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Two Opposing Views on Pay Transparency

Two Opposing Views on Pay Transparency

by Frank Roche on February 25, 2009

in Pay Transparency

I’ve been doing a lot of reading about pay transparency in the past few weeks. I get Google alerts. I watch for Twitter hashtags about it. I read blog articles. (I’ll be getting to those later this week.) There’s a lot of information out there. I have a personal view about what will happen if we end up with a demand to expose everyone’s pay to everyone else that I’ll get to a bit later.

For Pay Transparency

Meanwhile, here are two opposing views about pay transparency. The first one comes from KnowHR commenter, Elandra, who is for shining a bright light in dark corners:

I am fascinated by these comments. I participated in the survey and vigorously defend my position that pay transparency should be adopted in all organizations. The justifications for not blowing open the salary books point to a workplace that is tinged with fear of accountability, perhaps incorrect practices that have been historically adopted and never challenged, and an environment where pay is not an indicator of performance.

What are we all so scared of?

If a person is being overpaid or underpaid, why can’t this be addressed in an open way? We’re already seeing the scoffing of huge executive payouts/bailouts, why should it be any different no matter what level you’re at in an organization?

Against Pay Transparency
On the other hand, incentive expert Paul Hebert writes in Fistful of Talent about the downside of pay transparency in an article about capping CEO pay:

Talk about unintended consequences. One of the reasons cited for the huge salaries and pay packages available to top executives is in fact greater transparency caused by the disclosure requirements in Sarbanes-Oxley. Congress enacted the Sarbanes-Oxley Act of 2002 in response to a spate of highly publicized business failures and corporate improprieties. The issue they said was a lack of oversight and transparency. I don’t want another Enron and can see why more transparency was needed but, some of the requirements of SOX may be what is driving CEO pay issues. Specifically, once I can see what others get paid – that’s what I want. The highest salary now becomes the minimum salary and I want more than the minimum.

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