Photo by Karolina Grabowska
When you ask for a raise and you’ve talked about how you have increased your responsibilities and your plans to either save the company money or bring in more revenue, that’s when your manager asks, “How much money do you need?” What if you’re a crew member at a fast food restaurant and your reply is, “How about $25 an hour?” Neither question seems helpful. Your manager should know (and be willing to disclose) the budget range for your position. Salary is not determined by how much the employee needs. It is based on how much the company is willing to pay an employee to get a job done on time, under budget, and with excellence. Does this seem weird to anyone else? No? Just me? K. Moving on.
One of the best ways to find out how to solve a challenge is to ask someone who has been through it. However, we’re trained early in our careers to not talk with our coworkers about compensation. Why?
Employers cannot forbid their employees to tell each other how much money they make. In fact, it’s a right protected by the National Labor Relations Act. Yet, we know we’re not supposed to and some employees have gotten fired for doing so. Authenticity at work means being open about who you are, your values, beliefs, and experiences. Your compensation is one of your experiences. Some state legislatures agree and have passed pay transparency laws to aid in reducing pay discrimination. This new authenticity has ramifications for both the employee and the employer.
For the Employee
Pay transparency laws require companies to disclose salary information to job seekers. These laws are supposed to make it easier for potential employees to negotiate salaries and feel confident they will receive fair compensation for their work. The fast food employee in our scenario above should get online, find the restaurant’s job postings, look for their job description, and see what pay range is offered. Then they will know how much of a raise to ask for. They should also look at other similar fast food restaurants’ job postings. Are they offering the same pay range?
For the Employer
Pay transparency laws should help you reduce turnover and avoid costly discrimination lawsuits. While adjusting to the new rules, be aware there may be hidden compliance costs. For example, you may need to invest in new systems or processes to collect and disclose salary information. This could increase your administrative costs. You may also need to raise your current employees’ salaries to prevent them from quitting. To do this at a sustainable pace, you can tie raises to job performance and give reviews twice a year. Before posting an open position, check to see what pay range your competitors are offering.
Negotiating terms of employment is where the foundation of trust gets built between an employer and employee. Pay transparency laws should produce a more competitive job market, better informed decisions, improved employee morale, and a more positive work environment for everyone.
How do you feel about pay transparency? Please share in the comments.