6 Reasons Your Colleagues’ Salaries Are Top Secret
If you live somewhere in APAC, you probably have no idea how much your co-workers earn. In fact, 52% of Asia Pacific employees do not understand how their salary compares to a typical employee in their organization.
With no clue about compensation schemes, we can only assume that we earn about as much as our peers. While the world is slowly moving towards full pay transparency, Asia is still lagging with its restrictive views on compensation. Often, Asian companies impose strict rules prohibiting employees from discussing their salaries in the workplace. If you do not comply, you risk getting invited to a disciplinary meeting.
Why Don’t Companies Talk About Compensation?
Despite the lack of transparency, few people question pay secrecy. In fact, in most countries discussing your salary at work is still considered inappropriate. However, our sociocultural norms are not the only reason your company discourages pay discussions.
Do you ever wonder why you can’t talk about money at work? Here’s a short video explanation.
If you would like to dive deeper into the pay transparency issue, check out these five reasons your management doesn’t want you to talk about your income.
1. Information Asymmetry
You have probably heard about Information Asymmetry — a phenomenon where one party of an economic transaction has more information than the other party. That means that by not disclosing compensation programs the employer may take advantage of the employees.
If the employee does not know how much the rest of the team earns, the company can get away with the minimum wage. Why pay you more if you don’t know how much you can make?
2. Avoiding Confrontation
It’s talked about so little, most people don’t know how to handle information about compensation objectively. Some responses to transparency may include boycotts, endless arguments, and even departures. To avoid ugly situations, most employers decide not to share such sensitive information. However, this choice can backfire.
Real-Life Example: Many decades ago, Vanity Fair’s management issued a memo which prohibited employees from discussing their salary. The situation took an unexpected turn. The next day, Dorothy Parker, Robert Benchley and Robert Sherwood, all famous figures, showed up for work with signs showing their salary, proving that secretive policies can blow up in the employer’s face.
3. Some Negotiate Compensation Better Than Others
Some people are natural-born negotiators while others settle down for the first offer they get. Confident people tend to get better salaries because they know how to present themselves.
On the contrary, those who are less self-assured accept the first opportunity they have are presented with. They are shy to ask for more and rely on employers’ honesty. But when they learn that they have sold themselves short, they often get mad at the employer for not valuing them more. Understanding the salary data industrywide is a key part of any good salary negotiation. Therefore, we strongly recommend doing your own research before applying for a new job. Your current salary may not be an accurate representation of the job market value for this position.
If you found out that you are being underpaid, it might be a good time to ask for a raise. It’s never too late to make edits to your employment contract or re-negotiate an offer.
4. Discrimination Cover-Up.
Forty-five percent of employees in the Asia Pacific feel that their workplace does not support fair treatment and equality. If you are a woman or a member of an ethnical minority, you might be earning less than someone who is doing the same job. To avoid this difficult conversation, companies keep salaries secret, so no one feels discriminated or undervalued.
Real-Life Example: Thai nationals’ floor salary is usually lower than the compensation for the similar role for foreigners. However, not everyone is aware of it. The lack of transparency can create a lot of tension and resentment. While abiding the law, the company chose to treat the employees differently, and the situation can quickly get out of control.
5. Your Boss Hopes to Achieve High Employee Retention
By keeping your salary secret (especially if it’s below average), your company is trying to prevent you from looking for better opportunities. Indeed, employees’ sentiments such as “job satisfaction” and “intent to leave” is closely tied to a company’s ability to communicate clearly about compensation.
The survey by Harvard Business Review showed that “intent to leave” decreased in relation to how satisfied an employee felt about the pay. 60% of workers who thought they were underpaid intended to leave versus happy 39% who continued to work at the same company.
6. Your Management Fears Drops in Productivity
Negative emotions about one’s pay can dampen productivity. Regardless of the reason behind the pay gap, “underpaid” employees might start performing worse, even if the difference is well justified.
An employee does not view his salary as mere monetary compensation but also as the value his employer places on him. When the worker learns that he or she earns less than others, the morale drops. Motivation affects productivity and low-performing employee is the opposite what the management wants.
Pay Transparency: Yea or Nay?
Most employers think that with pay transparency all hell will break loose. People will fight, confront the management and even quit. The alleged assumption is that there are no benefits in being open about compensation. But is that so?
Breaking the conventional wisdom on pay secrecy, David Burkus says that sharing salaries openly across the company is beneficial not only for the employee but also for the employer. When we don’t know how much money others make, we are more likely to feel underpaid or even discriminated, which makes us unmotivated and unhappy at work.
Organizations with pay transparency see dramatic reductions in discrimination and increases in the perception of fairness.
Yes, pay secrecy is a way for a company to save money. However, to guarantee satisfaction at work, both employers and employees need to advocate for openness and honesty. As of now, few Asian organizations support pay transparency. The desire to cut costs and boost rapid growth is in the way of playing fair.
Yet, keeping in mind the speed at which the region is developing, soon enough Asian employers will realize how openness affects engagement and performance. Transparency will soon become the driving force for sustained economic prosperity as it creates an environment of trust and loyalty.
Here at GetLinks, we believe in full salary transparency, that’s why we’ve created our Salary Report. We want to empower candidates to find a job they deserve and help companies recruit and hire with insight.
Know your worth! Find out where you’d get paid most – check out GetLinks Salary Report.