Should CIOs Promote Full Pay Transparency?

ure being transparent on pay sounds like a good idea, but is it really?
ure being transparent on pay sounds like a good idea, but is it really?
Image Credit: HonestReporting

So let’s make sure that we all understand what we are talking about when we bring up pay transparency. Right off the bat, pay transparency sounds like a really good idea. In a company that has pay transparency, every employee knows what every other employee is making. There can be a lot of benefits to doing this: it can motivate employees, it can close gender gaps, and it can attract new talent that will understand the : importance of information technology by showing people how achievement at the company is rewarded. However, the person with the CIO job needs to understand that there is also a darker underside to pay transparency…

Decisions About Talking About Pay

So what could be wrong with telling everyone what everyone else is making? It turns out that when someone discovers that one of their coworkers is making more than they are and that could be very disheartening. Additionally, pay transparency could end up driving people away when they discover that people that they don’t think should be making a certain amount of money are actually making that money. When it is not clear why someone is making what they are making, this may make the company a less desirable place to work.

As the CIO, there are a number of steps that you can take prior to making the decision to implement full pay transparency. What you need to understand is that there are different levels of pay transparency. The initial steps can be easy to take with little or no downside. One of the things that you can do is to take a look at the firm’s policy on employees discussing their pay with other employees. Many firms have rules in place that prohibit the sharing of salary information. This is a good rule for the CIO to get rid of. Most of your IT department’s employees and any potential new employee will view such a rule as being unreasonable.

Another step that the CIO can take in order to make pay more transparent within the IT department is to share with everyone how the pay for each position in the organization is determined. Disclosing the formulas or processes that are used to set pay can answer a lot of questions that your staff may have. The value in doing this is that it can act as a motivational tool for your employees by showing them the path to a higher salary. With a little luck they will come to understand that they can improve their pay by improving their performance.

Going All In: Pay Transparency

These “baby steps” are fine, but what about taking that final step – providing your employees with full pay transparency? There are two situations in which providing full pay transparency is clearly a good idea. The first is in an organization in which pay levels are simply based on what level an employee is at and how long they have held that position. If job performance is not part of how pay is calculated, then all discussions about why someone is making what they are making will stop. Another situation which full pay disclosure can be a good move is one in which everyone can see how everyone else is performing. This can happen in an organization in which performance can be measured easily or one in which there are few people so everyone is aware of what everyone else is doing.

Pay transparency can cause problems if it is applied to the wrong type of organization. If the person in the CIO position wants to reward a worker; however, their contribution to the department is not easy to measure and may not be visible to everyone else in the department and so this can cause problems. Another problems can occur when an IT department is large and the work that the people do in the department is generally done as a part of a team. This kind of working situation is going to make it almost impossible for other workers to fully understand all of the contributions of any other worker. Additionally, any contributions that a worker makes to another team can be very tricky to properly value.

If your IT department is not ideally set up for transparent pay, then you do have alternatives. The simplest case is that you do away with pay for performance and you simply pay employees based on their position and their tenure. However, if you want to include performance based pay in how you reward your staff, then you are going to need to do some communication. You are going to have to let everyone know what the equitable process is that is being used to determine performance subjectively. You don’t want to reveal the salaries that people are receiving, but you do want to tell everyone how they have been calculated. This is going to allow you to avoid the resentment that comes along with full pay transparency.

What All Of This Means For You

A popular concept that is sweeping though IT departments is the idea of pay transparency. Under this policy, every employee would know how much every other employee was being paid. This new approach comes with a number of benefits to both the employees and the IT department. However, at the same time it can cause a great number of issues. What’s a CIO to do?

It turns out that before enacting a full pay transparency program, a CIO can take a number of different steps. The first of these is to do away with any company policy that prohibits employees from talking with each other about salaries. This is seen as silly and can adversely affect potential new employees. Secondly, the CIO can share with everyone how the pay for each position in the organization is determined. This will allow everyone to understand why certain positions may make more than other positions. If an IT department is not a good fit for full pay transparency, then a CIO can do away with pay for performance and just pay based on job position and tenure. If pay for performance is important, then the CIO can share how this will be calculated without sharing any actual salaries.

CIOs want to have an IT department that is filled with happy workers. The amount that they are being paid can be a big part of this. Everyone is always interested in how much their coworkers are making and they have opinions on if they should be making more or less. Pay transparency can answer some of these questions but it can also create more. CIOs need to very carefully evaluate their departments and if appropriate, roll out pay transparency. If not, there are other actions that can be taken that will help to make pay more transparent.

– Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World IT Department Leadership Skills™

Question For You: Do you think that there would ever be a case where a CIO would want to undo a pay transparency program?

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What We’ll Be Talking About Next Time

As the person with the CIO job at your company, you are constantly under pressure to understand the importance of information technology and to find ways to allow the company to do more things quicker. You’ve probably already done the simple things such as deploying a group chat application, installing an ERP suite, and, of course, putting in countless firewalls to keep the whole operation safe. However, now the people running the company are going to be asking you to do more. They want you to find ways to automate the back office tasks that are being done that don’t bring a lot of value to the company. Looks like you are going to have to learn about RPA.