Pay Range Secrecy Persists ... and the Approaching Window for Addressing It

I was struck by a particular statistic in a recent WorldatWork research report ("Alignment of Business Strategies, Organizational Structure and Reward Programs" coauthored by Dow Scott, Ph.D. of Loyola University and the Hay Group - members click here to access):  Only 41% of responding organizations indicate that their employees know the pay range for their own position.  This shouldn't surprise me, as it is consistent with findings in earlier research, yet I admit it still does.

As I try to get my head around the persistent nature of pay range secrecy, two questions come to mind:

Why?

For how much longer?

Let's start with the why.  First, know that this can't be written off as an issue of smaller, less sophisticated organizations without formal pay programs or professional HR staff.  The vast majority of participating organizations (86%) have more than 1,000 employees.  More than half of them (54%) have over 5,000.  These are big companies, not emerging businesses or "Mom and Pop shops".

That being the case, I would suggest there are three reasons that pay range secrecy exists in these organizations:

1. Some organizations are simply enshrouded in a culture of secrecy, and pay range secrecy is merely one example of how this plays out. 

2. Management does not believe that pay ranges and pay range assignments are defensible

3. Management does not believe that actual employee pay levels within their assigned salary ranges are defensible

None of these seem like good reasons to you?  I'm hard pressed to disagree, but I also appreciate that this (particularly #2 and #3) is the reality many organizations are faced with at present ... and there aren't currently a lot of discretionary pay budget dollars floating around which can be used to fix problems.

How much longer? 

As the recession bottoms out and the labor market begins to turn, which it will (particularly in critical skill areas), employee expectations and demands will rise accordingly.  In this age of information and transparency, and given the increased pressure and regulation around pay discrimination, it is difficult for me to believe that pay range secrecy is a tactic that employers can hold onto in the long run.

But as the economy turns, we will see plenty of churn and adjustment as the labor market (and market pay values) adapt to the reality of the other side.  This presents all of us with opportunity and (frankly) cover for getting our pay houses in order.

If you are one of the 59% of employers who does not reveal personal pay ranges to employees and the reason is a lack of confidence in your pay program and practices, you have a distinct window for addressing this approaching on the horizon.

I hope you take advantage of it.

Image:  Creative Commons Photo "Secrets" by stevendepolo

Comments

[E James (Jim) Brennan]

I've always considered all those three reasons to be simple examples of one single common cause: top management doesn't understand the pay program and doesn't want to look stupid by admitting it. When senior executive management fully comprehend the pay system, they are much less likely to stonewall and far more likely to openly cite it and take pride in it.

HR/Comp folks may mistakenly think their bosses don't have confidence in the pay system, but that's not it. The big bosses don't have confidence in their personal ability to talk their way through the reality without stumbling.

After all, the first rule of top management is Thou Shalt Not Expose Thy Boss to Ridicule. Training in humility, human behavior and compensation systems are necessary, in order of priority.

[Ann Bares]

Jim:

I'd be hard pressed to disagree with your conclusion. And in these cases, of course, members of top management often don't understand the pay program because they don't believe it represents a high enough priority to justify the investment of time and energy it takes TO understand it. Sad.

[E James (Jim) Brennan]

While pointing WorldAtWork online Community members discussing this topic to your timely blog, I posted a response there particularly relevant here: "There's no requirement to give detail, but the act of volunteering such detail is indicative of management confidence in the correctness of its discretionary decision while secrecy implies guilty conspiracy to defraud."

[Ann Bares]

Jim:

So right on.