
the 96 best-paid employees
were women, none of whom
were in the top seven. Then in
April 2018, large firms and
public bodies were required
to publish figures comparing
men and women’s average
pay, revealing that 78% of
them pay men more.
The BBC staff who signed the
letter demanding pay
transparency argue that it
constitutes the “fastest,

cheapest and fairest way to

begin to tackle unequal pay”,

and that it is the most

effective way to uncover pay

discrimination due to race,

gender, age or class. The

CEOs of those companies

who have adopted the policy

• so far low in number but
  high in enthusiasm – believe it
  is an improvement on the way
  we have always done things.
  But what is the evidence?
  Given we have laboured
  (quite literally) under pay
  secrecy for so long, what
  would such a dramatic shift
  do to our minds?
  Despite its longevity, there
  have been some experiments
  suggesting that pay secrecy
  may be the worst possible
  policy we could have in the
  workplace, for both
  employers and employees. In
  one study by Elena
  Belogolovsky at Cornell
  University and Peter
  Bamberger at Tel Aviv
  University, participants were
  divided into groups of four
  and asked to perform a task
  on a computer. After each
  round, one set of groups saw a

bar chart on the screen

showing only the amount they

as an individual would be

paid for their performance,

and they were forbidden from

discussing their remuneration

with others in their group

over the monitored email

system – mimicking pay

secrecy conditions. Those in

the second set of groups,

working under pay

transparency conditions, also

saw a second bar chart

showing their reward relative

to other participants, and

were told their email

communications had no

restrictions. After three

rounds, the researchers found

that those in the pay secrecy

group performed worse and

would be less willing to come

back. Further studies by

Belogolovsky and Bamberger

found that employees

collaborate more effectively

under transparent conditions,

as they are better at assessing

the best colleague to

approach for advice, based on

knowledge of their salaries.

Belogolovsky says: “In

pay-for-performance systems,

pay secrecy has a negative

impact on individual task

performance and retention

because it weakens the

perception that an increase in

performance will be followed

by increase in pay.”

The evidence seems clear:

secrecy obstructs

productivity. But what

happens in a real workplace?

Here, the case for

transparency grows more

opaque.

35% Below market

64% Below market

83% Below market

45% At market

30% At market

14% At market

21% Above

market

6% Above market

3% Above market

35% percent of people who are paid above the market average for their

job believe they are paid less than the market average. Women in this

bracket are 18% more likely than men to believe they are underpaid.

64% of people who are paid the market average for their job believe they are

paid less than the market average.

3% of people who are paid below the market average for their job believe

they are paid above the market average.

Canada 71%

61%

60%

52%

49%

43%

UK

US

France

Switzerland

Germany

Ryanair 72%

54%

24%

16.4%

14%

9.7%

9.3%

JP Morgan

Apple UK

Immediate
Media

Public
sector

Overall

BBC

Source: Government Equalities Office, 2018 Source:Global Salary Transparency Survey (conducted by Glassdoor)

Source: Reward Management Survey 2015 (conducted by the Chartered Institute of Personnel & Development)

70% of employers

30% of employers

Yes No

GENDER PAY GAP IN SELECTED UK COMPANIES

A CLEAR PROBLEM...

ARE OUR PERCEPTIONS OF PAY ‘FAIRNESS’ ACCURATE?

HOW TRANSPARENT ARE WE NOW?

WILL GREATER

TRANSPARENCY

REDUCE THE GAP?

“In a real workplace, the

case for transparency grows

more opaque.”