Salary transparency in companies – can that work?

January 16, 2024

Intransparency as an obsolete model?

When the communication consultancy Ketchum Austria conducted its #geheimGEHALTen survey on salary transparency, a man was quoted saying salaries were a taboo topic like sex. And according to renowned international studies, talking openly about taboos increases the quality of the relationship between employee and manager. So, the big question is why do so many companies shy away from openly addressing the topic of pay?

Why is the topic of salary still muzzled in many places? Image: created with Dall E in ChatGPT
Why is the topic of salary still muzzled in many places? Image: created with Dall E in ChatGPT

Facts are:

  • Generation Z puts salary first to third (depending on the survey institute) in its wish list for a future employer or why it is willing to change jobs.
  • ESG Reporting requires transparent KPIs regarding equal pay and appropriate salaries.
  • The European Union has approved a new directive on equal pay and pay transparency, whereby companies have six months as of 2026 to rectify a gender pay gap that is greater than 5%, to name just one of the necessary measures.
  • There are already some very good salary surveys that any applicant can easily find online.

How To Navigate the Terrain of Salary Transparency?

Whoever thinks of salary transparency probably imagines unaffordable extra costs for the company.

Instead, you should focus on the following 4 aspects:

1. Climate of Inclusion

Companies that want to be attractive employers will create a climate of inclusion in which values such as a sense of belonging, fairness and equal opportunities are a given - and equal pay, i.e. equal compensation for equal jobs and comparable performance, is an absolute must.

2. Clear Policies

Clear and transparent remuneration rules that govern pay and salary increases prevent unnecessarily high salaries and allow companies to keep personnel costs under control.

Does that sound strange? Often, certain managers tend to promote specific employees at all costs - regardless of whether their salary is still in line with market value or not.

Companies without clear policies quickly end up with complete chaos when it comes to salaries and find it even more difficult to deal with issues such as equal pay and inclusion.

3. Transparent Career Paths

Comprehensible, transparent career paths and development opportunities form the basis for individual professional growth: at what point can I be promoted, under which conditions and what does this mean financially? None of this should be a secret. The more transparent, the easier it is for everyone to contribute and perform - and for the company to retain its top talent.

It's not just salary per se, but also transparent career paths that help to keep top talent in the company. Image: shutterstock, Andrii Yalanskyi
It's not just salary per se, but also transparent career paths that help to keep top talent in the company. Image: shutterstock, Andrii Yalanskyi

4. More Rationality Through More Transparency

Making salary guidelines transparent across the entire company not only facilitates professional growth, but also rationalizes difficult performance discussions, which unfortunately all too often diverge greatly from one manager to another and are therefore unnecessarily demotivating.

Why all the hassle?

Regulatory pressure is the unpopular side of the equation, but the good news comes at the other end: transparency and clarity of remuneration policies increase the feeling of fairness and boost employee engagement, which ultimately leads to higher corporate productivity.

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