Should individual employee salaries be confidential?

Should individual employee salaries be confidential?

We recently published a research on salary transparency in Zimbabwe.

337 participants responded to this survey. Participants currently occupy various managerial and non-managerial jobs. Participants were drawn from over 18 economic sectors.

Recent studies have shown that employees’ negative perception to the pay structure of their respective companies may prove to be harmful to their performance and motivation. Thus salary transparency, to a certain extent, tends to affect employee engagement. It has also been argued that companies who have transparent salaries tend to be considered to be the employers of choice by the public. In my research in employee engagement, I have noted that companies with less transparent salaries and pay structures more often have problems with employee retention.

  • Most of the employees (69 percent) agree with keeping individual salaries confidential. This highlights that the majority of employees are not prepared to disclose their salaries.
  • Managerial and non-managerial employees are in the same group (by statistical analysis) which supports the confidentiality of individual salaries policy. This implies that managers and non – managers share the same sentiments regarding confidentiality of salaries. They equally want their individual salaries to be kept confidential.
  • Half of the participants (50 percent) have a good understanding of why they are earning the salary they are currently earning.
  • Most of the participants (93 percent) believe that they are not overpaid in their current roles.
  • Most of the respondents (72 percent) highlighted that their salaries are not comparable to the market i.e. 7 in 10 employees believe their salaries are below the market median.
  • 84 percent of the respondents perceive their organisations’ salary structures as not transparent.
  • 59 percent of the respondents do not know their salary ranges.
  • 63 percent of the participants believe that the differences in salaries between management and other staff members are not reasonable or equitable.
  • The majority of the participants (70 percent) are not happy with their job grades.
  • 86 percent of the respondents are prepared to leave their current organisations should another company offer a better remuneration package.

Outside of government and a few quasi government institutions, sharing salary information with employees has long been taboo. Most employers either contractually forbid or “strongly discourage” their employees from discussing pay with their colleagues. Some organisations even say it is a disciplinary offence to do so. The survey results seem to suggest that the lack of willingness to disclose salaries is not just an issue on the part of employers – even employees themselves seem not to be keen on transparency.

My concern is that these formal and informal “salary secrecy” policies make it hard for employees to learn who is paid what, why, and whether their own pay is fair and consistent with industry standards. This causes a number of employee satisfaction and performance related issues.

Internationally, in recent years, there has been a gradual shift away from traditional workplace secrecy and toward more transparent salary policies. There is a growing literature in economics and human resources management on how transparency in salaries may affect productivity, inequality and the gender pay gap, employee turnover, amongst others (George J. Stigler et al, 1962)

For the detailed Salary Transparency Survey Report, please download below

Salary Transparency Report for 2018

Memory Nguwi. Memory Nguwi is an Occupational Psychologist, Data Scientist, Speaker, & Managing Consultant- Industrial Psychology Consultants (Pvt) Ltd a management and human resources consulting firm. He is the president of the Zimbabwe Psychology Association. He hosts a radio program HR Perspective every Thursday at 1900hrs on Capitalk 100.4FMhttps://www.linkedin.com/in/memorynguwi/ Phone 481946-48/481950/2900276/2900966  or email: mnguwi@ipcconsultants.com  or visit our website at www.ipcconsultants.com

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