H.R. expert explains new research and how employers should apply it to their workplace
A new study has found something interesting: When employees know how much their boss makes, they work harder as a result. But, other evidence has shown that when employees know how much their colleagues make…they work less hard.
What can explain this difference? And, what does it mean for employers?
“Salary transparency is a complicated issue,” says human resources expert Rob Wilson, President of Employco USA, a employment-solutions firm with locations across the country. “The truth is that there won’t be a one-size-fits-all approach that works for every company, but there are a few basic things that every employer should know.”
First, Wilson says that as this study shows, employees actually like to know that their boss is doing well financially. “If the top tier people are struggling financially, that can make employees insecure and unmotivated,” says Wilson. “Employees want to feel like they are being led by someone who is doing well for himself or herself. This is both aspirational and comforting, as they know that the company is in good hands and has a solid future.”
However, Wilson says that salary transparency among coworkers can become problematic.
“If an employee finds out that their coworker is making more money than them, but yet they are always slacking off or showing up late, that can really breed resentment and dissatisfaction,” says Wilson. “So while salary transparency may make some people happy, it can cut both ways. If you want to make salaries transparent, first you really want to make sure that all of your workers are being fairly compensated and that there is no nepotism or poor behavior that is being rewarded.”
Ultimately, Wilson says that salary transparency should be led from the top-down. “As this study shows, employees benefit more from knowing what their leaders make. They want that inspiration. It is motivating and encourages them to work hard, whereas competing with the guy in the cubicle next to them can have the opposite result. So, when it comes to talk of salaries, maybe be willing to show your own hand, rather than encouraging open talk among workers.”
For more on this topic, please contact Rob Wilson at rwilson@thewilsoncompanies.com.