Pay transparency: Would you mind if other people knew how much you earn?

The BBC has revealed the salaries of its highest paid stars, and gender pay gap reporting will force

The BBC has revealed the salaries of its highest paid stars, and gender pay gap reporting will force companies with larger workforces to detail their gender pay discrepancies, but how clear-cut is the issue of pay transparency? Picture: Joe Giddens/PA Wire - Credit: PA

After the BBC published the salaries of its highest earners, the issue of pay transparency has come to the fore. But whether a more open discussion about wages will bring benefits to businesses is not a clear-cut issue. BETHANY WHYMARK reports.

Alongside sex, religion and politics, how much you earn is high on the list of taboo subjects in British conversation.

Last week the BBC caused a national storm after it published the salaries of its TV and radio presenters earning more than £150,000 a year – a move demanded in changes to its Royal Charter – which revealed significant disparities between the 62 men and 34 women listed.

But what lies behind the English reluctance to reveal our wages and salaries to colleagues, acquaintances or even friends?

Dr Susan Sayce, diversity and equality specialist at Norwich Business School, said the ingrained career structures – and class system – in English society could be behind the modesty.

Future 50 Live at the UEA Enterprise Centre, Norwich.
Speaker Lynn Walters. Picture: Archant

Future 50 Live at the UEA Enterprise Centre, Norwich. Speaker Lynn Walters. Picture: Archant

She said: 'In Britain, not talking about it [pay] is about not wanting to advertise your wealth and status – we can read that in other ways.

'By contrast in the US, it is a very entrepreneurial culture where more people are self-made. They do not mind talking about how much they earn whereas here we are more reserved about it. It is built into our heritage, especially in times of hardship when conspicuous consumption would be frowned upon.

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'Advertising your wealth around people who are poorer than you is considered to be in bad taste.'

New legislation such as gender pay gap reporting – which comes into force next year – is causing traditionally tight lips to loosen, while revelations over bloated executive pay and bonuses have raised the public's hackles.

Jeanette Wheeler, partner at Birketts law firm. Picture: Submitted

Jeanette Wheeler, partner at Birketts law firm. Picture: Submitted - Credit: Archant

But views conflict as to the efficacy of airing companies' pay-related laundry – whether clean or dirty – in public.

Research has suggested that pay secrecy could impede performance, and that being able to compare pay can give employees a steadier foundation on which to challenge bosses over their wages.

However, others argue that pay openness will inevitably lead to inflation, as colleagues do battle to reach the top of their respective pay grades and senior management struggle to hold onto staff amid competing bids from commercial rivals.

Jeanette Wheeler, employment lawyer at Birketts in Norwich, said many subjective factors could influence the 'worth' of an individual to a business.

'In practice we are very far from seeing full pay transparency on pay and bonuses in the private sector and there are some cogent reasons why it is not necessarily in the best interests of a business to be fully transparent about pay,' she said.

'Allowing employees to compare themselves to each other can create conflict in the workplace, particularly when an individual's perception of their own self-worth can differ dramatically to that of their employer.'

Lynn Walters, managing director of East Anglian recruitment firm Pure, agreed that more pay transparency could create rivalry.

She said: 'I am hearing anecdotally that the gender pay gap reporting is going to cause inflationary pressures, but what you are getting there is parity.

'Many businesses are endeavouring to be transparent, but there are always nuances and differences which someone looking from outside may not understand.

'Most businesses encourage people to keep their pay and rewards confidential but invariably people do talk about it, whether management knows or not. I think it will lead to some difficult conversations which businesses will have to face up to – it may cause them to question themselves as well.'

Dr Sayce conceded that pay openness could instigate an 'inflationary spiral' within companies and sectors, but said firms that 'believe in equality' should welcome transparency.

'We need to accept that it is not a perfect world – while people may think that everything is fair and rational, in the way people get promoted and how bonuses are handed out you can see how subjectivity can creep in,' she said.

'If you are an open, honest company you should be able to say how is pay determined and justify the pay gap. Linking it to qualifications and experience is one way, but in the BBC case they were not able to do that.

'Breaking down the secrecy of pay is a good thing. Even if there are pay inequalities around gender, there may be others around disability or ethnicity which we need to be made aware of.

'I do think this discussion, in light of new legislation, is exactly what we need.'

The gender pay debate

From April 2018 companies with more than 250 employees will have to publish figures showing their gender pay gap.

While the Equal Pay Act 1970 legislated against pay discrimination on grounds of gender, the difference between men and women's earnings still stands at 18%.

Birketts employment lawyer Jeanette Wheeler did not believe gender pay gap reporting would make a great impact in East Anglia, a region populated by smaller businesses, but said it will 'hopefully serve to at least keep some momentum behind the issue and raise public consciousness, and perhaps encourage all businesses to take steps to voluntarily improve the gender pay position'.

Norwich Business School equality specialist Dr Susan Sayce said publishing directors' salaries in company reports showed the extent of gender pay gaps which could indicate 'more embedded gender discrimination'.

'An art rather than a science'

Discrepancies in pay can be affected by factors including the make-up of senior management teams, career progression or promotion opportunities for women and ethnic minorities, or different working hours.

Jeanette Wheeler, partner at Birketts, said working out an individual's rate of pay was 'an art rather than a science'. 'Most employers prefer the flexibility of broad pay scales within which they can retain an element of discretion in order to reward those who are perceived as being of most value to the business,' she said.

'Attempting to introduce a more 'scientific' approach to pay may ultimately mean that the best people are not properly rewarded and incentivised, which could result in difficulties with recruitment and retention.'

But she added that these pay scales meant female talent 'has historically been lost and under-utilised because of poor pay rates', saying it was 'time for change'.