Discussing compensation: What got your parents fired can help your career

Discussing compensation: What got your parents fired can help your career

For many years in corporate America, discussing your salary or that of your coworkers was a no-no. At many companies, it could get you fired.

The National Labor Relations Act of 1935 makes it illegal to prohibit employees from talking about compensation with coworkers, but many companies still frown on the practice, discourage it and punish employees who do. It’s such a problem that individual states and the federal government are passing their own laws to protect the rights of employees.

Understanding the pros and cons of discussing compensation will help you better understand when or if you should participate in pay-related subjects at work, or encourage it if you are a manager.

Who’s talking?

People are more likely to discuss compensation if they are younger and based on their cultural backgrounds.

In some cultures, it’s considered rude (bragging or showing up friends) to discuss your income. Other cultures see income discussions as sharing their good fortune. Some cultures view talking about the price of your car, home or vacation as vulgar, while others see it as a point of pride.

The taboo against talking about money can be traced back to the British, and it still persists in America today, especially the higher the income of the person.

Younger workers are more open to discussing compensation than older workers. Approximately a third of millennials in the 27-36 age range are comfortable talking about their compensation with coworkers, while only 8 percent of baby boomers are.

Why not discuss it?

Discussing pay at work, especially in a small office, can cause a variety of problems not only for employers, but also coworkers.

“Marcy, can you run this report for me? I’m slammed with the monthly updates right now.”

“Run it yourself—you’re making more than I am.”

Discussing compensation, which includes salaries, hourly wages, overtime hours, bonuses and commissions can cause hard feelings among employees. Not only will this lead to damaging a team, it can ultimately lead to employees quitting and finding work elsewhere.

Another reason companies don’t want employees discussing pay is that it can lead to the company having to raise the compensation of employees who find out they are making less than their coworkers.

What are the benefits of talking about compensation?

One reason for making it legal for employees to discuss compensation is to make it easier for workers to organize, collectively bargain and unionize. This is more important at larger companies than smaller businesses.

One surprising benefit of employees openly discussing compensation is that they might discover a company wide pay gap, either between genders, races, age groups or another employee category.

At large companies, HR directors should already be running compensation analyses to spot these types of imbalances. At smaller companies, these types of pay gaps might not occur by design, but they can occur by unnoticed circumstances.

For example, one customer service rep might have been hired when the company was smaller and had less cash to pay employees, while another CSR doing the same job was hired when the company had more cash and could afford to pay more. Or, one group of employees was hired when unemployment was high and labor was cheaper, while another group of employees doing the same job was hired when the economy was booming, unemployment was low and skilled workers were harder to find and cost more.

In either case, salary transparency helps eliminate mistrust employees might have about their company if they feel other employees are making more compensation.

Talking about your compensation can also help you negotiate better, not just at your current place of work, but also when you leave and enter the job market. Surveys of female workers show that one reason they make less than some men is that women are less aggressive than males when it comes to the compensation aspect of new job negotiations.

Have a discussion

If you’re an office manager, talk to your employer about their views on employees discussing compensation. Point out the fact that it’s illegal to ban these types of discussions or to fire or discriminate against employees who do so. You might want to look up your state’s laws regarding this first.

Talk to your employer about the pros and cons of employees discussing salary and then see if the company is open to having a management/employee discussion about the subject. You’ll need to use your judgment, based on your relationship with your boss. In many cases, managers might focus on the fact that you want to “reveal” salaries, bonus structures, commissions and other forms of compensation, which can have very negative impacts on a business. Concepts like “transparency” might not be concrete enough to counter the negatives that come with revealing salaries. Management can also conduct an internal review to see if there’s a gender pay gap without encouraging employees to discuss their pay.

Despite the negatives of employees talking about compensation, more and more companies are encouraging it.

If you believe employees are already talking and you’ve heard some negative results, you might tell your boss that you want to be more proactive and head off any rumors or incorrect information.

If you get approval, hold a meeting with office staff to discuss the subject. Ask the employees how they feel about this. Ask them if they’d mind if others knew their compensation and discussed it.

You might find that your staff doesn’t want their salaries revealed or discussed.

The employees who don’t mind might find out that some of their coworkers would be very offended if they learned that others were talking about their compensation. Employees who don’t want their salaries discussed might re-think their position if they learn that most of their coworkers don’t mind sharing their compensation numbers and are already talking about it.

Having a frank and open conversation about compensation discussions can help clear the air on an awkward subject and ultimately strengthen your office by getting everyone on the same page.