Should salaries be secret?

Not knowing your co-worker’s salary may not seem like a problem until you find out that they get paid more while you work harder. So, should salaries be a secret? Let’s find out.

Do you know what’s the toughest part of being friends with your co-worker? Having the salary talk.

Would you be jealous if you knew that he or she earned more than you while you both were on the same level? (don’t lie, we all have been there :))

That is why some people might want to avoid the conversation, but there are some in the office who make wild guesses about other people’s salaries.

— “I think this guy earns more than that guy because this guy has never taken any leaves.”

No sh*t Sherlock.

1. Why do we keep salaries secret?

Imagine this: There are two employees who perform equally, but one gets a bigger raise. Now, who would know about this appraisal thing? The manager and the one who got the raise. The other employee never gets to know about this.

What do you think happens next? Nothing.

This is exactly why salaries are kept secret. If everyone knew each other’s salaries, there would be chaos. People would compare, argue, and even quit.

On top of that, if things are unfair, the boss doesn’t even need to justify their decisions — it lets them play favorites.

Now, this pay secrecy also leads to what economists call — “Information Asymmetry” — where one party in the negotiation knows a lot more than the other. Giving employers an edge during hiring or appraisals as employees have no clue about what’s fair.

In the 1970s, economist George Akerlof brought attention to information asymmetry using the “market for lemons” example, showing how incomplete information can affect markets, especially while selling used cars.

Only If you knew what your co-worker earned, you’d be better equipped to negotiate fair pay based on solid evidence (and not some wild guesses :))

But if someone accidentally finds out a colleague’s salary (like sneak peeking into the HR’s salary record sheet), it can lead to feelings of unfairness.

In some cases, widespread dissatisfaction can disrupt the entire workplace. Employees might become less motivated, more likely to leave, or even go on strike — hurting the company’s productivity.

2. What would happen if we removed this secrecy?

Before that, did you know for every ₹1 an Indian man earns, an Indian woman earns only ₹0.76.

And as women move higher in their career’s ladder, those in management roles earn only half as much as their male counterparts. Only if the women knew (well.. somebody would’ve just shut them up :))

Which is why pay transparency might be crucial. As bosses will have to explain why they pay people what they do. Making it harder to be unfair. Also, it helps the employees negotiate better pay. Your pay should be based on actual market rates, not just what you’ve made in the past, be it a man or a woman.

But wait, are we getting ahead of ourselves? Making pay not a secret isn’t that simple. You can’t just go to your boss one day and say, ‘Hey, I want you to know what that guy earns, or else I’ll go on strike’ <you might get fired>.

3. How to choose fair pay for yourself?

Well.. some drop a job offer from another company on their current employer :)

See, pay transparency varies between organisations. For example, government jobs don’t disclose exact salaries but instead group jobs into levels and disclose the pay ranges for each level. Some organisations may share all compensation details, while others might only share base salaries. Some organisations share this information internally, whereas others make it public.

You can’t really change the rules or the structure of big organisations on a whim. But you should know how to decide fair pay based on your skills and experience.

Here’s how you can know that –

• Research industry standards — Websites like Glassdoor, Payscale, LinkedIn Salary, and Indeed offer salary information based on job titles, industries, and locations. Some big orgs also release annual salary reports.
• Evaluate your skills and experience — Compare your skills, education, and experience to industry standards. Highlight unique, high-demand skills or certifications that can boost your salary <no, winning an award for “best non-living object” for a play you did in high school doesn’t count>.

• Consider geographic location — Salaries can vary a lot depending on where you work. Consider using cost-of-living calculators to compare expectations in different places.
• Network with professionals — Ask professionals in your field about typical salary ranges.
• Review job posting — See what companies are offering for similar positions and pay attention to the salary ranges listed in job ads to gauge the market rate.
• Consider your current compensation — Use your current salary as a benchmark, but also consider benefits, bonuses, and other forms of compensation.
• Prepare for negotiation — Know your worth. Be confident in your skills and what you bring to the table. Always be ready to negotiate based on your research and self-assessment.

While you should be self-aware and well-researched, here are a few things you should also look out for in a company —

• People aren’t getting paid more because of their position but because of the job that they do the best.
• They foster a culture that promotes the idea that value is created by skilled workers, not middle managers <who aren’t getting paid to spin in their chairs and send emails but supporting their team members>.

• Lastly, If a company pays their new employees well, it shows that they value all equally.

In orgs where everyone knows each other’s salaries, it’s easy to identify who the top performers are, what skills or talents are valued, and whether the company is a good fit for you. It’s time for more and more employers to realise this and make pay transparency a thing.

Till then, remember — “Information is the currency of democracy.”