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I know I wouldn't have any issue with pay transparency since I've never been paid what I think I'm worth (wink).

Couple of thoughts to throw into this discussion:

1. I think that employees really DON'T have a good idea of what others make. I think they always believe others make more than they should and they, themselves make less. I know in my career I've heard the grapevine discussions of pay and when I was promoted to run a division - most of those assumptions were way off. So I think in most companies the reality and the gossip are miles apart (IMHO.)

2. If you start from the assumption that pay is nothing more than a transaction - my time and expertise for the company's money the issue of transparency becomes one of value.

How much is that job worth? What is the output from that job? What is the job description? In most public sector jobs they have very strict and delineated job descriptions - designed to try to quantify the pay-work equation and eliminate any grey areas. That, again IMHO, leads to "work to rule" environments where employees only perform to the letter of the job description.

In the private sector, being more market driven and at the mercy of ongoing and accelerating change - it would be almost impossible to codify and job to the point that everyone could agree on the transaction value.

I think pay transparency would reduce employee engagement, create a less flexible workforce and drive more private companies to look like public agencies. Not a good thing in my mind.

There are some notable exceptions to the rule but I think they were designed from the start to incorporate transparency and have hired to that culture.

As long as there is ambiguity in the job description you will need a bit of ambiguity in the pay - it's just the way math works.

Great post Becky, I really like how to put the public/private employment in context.

There has been a great deal of research into how people view their ability to perform vs. their actual performance. The reality is that most people don't have a realistic view of how well they can do something. So I think pay transparency in a P4P environment can create huge issues since most of the employees will believe they're underpaid for their value.

Thanks for starting this interesting discussion!

Thanks, Paul & Darcy for your input on this post.

Regarding Paul's point on employees not really knowing what others earn, I think that's true. However, in the absence of knowledge, assumptions are made that become their reality. So they think they know, even if they don't, which creates issues in a work environment where employees don't understand how pay decisions are made.

I've worked primarily in the private sector, but learned compensation by consulting in the public sector. There are huge differences between them in all of these areas.

One other note is that one quality of the highest performing employees frequently is that they don't necessarily see themselves as such, so they don't believe they're underpaid. (I'm not talking about sales people here....). More frequently, it's the average or poor performer who believes they're not paid what they're worth.

Let the discussions continue!!

I think this is always an interesting topic, however I disagree that everyone in the Public sector is paid basically the same. I've worked in the Public Sector for years and done extensive compensation work. There are many public sector organizations that have compensation systems very similar to those found in private sector companies, with open salary ranges where pay is based on experience, education, skills and performance. There are also numerous cases of pay for peformance programs and variable pay programs that work well in these situations.

It's been my experience that the compensation challenges faced in public sector are not that different from private sector. The trick is ensuring that you have sound decisions behind every action, every market study, every promotion and merit increase because you never know when that will hit the front page of a paper.

Even if private sector organizations choose not to increase pay transparency, it would be a good exercise for them to review pay decisions and ask if the decisions could be defended in a public environment such as a paper, or at a public hearing? If you have sound compensation practices, I don't see how you risk losing motivation and engagement from employees. In fact, having more information about pay decisions can really help with enagement, and studies have shown that in both private and public sector environments increased information on pay decisions has a direct link to employee satisfaction.

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