This post by Ed Lawler, one of the all-time great thinkers on compensation matters, on Forbes.com is nutritious food for thought for all HR professionals! I have always said that what you don’t tell employees about pay has the potential to be more damaging than the truth because the vacuum such absence creates will soon be filled with misinformation. Communicating about pay on a need to know basis is good, but more disclosure is even better, but only when you’ve done your homework and made solid, credible and justifiable pay decisions in a systematic and objective way. So, the order in which this occurs is critical: (1st) make sure your employees’ salaries and bonus actually do reflect job values, internally and externally, and performance, and (2nd) decide how best to communicate both the pay plan design process and the outcomes so that all understand that their pay actually is fair and reflective of their contributions. Some employees may feel that their personal privacy has been violated if their pay is published within the organization, so this needs to be addressed. Another potential downside to transparency is that it may encourage a number of employees to dabble in being a compensation analyst, which is probably not the best use of their time or talents. The communication scheme should also clarify that the only legitimate market data sources are those to which employers (not employees) report salaries, which will disqualify most free Internet sites as purveyors of market values … don’t get me started!
– Shari Dunn, Managing Director
CompTalk 