In some companies everyone knows everyone’s salary. They are transparent. People know what they can aspire to and specifically what each job is worth. It evens out the playing field. A job has a set worth and that’s the end of story.
Other companies aren’t nearly so transparent. Salaries fluctuate as incentive tools, according to seniority or the discretion of the boss.
Some employers are pro-transparency others are not. There are valid reasons for both sides of the argument.
On the pro side, if everyone is aware of everyone else’s pay grade, it promotes pay equality. If people know they are being compensated equal to others doing a similar job, it eliminates pay jealousy and people are less likely to be unhappy with their salary. It also ensures everyone is paid equally for the job they are doing regardless of gender of race.
Satisfied they are being fairly compensated, pay equality encourages people to be more collaborative and productive.
Easier to discuss pay raises
Pay transparency also takes the pressure off when it comes time for employees to approach the question of a pay increase. As a person acquires more responsibility they understand they can request compensation for their efforts.
More to the job than meets the eye
On the surface person A and person B might seem to be doing similar work, but person B actually carries the lion’s share of responsibility. A downside of pay transparency is it can create jealously and hostility in the workplace when people look at dollars only, without understanding what exactly a certain job might or might not entail.
Restrictive to employers
Some employers use pay as a way to increase performance. They use it as an incentive. However when everyone knows what everyone else is making those kinds of discrepancies can cause envy and jealousy. Rather than raising their standards to try and increase their own compensation, lower paid employees will use the pay differences as a reason to seek employment elsewhere.