I cringe when I hear companies tell their employees not to discuss salaries with their peers. Let’s be real. Telling employees not to talk about money doesn’t work.
Employees often build close friendships and look to each other for advice about how to navigate their careers. They talk about everything, from kids to weekend plans to managers and, yes, salaries. Most would agree that these interpersonal connections at work are good for the company. But, over and over I’ve seen that you can’t have a close-knit team andprevent them from discussing compensation within these friendships.
So, why do we keep trying? Too often, we don’t feel confident in our own ability as HR to explain or defend compensation decisions so we try to head these conversations off at the pass. We know it’ll put us in a tough place, so we ask employees to avoid the topic altogether. Again, this doesn’t work and can even have serious negative effects. Telling employees not to talk about salaries:
- Creates stress. Salaries are already a source of anxiety and many employees feel an acute need for more information and benchmarks. Attempting to block employees from getting these data points just amplifies the anxiety.
- Diminishes trust. Nothing creates more suspicion than labeling something a secret. What is the company trying to hide? Why are they scared of me knowing my friends’ salaries? Especially in companies that champion transparency, this core value must also extend to compensation philosophy.
- Makes it harder for employees to talk to HR. When discussing salaries with your closest work friends becomes taboo, it can become a scary topic to discuss with HR as well. It sets up an adversarial relationship in which employees feel that HR is trying to micromanage information and put them at a disadvantage in salary negotiations.
Now, we know that 1) employees talk, 2) we’re often scared of what happens when they do because we aren’t ready to stand behind our decisions, and 3) attempting to control these conversations can backfire. However, I’m willing to go even further and say that the fact that employees talk is more than just a fact of life we need to get over. It’s actually a good thing!
- It forces us to keep fairness and equity front and center. If we make salary decisions under the assumption that we’ll have to explain and defend them, we will make better, more consistent decisions. Ask yourself: If an employee asks me why they make less than a peer, do I have an answer that feels transparent, fair, and defensible? Your answer doesn’t need to be simple – salaries are based on a range of factors such as market standards, performance, seniority, tenure, fairness in the organization, the company’s resources, etc – but it needs to make sense. If it feels random to you, I guarantee that it’ll feel unfair and confusing to the employee, and it’s a sign that you haven’t invested enough time in an equitable decision-making process. (A note here: when employees come to you citing the salary of a teammate, it is critical to reorient the conversation towards the case-specific factors on which the employee’s compensation is based, avoiding direct comparisons to their peers or revealing the salaries of others).
- It provides opportunities for meaningful conversations and feedback. Salaries are perhaps an employee’s most tangible indicator of seniority, development, and performance. When employees come to ask questions about their compensation, it is an opportunity to engage on these topics in a transparent and actionable way. For instance, perhaps a salary increase was small because there is room for performance improvement or there is a mismatch between how the employee sees themself and their actual seniority. When we are prepared for these conversations and can manage them properly, we can use them as ways to deliver transparent, actionable feedback and to accurately set employee expectations.
Next time you’re talking to your team about salaries, don’t admonish them not to talk. And, next time an employee comes to you citing the compensation of their friend, don’t get frustrated. Instead, understand that these are realities we need to accommodate, not control. And, in so doing, find opportunities to improve equity, transparency, and trust in our organizations.
