Employee Salary Self-Reporting: Blessing or Curse

A spreadsheet compiled by Google employees has recently caused quite a stir,  as it recorded the salaries of a wide variety of employees across all levels of the company,  specifically comparing the salaries of men and women.

It has been used in an ongoing class action claiming that Google discriminates on the basis of gender,  and lead to Google being ordered by the court to provide more documents for evidence of pay records. Meanwhile, Google continues to insist this is a storm in a teacup, and suggests that the spreadsheet does not take into account other factors such as performance, and that it is not a representative sample.

Gender politics aside though, the current events do make an interesting commentary on the state of pay transparency in some of these major corporations. If employees feel the need to compile this sort of evidence, this suggests that toxicity has crept into the culture. This can only lead to resentment amongst employees, both towards each other, and directed towards management.

Why is pay transparency so discouraged?

The right of a worker to be transparent about their salary and wages is actually protected under American law, under the National Labour Relations Act. If it takes an anonymous spreadsheet to have pay transparency in this company, it sends a pretty strong message, that this kind of disclosure is not widely accepted within Google.

It’s a fairly widespread attitude, it’s seen as impolite to actually discuss what you earn in most of western culture, which big corporations couldn’t be more pleased about. This culture of silence is really not doing any favours for employees in the long run, however. For companies who prefer to keep employees underpaid on the lower rungs of their ladder, in favour of keeping more money in the budget for other employees or other resources, employees without pay transparency are left to fend for themselves without any ground to stand on. Obviously, for companies with this culture, pay transparency is not in their best interests.

A culture of trust

However, this culture of keeping employees in the dark about their colleagues’ pay doesn’t allow for trust in the relationship between employer and employee. Trust is vital in the workplace environment to encourage open lines of communication and maintain employee motivation and engagement.
An employee is likely to find out if they are being severely underpaid compared to their colleagues eventually,  and when they do, a great deal of resentment will be the result. While it is true to say that more money will not help employees be more engaged with their work, pay inequality is likely to lead to dissatisfaction and can lead to lots of good employees to turnover. This is much more expensive than a pay rise or bonus when you consider the costs of re-hiring and training to fill that role.

Ultimately this spreadsheet which has enabled employees to self-report their salaries has been a curse for Google, and may possibly lead to them being ordered to pay millions in compensation of unequal salaries. However, hopefully I have demonstrated that pay transparency in the first place would have been a lot less costly.  Perhaps, this has been a blessing in disguise, if it leads other companies to be more transparent in order to avoid this happening to them.

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