386 SECTION 4 Compensation Is It Better to Know? COMPETENCIES & APPLICATIONS E while downplaying the contoutons of their experts on compensation Gunnart the peers. Consequently, equity theory enters the of full pay transparency whereby every thinking, and the knowledge of everyone's a employee in a company is allowed to know can make the typical worker feel underpaid. what everyone else is paid. It sounds like a fair way to handle perceptions of fairness about If an organization seeks to foster a tras pay, but is it better to know or not know? On collaborative work environment, then it may be une plus side, this might motivate current work- ill-advised to disclose individual pay levels. The solution might be to simply institute a comper ers and reduce the differences in pay often sation scheme based on rank or job title with related to gender. But the opposing view says that it might actually demoralize workers and little pay for performance. However, if the orga drive talent away when the reasons for pay dif- nization wants to retain its pay for performance ferences are not clear. philosophy, then full pay transparency might not Full pay transparency can work in two situ- rk in two situ be the best solution. The company can clearly ations. First, if pay levels are based on rank and define and communicate the criteria used to tenure (as in many union contracts and govern determine pay levels within job grades or bande ment agencies), then pay is not determined by and train managers to share this information performance or other factors. The pay rates are freely with workers. typically made available to workers in the or T he organizational culture and work envi- ganization, and even to job applicants. There is ronment must be appropriate for introducing no mystery in learning how much any individual full pay disclosure, while maintaining collabo- would earn in such a system. ration and harmony within the work group. HR The second situation in which this approach professionals should work with organization may work is when members of the organiza- leaders to determine if disclosing pay at the tion can easily see how well everyone else is individual level will be in the company's best performing. This is particularly true when per interest.4 Based on these issues, consider the formance can be objectively measured, like in following questions: sales jobs that post a "leader board" showing the sales generated by each salesperson. 1. How should companies address the percep- When an organization is not operating in tions of inequity when they are not able to one of those two situations, opening up the or willing to disclose individual worker pay payroll manifest for all to see may in fact do levels within the organization? How would more harm than good. If employees cannot ac you feel if your employer announced that curately assess each other's performance, then they plan to open the payroll records for ev- perceptions of inequity are almost inevitable eryone to see? when they see their peers' pay levels. Most 2. What information should companies share people are also not very good at judging how with employees relative to the employee's their own productivity stacks up to the perfor- personal pay determination and general pol- mance of other employees. Many workers have icies regarding pay decisions? How should an inflated sense of their own contributions, the needs of employees be addressed in these strategies? KEY COMPETENCIES: Critical Evaluation (Behavioral Competency) and Organization Technica Competency