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It's The One Thing You Never Tell Anyone — & It's Costing You BIG

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Illustrated by Anna Sudit.
There are few topics that are still taboo in our culture; thanks in part to social media, people openly share their feelings on everything from politics to religion to sex. The one topic guaranteed to still make people squirm? Money. Few of us have open conversations about our income with anyone other than our partners (even some married couples don’t even discuss it), and many companies discourage their employees from sharing this info.

Even in the tech industry, which loves to disrupt the "typical" work culture, salary transparency is met with skepticism and fear. This summer, Twitter was abuzz after former Google employee Erica Baker tweeted about the internal salary doc she created — and the pushback she got from her managers. While employees loved the idea (nearly 5% of the company shared their compensation packages, and Baker claimed that some people used the info as leverage for better pay), Google management wasn’t so pleased. Peer bonuses sent to Baker to reward her work on the salary document were rejected by her manager, she said in her tweets and in subsequent interviews.

Baker’s argument for creating the doc was that Google employees should be aware of the huge difference in pay between two workers doing the same job. And with women in the U.S. making 79 cents to every dollar a man makes, more and more people are calling for salary transparency to help close that gap. While Google might not be ready for that kind of disruption, some companies are stepping up to the challenge.

When Lema Kikuchi, 35, was first interviewing for a position as a data analyst for SumAll, a social media data analytics company, she was informed that the brand approached salaries in a different way than many employers do: As part of SumAll's culture of transparency, all employee salaries are public.

Kikuchi was surprised at first. After her years of working for companies that discouraged such openness, salary transparency seemed like a foreign concept to Kikuchi. A year in at SumAll, though, and she’s gotten used to the idea — so much so that she forgets transparency is not the norm. “Just mentioning [to my peers outside the company] that we have transparent salaries...the reactions I get remind me that this is a sensitive topic anywhere outside of my company," Kikuchi explains. "It really seems to jar people.”

Some experts argue that this discomfort around salary transparency is generational. “My generation [Gen X] was brought up [being] told that it’s not polite to talk about pay, politics, or religion in mixed company,” says Stephanie Thomas, a research associate at the Institute for Compensation Studies at Cornell University.

However, thanks to companies like SumAll and other young tech start-ups like Buffer, who tout “radical transparency” philosophies, the tide may be turning in corporate culture. Even President Obama has expressed the need for more wage disclosure in order to fight pay inequality.

Thomas says the Google spreadsheet is an example of how different types of salary openness can have different results: “The Google spreadsheet was an example of full, naked disclosure of individual details, which to me is very different than having pay-process transparency.” Process transparency, she adds, is a system in which employees have enough information to understand how pay decisions are made. So employees can know what they need to achieve in order to get a raise or qualify for the annual bonus — but they won't necessarily know the exact, individual figures in their coworkers’ paychecks.

“I am a big supporter of pay-process transparency,” says Thomas. While open data about pay can expose inequalities and discrimination, there are risks involved, she says. “There is the danger that disclosing this kind of information on the personal level can create a morale issue and lead to disharmony among work groups,” she adds.

However, listing salaries with personal information and names attached is exactly how it works for federal government employees. Companies in the private sector are following suit, says Ariane Hegewisch, a study director at the Institute for Women’s Policy Research (IWPR) who researches the gender wage gap. And they're doing so without dire consequences, she says, adding that “those concerns are a little overrated.”

While Kikuchi at SumAll is free to look up her coworkers’ salary information, that data isn’t shared outside the company. Other companies, such as Buffer, go so far as to post their employee salaries in a public-facing document. Åsa Nyström, who works in customer support for Buffer, says letting the world know her salary has never made her uncomfortable; in fact, she says it gives her more faith and trust that the company she works for pays her fairly. “Women in the U.S. can often feel worried they aren’t being paid as much as a man in the same role,” she says. “[Buffer’s policy] can help show other companies that there doesn’t need to be a wage gap at all.”

For Whole Foods, the idea of salary transparency is nothing new; it’s been a policy for almost 30 years, says Mark Ehrnstein, the global vice president of Team Member Services at Whole Foods. Once a year, the company publishes an internal document, available to all employees, that lists everyone’s salary and bonus pay, name, and job title. Like the tech companies that have similar processes, Whole Foods errs on the side of transparency when it comes to business philosophy, but company leaders also note that the wage disclosure is a way to make sure they’re paying everyone fairly.

“We’re always looking at the data. We’re really clear that our pay practices are sound, and there’s equity across the board,” Ehrnstein says. “There are many examples of people being paid more money for doing the same job, of course. But we have to be able to say, 'This person has been in their job five times longer, and here are the things they’ve done along the way.' You need to be able to articulate that.”

As for whether the open-wage policy has ever led to negative experiences, Ehrnstein says that beyond one or two instances of personal data being made public, the company stands by wage disclosure as a policy that makes it a competitive employer. “Our employment brand is really important to us. We’ve been listed on Fortune’s Best 100 Places to Work for 17 consecutive years, and we’re really proud of that acknowledgment," Ehrnstein explains. "We think it’s a sum total of all of our practices.”

Still, some companies are looking to combat pay inequality without disclosing salaries. Salesforce CEO Mark Benioff recently announced a plan to close the gender wage gap at his software company, but in a statement to Refinery29, the company did not mention disclosing salaries to employees as a part of the plan. Instead, Salesforce says: “We are currently assessing the compensation of our more than 17,000 employees. This process could take up to a year to complete, and we plan to review salaries on an ongoing basis.” In August, Pinterest announced a similar plan.

Even with some private-sector companies making efforts toward transparency and pay equity, the IWPR’s Hegewisch says policy reform that strengthens the protection of workers’ rights to discuss salary is still important when it comes to closing the wage gap. “A law can influence cultural change, to make the system work more fairly,” she says. “What is really important is to make sure that if someone wants to discuss their salary and wants information about what other people earn, that there is no retaliation.”

The Paycheck Fairness Act — which has been introduced in Congress several times but was never passed by both houses — provides such protections, in addition to calling for more wage transparency. Under current law, an employer technically can’t prohibit you from discussing your salary — but that law isn’t very tough, or very well understood. So even though discouraging the discussion of wage and salary information is technically illegal, about half of workers report this is the attitude at their place of work, according to a 2011 IWPR survey.

Law or not, Thomas at the Institute for Compensation Studies at Cornell believes the culture is already changing. As more millennials — who have grown up sharing personal information on social media — join the workplace, they’ll be expecting more transparency. “Employers who aren’t prepared to be transparent will be at a disadvantage in terms of competing for top talent,” she says.

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