Additionally, Nightingale feels that many leaders simply aren't prepared to handle salary discrepancies, especially as companies grow and scopes of work change. “People can sort of assume that compensation doesn’t have to be checked in on, and a lot of leaders get themselves into a bad situation,” Nightingale tells Supermaker, noting that this can be especially tricky when, for example, an individual starts as an intern and grows within the company and is making significantly less than the new hire they work alongside.
Nightingale says that organizations need to stop assuming that workers discussing salary will automatically lead to an increase in their overall employment cost. In fact, they need to start assuming that these types of discussions will inevitably take place and be proactive in curbing negative repercussions, noting that losing a strong employee over a salary dispute could cost employers 1.5 to 2 times an employee’s annual salary.
She paints me a picture of what it might look like to lose such an employee over a pay dispute: For a worker making $60,000 who discovers she is making $5,000 less than a colleague, bringing the two salaries to parity would cost the company $5,000. In contrast, failing to do so could cost the company $90,000 to $120,000 if the disgruntled employee decides to quit. “When faced with the $5,000 cost, people view it in isolation and think it’s going to cost the business money,” but addressing salary discrepancies proactively, she says, often makes more sense. “It’s really good business math in addition to being a decent human,” she adds.
In order to avoid or reduce the likelihood of the above scenario playing out in a company, Nightingale suggests developing a proactive, integrated compensation strategy rather than viewing individual salaries in a vacuum. This doesn’t mean companies have to pay everyone the top or bottom of the market, Nightingale adds, but employers can get into trouble when people start talking and huge, seemingly arbitrary salary discrepancies are unearthed. She also notes that part of this strategy should include sharing the distinction between junior and senior roles so that employees can understand the difference between seniority levels, know where they currently stand, and grasp what is required to grow within the company.
One organization who has adopted a transparent compensation policy is Glitch, a tech company based out of New York City. The software company shares salary ranges of roles with candidates and employees with the goal of paying everyone fairly. Antoinette Smith, 39, a Minneapolis-based full stack engineer at Glitch, joined the company in December and has experienced these policies first-hand.
“This is the first company [I’ve worked for] where the CEO has said multiple times—publicly—that it’s okay for us to share our salaries,” Smith tells Supermaker. She explains that Glitch also shares a document with employees showing all of the salary ranges for all of the roles at the company. “I’m able to see the ranges for everyone—including the CEO,” she adds.
Prior to joining Glitch, Smith felt some apprehension in sharing her salary. Now, she has come to view things differently and notes that her company’s transparency around compensation has made her feel more empowered. “Being someone who is not white and not male, it makes it a lot easier for me to feel comfortable talking about my salary,” she says. “If I have questions I don’t feel like I’m going to be cast as difficult person for asking.”
Given today’s increased debate over the merits of salary transparency, many workers are feeling more empowered than ever to disclose their income. But doing so can still be incredibly stressful for many workers, particularly women of color and minorities. Companies who claim they want to make a difference and work to improve or eradicate the wage gap ought to consider what they can do within their organization to take some of the burden off of employees. After all, companies can, and should, play a role in empowering their employees and doing so can potentially help to avoid losing money due to poor attrition rates.
Today, many organizations are still not motivated to encourage employees to share salaries because they are afraid that doing so will mean losing financial leverage. But, there are many companies, like Glitch, who are trying to do right by their employees by being more transparent—and who see such moves as worthy investments in their team and company culture. Not only can developing transparent compensation strategies help curb employee turnover, it can also do wonders when it comes to empowering minority workers and fighting the pay gap.