This article is part of our Going Against the Grain series, which tells the stories of companies bold enough to break business norms and try out new ideas. To explore the rest of the series, head here.
For some experts, salary transparency is the gold standard in equitable working.
With some major UK employers posting gender pay gaps in excess of 40%, could transparent pay policies help deliver fairer pay?
Several municipal and national administrations are planning to pilot or run pay transparency schemes to close corporate gender pay gaps. The UK announced a pilot programme that will see participating businesses publish salaries on all job adverts. Across the Atlantic, companies in New York will soon be required to publish the minimum and maximum possible salaries on all future job listings as part of a new citywide law.
Social media management platform Buffer is a pioneer of the concept. Its pay transparency rules go one step further, publishing employee salaries online, including the CEO’s earnings. People can opt out, for example for personal safety concerns.
Jenny Terry is director of business operations at the San Francisco-headquartered company. Her $165,759 (about £121,000) annual salary is published online for all to see. The initial decision in 2013 was to make pay transparent internally, she says, to better align the company with its values and “so the rest of the team would be able to see what other people made”. Finding a positive response to the move, Buffer decided to go one step further and make salary details public.
“The reasons for making it public were twofold,” Terry says. “The first was to continue to be as transparent as possible in everything we do as a business. And secondly, as an early-stage company, the founders were looking for ways to structure pay to account for business growth.”
The policy was further developed to include a salary calculator and career frameworks, which aim to help employees see how their earnings could potentially grow as their career progresses.
“You will know the set pay for your role and area, and you will know the skills and career level expected of you in order to progress to the next pay bracket,” Terry says. “This gives our people the tools they need to have control over their own destiny.”
One immediate benefit was that the number of people applying for open positions skyrocketed, according to Terry. “Candidates were very encouraged to see that level of transparency at the business and it helped for people to know what to expect, in regards to pay, before applying to the role,” she says.
Other business benefits include improved levels of trust among teams, removing the need to negotiate pay rises and helping to eliminate pay gaps between certain groups.
Because pay at Buffer is transparent, the business doesn’t have an adjusted pay gap when comparing people in the same roles. “Whether you’re male or female, if you’re in the same position, you’re going to make exactly the same amount,” Terry says.
However, Buffer does still have an average gender pay gap, because more men occupy senior roles at the organisation. It’s something Buffer is hoping to address by hiring more women into these top positions.
One of the advantages of implementing pay transparency early in the life of a business is that new hires know what to expect before joining the business. “Because the team was still quite small in 2013, the founders were able to get a lot of buy-in from their colleagues before their salaries were made public,” Terry says.
Now when people join Buffer, they should know what they’re going to make upfront. “There shouldn’t be any surprises about the people making more or less than you, because we’ve made all of that available and transparent to you before you join the team,” she adds.
Some companies don’t have the advantage of being a start-up with a small team. For these organisations, it’s important to set clear expectations from the offset. Terry advises businesses to make the transition incrementally. “What steps can you take to reach your end goal?” she asks. “This might mean just publishing your career frameworks at first and then adding a pay range for each role later.”
This is something that Buffer does, too. According to Terry, the policy is “continually evolving” and has been adjusted to include a formula for calculating bonuses and based on an employee’s location. “Even though we have a formula for calculating salary that’s consistent across the business, there are still elements of it that we would like to continue to improve upon,” she says.
Capitalising on the benefits of transparent pay may take some adjustment, but as more businesses look to improve pay equity and close gender pay gaps, a transparent salary framework may be one solution.