ONE – Pay PROCESS Transparency

Giving employees more information about how decision makers determine levels of base pay, benefits, pay raises, and incentive pay.

TWO – Pay COMMUNICATION Transparency

The extent to which employers refrain from imposing restrictions on employees’ freedom to discuss pay-related matters.

It is illegal in the U.S. for employers to restrict employees from talking about pay with each other. Read the National Labor Relations Act.
Two-thirds of the private-sector employees reported that pay-related discussions with co-workers and others were either discouraged or formally prohibited by their employer.

THREE – Pay OUTCOME Transparency

This refers to employer disclosure of actual pay levels. It is controversial to make individual employee pay levels visible to the public or internally within the organization.

It does help to facilitate social comparison and social monitoring, but there can be good and bad consequences to this type of transparency.
An alternative to full individual employee pay-level visibility is sharing aggregated data. Employers can use an average, median, or a range for salaries, merit increases, or bonuses by pay grade. Employers can share the pay data in aggregate by gender/ethnicity or race. And pay data can be aggregated by performance rating or compa-ratio.

If you want to learn more, read the book Exposing Pay: Policy Implications and Research Challenges by Robert Bamberger.

Sources: WorldatWork; 2010 IWPR/Rockefeller Survey of Economic Security

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