A Potential drawbacks
Researchers Jordi Blanes i
Vidal and Mareike Nossol at
the London School of
Economics sought to answer
this question using data from
a German wholesale and
retail firm that began
informing its employees how
they were paid, and how
productive they were, relative
to their colleagues. As a
result, productivity improved
by 6.8%.
But when David Card,
professor of economics at the
University of California,
performed an experiment on
other staff at his university,
the results were not so
positive. Randomly chosen
staff members were sent a
link to a website set up by a
local newspaper which listedthe salary of all state
employees, including those
working for UC – with no
information about
productivity levels – and then
surveyed them about their
pay, job satisfaction and job
search intentions.
Unsurprisingly, he found that
workers who were paid below
the median in their
department felt less satisfied
in their job and intended to
look for another. But those
who were paid above the
median did not report any
significant improvement in
job satisfaction or shifts in
their intention to move. The
negative impact of pay
transparency among those
who earned less was not
off-set by the positive impact
among those who earn more,and that means, according to
Card, “employers have an
incentive to maintain pay
secrecy.” Little wonder it has
been the norm for so long.
Joel Gascoigne, CEO of the
social media management
platform Buffer, believes the
incentives for pay
transparency are far greater.
He is committed to what he
calls ‘radical transparency’,
publishing not just the
salaries of all his employees
but also revenue data and
details of diversity of his
employees. “When we moved
to pay transparency within
the company, most of our
concerns were around the
uncertainties of what might
happen,” he explains. “It is
still a very uncommon
practice, so there were almostno resources to look at or
people to advise us. But we
found that all these concerns
were unfounded and
hypothetical, and that the
massive benefits far
outweighed challenges – there
was an immediate growth in
the level of trust among team
members, and the overall
sentiment was very positive.
Knowing how much everyone
else was making, knowing the
formula used and seeing it
was fair was comforting for
people.”
When the salaries were
published online for the
general public, it was not
quite so straightforward, he
explains. “That was a little
more psychologically
challenging, and we had more
conversations and discussionsCulture
South Africa ranks
117th out of 149
countries in gender
wage equality.