Pay Transparency - Windows Not Walls
“People who live in glass houses should not throw stones.” We can trace versions of this saying back to Chaucer around 1385. I am pretty sure he never thought it would become famous enough to be used in a blog article by me! Glass houses have more problems than just simple stone throwing. Anyone who has stayed at a hotel with a room directly across from another hotel knows this.
When it comes to pay transparency, it can be even more tricky. The following things are both completely transparent and incredibly distorting:
Prisms
Magnifying glasses
2-way mirrors (from the correct side)
Water (in the right context)
Diamonds
None of the above would help anyone understand your pay programs or how they fit into them. In fact, each of them would probably be worse than no transparency at all. But we want people to understand their pay. We want them to feel valued and know that they are not being shortchanged when compared to their peers. Anything we fail to share may be seen as something we are trying to hide. We are returning to the idea of transparency, but we cannot always agree on what it means.
There continues to be a discussion about radical transparency. Having glass walls means transparent bathrooms and bedrooms and doctor’s offices. We can all agree that some things are better left unseen, or only seen by those who are trained to understand them.
I like envisioning pay transparency using the idea of windows. There is a great reason we created windows many ages ago. They let light in. They allow us to look out. They can be designed to let in the fresh air, and they can provide coverage for those things not meant for the eyes of others. They are transparent but can be covered at critical moments. In short, windows work.
Of course, compensation should not be a windowless room. It shouldn’t be a dank basement in your company, but we do not need to resort to exhibitionism to create the value and understanding we desire. Radical pay transparency does not equate to everyone perceiving things the same way. Just like the proverbial glass house, what some see as exciting or blasè, others will see as obscene or titillating.
Honest and consistent communication coupled with limited transparency can be far more effective than simply airing your dirty laundry. Some companies may have the fortitude and physique for glass walls, but most will do better with well-placed windows.
Dan Walter is a CECP and CEP and works as Managing Consultant for FutureSense. He is passionately committed to aligning pay with company strategy and culture. Dan is also a leading expert on equity compensation issues and has written several industry resources including the one-of-a-kind Performance-Based Equity Compensation. He has co-authored ”Everything You Do In Compensation is Communication”, , “Equity Alternatives” and other books. Connect with Dan on LinkedIn. Or, follow him on Twitter at @DanFutureSense.
Posted by DanFutureSense on 05/02/2019 at 08:30 AM in Base Salaries, Compensation Communication, Compensation Philosophy, Executive Compensation, Small Company