byFairygodbosson Feb 03, 2016

Think You're Underpaid? You're Not Alone...

piles of money

Photo credit:Wikipedia Commons

"Most people have no idea whether they're paid fairly". This is the title of a recent Harvard Business Review article about pay transparency. In a 2015 survey of over 70,000 employees by Payscale, over 2/3 of employees surveyed believed they were being paid less than market rates even though it turns out that they were actually being paid fairly. 

This is a pretty staggering statistic if you think about it. The primary reason many people work is to get a paycheck. Sure, we can love our work, it can challenge and improve us in all sorts of other ways, but ultimately even those of us who work for mission-driven employers or non-profits that help create positive change in the world still need to pay our bills. Therefore, it's incredibly corrosive to our happiness and engagement levels at work if we believe are being paid unfairly.

So why do so many people believe they are paid unfairly? First, when there isn't transparency into salaries, we may assume the worst of our employers. This isn't entirely irrational. Most employers do not publish salaries for all employees to see (as Buffer does). 

And then there are government rules about pay disclosures that are intended to reduce -- and eliminate -- pay discrimination. Surely these rules wouldn't exist if everything were perfectly fair in the world, in the first place. In fact, the federal government recently expanded disclosure rules to require employers with over 100 employees to report salary bands for employees by race and gender to protect women and minorities from unequal pay practices.

Is it the case that "all hell would break loose" (as one TedX talk put it) if there were radical pay transparency and people wore their "numbers" on signs when they walked into work? Well, maybe. We can certainly see this might create resentment between people who were hired at different levels of experience, or during different labor market conditions. Senior leaders might also be hard pressed to justify large pay differentials between themselves and their direct reports.

However, there is a middle road here. Intel, for example, just followed in the footsteps of Salesforce and GoDaddy in proactively taking steps to analyze whether there were any pay gaps between the women and men in their workforce. The answer? After years of effort, it turns out they are pretty sure there isn't a gender pay gap

These kind of public announcements and analyses make people feel better about an employer's priorities and commitment to fairness while avoiding the complete unveiling of individual salaries. Similarly, when we ask people to report on bands on pay by title rather than specific salary data points, we're trying to preserve anonymity and keep the peace. 

In our experience, the concern isn't about slight differences in pay, but with gross injustices. Most people seem to want some assurance that their pay is within the same general range as others in the industry or at competitive employers. 

The bottom line is this: we believe that some level of pay transparency improves job satisfaction and employee morale -- and contributes to the cause of fairness at the same time -- without having to create embarrassment, resentment or other difficult dynamics at work.

See how your salary compares by title, department and company here!



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