Are tech companies pushing back against pay transparency?

A consultant says the urge to suppress salary discussions may be understandable, but laws in the US are moving in a different direction.
By: | September 9, 2019

Salary transparency has been lauded as a way to help close the gender-pay gap and improve employee engagement. However, a recent survey finds that employees at some of the world’s most prominent tech companies say they’ve been discouraged by HR from discussing their salaries with colleagues.

The survey was conducted by Blind, a social-networking app that’s popular among tech professionals. Participants were asked two questions: whether they’ve been discouraged by HR or management at their current employers from discussing their compensation with other employees, and whether they have shared their compensation with their co-workers.

About 60% of respondents answered “yes” to the first question, and 40% responded “no” to the second. Of the 18 Silicon Valley companies that were surveyed, employees at PayPal, Intel, Cisco, Oracle and eBay were the most likely to say they had been discouraged from discussing pay with their co-workers.

Tauseef Rahman, a principal at Mercer who studies compensation issues, says he found the survey results “strange,” given recent trends in pay transparency.

“There are plenty of websites out there that give you salary information for a range of jobs,” he says. “Plus, states like California, Washington, and Colorado have passed laws that entitle job candidates to pay information about an open position.”

PayPal employees had the highest percentage of “yes” responses to the first question, followed by Intel (79%), Cisco (73%), Oracle (71%) and eBay (70%).

Employees at those companies were also the least likely to reply “yes” to the second question: Only 29% of PayPal employees said they shared their compensation with coworkers, for example. In contrast, more than half of respondents at Google, Indeed and Facebook (62% in Indeed’s case) said they had shared their pay information with co-workers. Employees at these companies were also the least likely to say they’d been discouraged by HR or managers from discussing their pay with colleagues.

Several of the companies on the list deny that they prohibit employees from discussing their pay with each other.

“At Cisco, we don’t have a policy that says you can’t talk about compensation, as it’s illegal in many countries to prohibit employees from discussing their pay with others,” a Cisco spokesperson responded via email. The company shares data with employees on pay ranges, how pay decisions are made and how employees’ pay compares to the market and others at a broader level, she says.

A spokesperson for Intel says the company “respects the rights of employees to discuss their compensation, and also respects the rights of employees who do not wish to discuss their pay.”

Oracle and several other companies on the list declined to comment for this story.

Companies that prohibit employees from discussing their pay with each other will run afoul of the law in a growing number of states in the US. At least 18, along with the District of Columbia, have passed laws that ban employers from retaliating against employees who discuss their compensation with coworkers. Colorado’s law, which will go into effect in 2021, is one of the most far-reaching: It will also require employers to disclose the hourly or salary compensation for an open position, or range of hourly or salary compensation, in all of their job postings.

Compensation is a fraught topic these days, given the focus on pay equity, says Rahman. Mercer’s 2019 Global Talent Trends Study found that only 19% of US employees give their company an “A” for equity in pay and promotion, while the perception of fair pay among employees has declined from 57% to 52% during the past five years. A different Mercer survey found that 34% of companies share salary-range data openly, while another third make it available upon request from employees, he says. Another third does not share salary ranges openly.

By being transparent, companies can address head on employees’ concerns about fair pay, says Rahman.

Nancy Romanyshyn, a director in the talent rewards practice at Willis Towers Watson, says she too was surprised by the Blind survey’s findings.

“Employees in the tech industry tend to be pretty active in seeking out infornation on what they believe they should be paid, and employers in the industry have tended to be more transparent on pay than other industries,” she says. “The results suggest there may be small pockets within these companies where people somehow feel discouraged from discussing their pay.”

Romanyshyn says pay transparency is a big topic among her company clients. The two most common questions they ask, she says, are about what sort of analytics they should be using to determine whether they’re paying people equitably, and what they should be communicating to employees on the issue.

“There is no single right answer for every company,” says Romanyshyn. “But all employers should be asking these questions.”

Organisations that shy away from pay transparency could end up causing more problems for themselves, says Rahman.

“The perception will be that you have something to hide,” he says.

It’s understandable why some companies are reluctant to be transparent on pay, he adds—many clients are trying to sort out the logic behind pay decisions that were made in the past within their organizations and are uncovering what some describe as “a mess,” he says. “They’re concerned that, if people start discussing it openly, it will cause issues.”

Nevertheless, companies should strive to be as open as they can be on the topic, says Rahman.

“A story will emerge on pay, whether a company likes it or not,” he says. “Unless the company takes ownership of its story, it will be other people and sources coming up with perceptions of their own.”