Why Salary Transparency Is Such a Good Thing
Why Salary Transparency Is Such a Good Thing
You’ve got your sights set on some impressive new talent—the A-Players who can take your business from decent to dazzling. Trouble is, to get them on board, you’ll need to pay them more than your current team. The market’s on fire, salaries are spiralling, and now you’re wondering, What the bloody hell do I do?
Here’s what not to do: keep salaries a secret. That’s the absolute worst move you could make. Ever worked in cybersecurity? If you have, you’ll know the simplest way to bait someone is with a file called ‘[Your Company Name] Salaries 2022.’ Leave that lying around, and someone will open it faster than you can say “pay disparity.”
Here’s the thing—people will talk about what they’re paid. Always have, always will. So instead of pretending otherwise, why not get ahead of the conversation? If the mere thought of salary chatter makes you, as CEO, want to hide under your desk, that’s a sign your remuneration system might need a rethink. Is there unfairness baked in? Are you relying on gut feelings rather than clear policies?
If so, it’s time to face facts. The first thing we tell our clients? Embrace salary transparency. Yes, the idea might make your stomach churn. Sure, it’ll force some uncomfortable truths into the open. But if there’s grumbling about pay inequality in your organisation, odds are it’s because people suspect (or know) something’s off.
Bringing in transparency, using actual compensation data, and communicating pay decisions clearly won’t just sort out the pay gap problem—it’ll also build trust and show your team you’re serious about fairness. Scary? Perhaps. Essential? Absolutely.
What Is Pay Transparency?
Pay transparency is all about lifting the veil on how employee compensation works. It means openly sharing details like salary ranges, pay scales, and benefits. The goal? To promote fairness, equity, and accountability in the workplace. When employees know how their pay is determined—and how it stacks up against others in similar roles—it creates a sense of clarity and trust.
Now, picture this: you walk into a room, and everyone knows what everyone else earns. Sounds a bit awkward, doesn’t it? But here’s the thing—it can also be incredibly empowering. Transparency takes the guesswork out of the equation. Employees aren’t left wondering if they’re being shortchanged or out-negotiated. Instead, they see a clear, logical process that’s fair for everyone.
By embracing pay transparency, organisations can build a culture of trust, improve morale, and even tackle sticky issues like pay gaps. No more whispered speculation or cloak-and-dagger salary negotiations—just an honest, straightforward approach to compensation. Refreshing, isn’t it?
Working Out Where There Are Pay Gaps
If the idea of salary transparency makes you break out in a cold sweat, ask yourself this: Why? Where’s the unfairness hiding? Are you paying women less than men for the same work? That’s not just awkward—it’s downright embarrassing. Just ask the local councils who had to publish their gender pay gap data when the Government decided it was time to tackle pay inequities. Spoiler: it didn’t go down well.
Take this example from a chat I had on the Mind Your F**king Business podcast with Giles Palmer, CEO of Brandwatch. Their new CFO published the company’s gender pay gap data without adding any context. Bold move—but not a clever one. It sparked a huge backlash. When Giles tried to explain the gap as being down to more men in higher-paid software development roles and more women in lower-paid account management roles, it didn’t land well. He was accused of “mansplaining,” and the situation went from bad to worse.
The silver lining? They didn’t leave it there. Brandwatch cleaned up its act. Today, their leadership team is a 50:50 split of women and men. They’ve made software development training accessible to all female employees, and they’re actively working to appoint a female Chair. Oh, and that pesky gender pay gap? Closed.
The moral of the story? Transparency might be uncomfortable at first, but it’s the only way to truly address pay inequities—and come out stronger on the other side.
Maintaining Trust with Pay Transparency
At the heart of this is trust—and trust is painfully easy to lose. There’s nothing worse than finding out you’ve been treated unfairly. It’s corrosive, like acid eating away at the foundations of your morale. Remember being a teenager and finding out someone cheated on you? It hits you in the gut, leaves you feeling taken advantage of, and shatters your confidence.
That’s exactly how an employee feels when they realise their pay isn’t fair. And here’s the kicker: it’s the kind of thing that makes people quit. Especially now, when the job market is so volatile. Maybe your A-Player gets a LinkedIn message at just the wrong time—when they’re already feeling underappreciated. Or maybe they spend a Sunday evening scrolling a competitor’s job page. Either way, you lose a star player over something you could’ve fixed.
Here’s the irony: research shows money isn’t usually at the top of the list when it comes to employee engagement. People care more about purpose, recognition, and growth. That is, until they feel taken for granted or mistreated. Suddenly, fair pay isn’t just important—it’s everything.
Pay transparency is your antidote to that. It signals to employees that you’re playing fair and that you value their trust. Because once they start doubting your integrity, it’s game over. Keep trust intact, and you’re far less likely to lose your top talent to something as preventable as a pay grievance.
Introducing Salary Scales and Pay Ranges
Here’s a surprise: we’re usually the first to tell small businesses to steer clear of copying big corporations. But not this time. When it comes to salary scales and pay ranges, big businesses are absolutely onto something. Why? Because transparent pay structures are one of the best ways to squash negativity before it even starts.
At IT Lab and Peer 1, we introduced salary bands long before we hit 50 people. The first step was grouping roles into job families. From there, we created salary bandings for each group, showing staff exactly what skills, experience, and behaviours they needed to demonstrate for a pay rise. By breaking roles into levels within those bands, we gave employees clear goals to aim for—and gave ourselves a rock-solid reason why some people were paid more than others.
Transparent pay scales also tackle a common small business headache: the belief that the only path to higher pay is a promotion into management. That’s why so many people end up in management roles they’re not suited for (and frankly, don’t want). Suddenly, you’ve got unhappy managers who lack the skills to lead, all because there wasn’t another way to reward their contributions.
The fix? Create overlapping pay scales for every role in the business. Let’s say you’ve hired Bob as an engineer. Two years in, you want to reward his commitment and growth. Instead of shoehorning him into a management position, you move him up the engineer pay band—simple, clear, and fair.
Publish these scales across the organisation, from junior roles to CEO. Make it clear why certain roles—like software developers—command higher pay than others, like account managers. And while you’re at it, be upfront about executive pay ranges. Transparency at the top is just as important as it is for entry-level roles.
Here’s the kicker: encourage your team to speak up if they think pay isn’t aligned with market rates. If someone flags a gap, do a quick benchmarking exercise and fix it. That’s how you build trust—and keep it.
Taking this approach also lets you sidestep the dreaded inflationary annual pay rise. Instead, employees understand that pay increases are tied to their growth, not just time served. Take Macquarie Telecom, for example. They’ve nailed this with their graduate programme. Every new hire comes in on a two-year fixed-term contract. From day one, it’s crystal clear: every two months, they’ll be eligible for a pay review and promotion based on gaining industry certifications. It’s upfront, honest, and gives everyone a fair shot.
By implementing clear, transparent salary scales, you create a workplace where pay progression is logical, fair, and motivating. No more guesswork. No more resentment. Just a system that works.
Getting Staff to Set Their Own Salaries
If you’re constantly hitting a wall of negativity around salaries—whether it’s from job applicants or your current team—it might be time to think outside the box. Here’s a radical idea: let your staff set their own salaries. Yes, really. It sounds bonkers at first, but hear us out.
We first came across this concept at Makers Academy, and it was so intriguing that we invited their CEO, Evgeny Shadchnev, onto the Mind Your F**king Business podcast as our very first guest. Makers Academy has taken the bold step of letting employees decide their own pay, and surprisingly, it works brilliantly for them.
Here’s how it plays out: Makers believe that employees are in the best position to assess their own value. They can factor in feedback from colleagues, their contributions to the business, and market data. If someone feels underpaid, they don’t stew in silence. Instead, they present their case.
The process is crystal clear. Employees gather evidence on how much value they bring to the organisation and benchmark their salary against others in similar roles elsewhere. They then find colleagues willing to vouch for their claims and document everything before submitting it to Finance for consideration.
It’s not just about pay; it’s a masterclass in self-awareness, feedback, and trust. Staff learn to articulate their worth, accept constructive input, and navigate tricky conversations. Plus, it builds a culture where pay decisions are grounded in fairness and transparency.
It’s unconventional, sure—but for the right organisation, it might just be a game-changer.
Freeing Up Managers to Coach with Equitable Compensation Practices
Salary transparency doesn’t just make things fairer—it also frees managers to focus on what they do best: coaching their teams. With clear salary bands and equitable practices in place, managers no longer have to carry the heavy load of deciding who gets a pay rise or a promotion. That means no more awkward conversations or emotional baggage.
At Rackspace and Peer 1, we took this approach and moved annual pay rise decisions to the Executive Team. Here’s how it worked: we’d determine the total payroll increase for the year and set clear ground rules. If someone had already had a promotion or pay rise in the past six months, or if they’d been with the company less than six months, they didn’t qualify.
From there, we allocated the pot based on performance:
- A-Players (our top performers) got around a 10% rise.
- B-Players received 5%.
- C-Players didn’t get anything.
Managers graded their teams quarterly, and weekly OKR and KPI tracking made performance crystal clear. Because of this, the system was easy to administer and totally transparent.
The best part? Pay rises weren’t tied to annual appraisals—a process I’ve always found outdated and painfully unproductive. This approach kept compensation fair and consistent while allowing managers to focus on helping their teams grow, instead of getting bogged down in endless salary discussions.
It’s a win-win: fairer pay structures and managers who are free to coach, support, and drive performance.
Planning Ahead
Once you’ve mapped out job families and pay ranges, planning for the future becomes a whole lot easier. For instance, if you’re gearing up to hire 150 people next year, a tiered system will encourage a smarter approach—like starting your own academy or in-house training programme. Instead of breaking the bank to hire the most expensive people on the market, you can focus on hiring for attitude and training for skills. Grow your own A-Players.
It’s also worth being strategic about where your people are located. Take a client we worked with recently—they’ve nailed their hiring strategy by balancing staff across the US, Canada, and Brazil. Why? Because this mix helps them manage attrition. In Brazil, for example, paying well tends to reduce churn compared to talent hotspots in America. By benchmarking pay across these regions, they can work out what each role is worth in different locations and adjust accordingly.
At Peer 1, we took a similar approach across the 22 places we operated in. We categorised locations into A, B, and C-tier cities. With this system, we knew exactly what a Level 2 software developer should be paid in any of those locations. It made hiring straightforward and set clear expectations for employees, especially if they decided to relocate. For instance, salaries would adjust if someone moved to an office in a different country or city.
Being proactive with pay structures doesn’t just make hiring easier—it helps you plan for growth without getting caught out by inconsistent or inflated salaries.
Implementing Pay Transparency
Pay transparency isn’t just a buzzword—it’s a shift that demands a clear, structured approach. Start by giving your compensation system a proper spring clean. Are there cobwebs of unfairness hiding in the corners? Dust them off with pay audits and market data analysis. From there, build clear, transparent pay scales and explain them to your team. Regular reviews will keep things fresh and fair—and stop your system from going stale.
Pay transparency is a powerful tool to close the gender pay gap, build trust, and attract talent, but it’s not without challenges. It can compress salaries and prompt employees to seek personalised, non-monetary rewards. To succeed, companies must link performance to rewards, train managers, and formalise alternative benefits to ensure fairness.
Overcoming the Hurdles
Worried about the blowback? What if someone realises they’re earning less than a colleague? That’s the whole point—get the unfairness out in the open and fix it. Explain how pay decisions are made, give people clear paths for growth, and tackle pay gaps head-on. Transparency might feel messy at first, but honesty builds trust. Trust keeps your team onside—and stops them eyeing up your competitors.
Staying Legal
Here’s the deal: pay transparency isn’t just a nice-to-have—it’s becoming law. The EU’s Pay Transparency Directive requires salary ranges and average pay levels to be disclosed. In the U.S., states like California, New York, and Washington have similar mandates. Keeping compliant means reviewing pay practices, updating your scales, and making sure your team knows what’s what.
Best Practices for Pay Transparency
Think of building pay transparency like constructing a solid house:
- Foundation: Develop clear pay scales based on market data and internal fairness.
- Walls: Communicate openly about pay practices and policies.
- Roof: Regular audits to spot and fix pay gaps before they cause leaks.
- Finishing touches: Foster a culture of trust and transparency, where no one’s afraid to talk about pay.
Done right, pay transparency isn’t just about avoiding legal headaches—it’s about creating a fairer, more equitable workplace where trust thrives and your team sticks around. Simple, isn’t it?
Written by business coach and CEO mentor Dominic Monkhouse. Read his new book, Mind Your F**king Business here.