Pay Transparency Starts Here

Written By: Richard Lear, CEO

A few years back a small software company in Boulder, Colorado called Buffer pioneered the idea of pay transparency. The audacious startup still publishes all their salaries for the world to see. Not long after, companies like Glitch and Starbucks made salary ranges and pay equity data transparent. The seeds of the Pay Transparency movement had begun.  

In the past year, eight states and cities, including California, Colorado, Washington, New York City and Rhode Island, have enacted pay transparency laws. Most statutes have already gone into effect. As more and more states and cities embrace the idea of pay transparency, some are asking:

Is pay transparency really a good thing?

While the idea of transparent pay creates a more level playing field for compensation negotiation, some think it creates chaos in the workplace. It opens the door for employees to both challenge their own compensation, and that of their co-workers. 

As Pandora’s box creaks open, some HR folks are fretting these laws. Yet, others see the benefit in having visibility into what their competitors for talent are paying. After all, pay transparency helps clarify their own pay policies. Most agree that the unfolding trend of transparent pay will force companies, employees and management to adjust to a new reality. 

Meanwhile, others are looking for ways to game the system. 

Pay transparency means greater fairness and equitable pay. A truly level playing field. It also means greater economic efficiency in compensation that has real consequences. For instance, imagine sometime in the near future there is a widely-accepted metric called “market value” for any given role. A role might be defined by title, candidate/ employee experience, and capabilities , plus a few company factors. Let’s say both candidates and companies agree that the price is right. Could we all coalesce around the “market value” idea, that it is fair and equitable based on market forces? Seems reasonable, right? In a perfect world, markets create economic efficiency. No one would be overpaying, no one would find themselves short-changed. Will this idea of one price, one candidate, one job, emerge as a possible outcome of pay transparency?

As the tipping point for Pay Transparency approaches, where will it all go? What unintended consequences can we expect? And, where do you stand on the topic? Is Pay Transparency really a good thing?