A recent Wall Street Journal article highlights one company’s efforts to revamp their compensation system — including rethinking how and when to disclose salary information.
GoDaddy, a web-services firm headquartered in Scottsdale, Arizona, now lets employees know how they stack up against coworkers in the same position. On their pay statements, employees see their level and salary range, The Wall Street Journal reported.
With this decision, GoDaddy appears to have struck a middle ground between total openness and secrecy around salaries — and they might be onto something.
While most companies keep people in the dark as to how much their coworkers earn, others have opted to pull back the curtain. Since 1986, Whole Foods has allowed employees to look up the salaries of other employees. More recently, social-media company Buffer and analytics startup SumAll joined their ranks.
In Buffer’s case, you don’t even have to work at the company to find out what individual employees earn — salaries are posted on Buffer’s public blog.
It’s hard to say whether there’s a “right” way to go about disclosing or withholding salary information, and certainly it depends on the culture of the individual organisation.
Research suggests that salary secrecy can hurt workers’ performance, especially when it’s unclear how performance relates to pay.
At the same time, studies have found that people generally prefer some degree of privacy around their financial information — in fact, researchers suspect that people’s desire for secrecy would override their curiosity about what their coworkers make.
Elena Belogolovsky, an assistant professor of human resource studies at Cornell University, has spent years studying the effects of pay secrecy and transparency in organisations. Her conclusion?
“My personal belief is that you don’t have to disclose [salary] information for every single person in the company,” she told Business Insider. “But what you need to do is make the system more transparent. You need to provide people with information on what they can do to make more.”
“Pay is not just about numbers,” she added.
Belogolovsky thinks GoDaddy’s system of revealing salary range and level — without making individual salaries publicly available — is sensible. As long as the company makes it clear how you can rise to the top of that range, the system should work.
Indeed, in an interview with Business Insider, Matt Toeller, GoDaddy’s Vice President of Total Rewards and HR Operations, said the company has made “levelling guides” available to all its employees since they rolled out the new compensation system in January.
These guides show workers the key indicators of success at their level, and what competencies will help them progress to the next level.
Toeller said his personal opinion is that complete salary transparency isn’t always productive.
“I don’t think it’s beneficial for the company to post everyone’s salary, 5,000 people on the internet,” he said. “Some people prefer to keep their salary private and some people want to make it public. I believe since we’re all adults, they can choose to do that.”
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