Why We Made Salary Transparent
On December 28, 2016, Truss made compensation transparent to all employees. We created a spreadsheet with everyone's names, levels, and salaries, and shared it with everyone at the company.
Why did we do this?
Anything else would have been hypocritical. We profess the organizational importance of building trust through candor and transparency, among other things. We explicitly call out diversity and inclusion as a core part of our organizational philosophy. When employees don’t see leaders exhibit the values they profess, this engenders distrust.
We wanted to create an unambiguous and visible example of how we want people to work. Salary transparency models our company values to employees in a way that is unequivocal. This, combined with the operational benefits of salary transparency, ultimately has made our company stronger and more resilient.
What values do we care about?
Salary transparency shows our employees Truss has the following values:
Salary transparency puts our money where our mouth is and reinforces the values Truss wants to see exhibited in our teams.
Why do we care? And how are these things reinforced by salary transparency?
An honest workforce is a more efficient and effective workforce. Individuals who are willing to come out and state uncomfortable truths resolve issues faster. Perhaps more importantly, a culture of honesty exposes mistakes and issues earlier and allows for smoother course corrections. Such a workplace results in a higher degree of trust among individuals, which means they are more likely to talk directly to each other about issues rather than circumnavigating an issue.
Furthermore, honesty is a prerequisite for psychological safety. When a person knows that what they are hearing from their managers and peers is information that can be relied on, they are more comfortable taking risks. This means that they are more likely to make unusual but creative suggestions, which is a key mechanic to yielding truly innovative work. As such, psychological safety is a necessary characteristic of the highest performing teams. You cannot have psychological safety without honesty.
With compensation transparency, we are being forthright with our employees about their salary and those of their coworkers. We are implicitly saying we are willing to have hard conversations about salaries and willing to hear feedback. Being honest about salary seems hard at first, but hard truths are often the most important and impactful ones to speak.
Critically, compensation transparency forces Truss leadership to be honest with ourselves and subject ourselves to criticism from our employees. Even when we feel like we have been fair, we sometimes discover we were not when we or our employees review our decisions post hoc. Only after implementing compensation transparency did we discover cases where we had made mistakes in setting fair salaries without realizing it. Salary transparency forces us to regularly re-evaluate past decisions and determine if they are equitable.
Accountability is another element of trust. When individuals hold themselves accountable to others, they solidify any promise that they will do what they say in the future. This reduces anxiety, and also increases psychological safety. You need fewer people double-checking things when individuals can be trusted to follow through on their commitments.
Salary transparency empowers our employees to hold us accountable, and gives us an opportunity to exhibit the accountability we would like to see in the world. Because we know we will be subject to scrutiny, we are motivated to make sure our reasoning is sound. Open sharing of salaries creates de facto accountability between the company and its employees.
Finally, knowing salaries helps individuals hold themselves accountable, as it can raise conversations about why X person has a higher salary or Y person has a lower salary. This helps individuals self-evaluate where they are in their career, and guide growth.
Several of the values listed here are elements which generate trust. Trust is an accelerator for organizations because it reduces friction between the moving parts. Individuals are more likely to bring things to others’ attention, not take things personally, and give others the benefit of the doubt. Trust also makes the experience of working within the organization a more pleasurable one. It reduces stress levels, increases the frequency of laughter, improves the outcomes of collaboration, and generally improves work product. As a consequence, employee retention improves and hiring becomes a lot easier. For more on the effects of increased trust within an organization, see Stephen Covey’s “The Speed of Trust.”
When you open the doors to information that is normally closed, you are making it clear that you have nothing to hide. You are implicitly saying that you trust your employees to do the right thing with this information. This is what trust at the organizational level looks like, and it creates a more open and forthright atmosphere overall.
Trustworthy behavior, as a habit, is one of our most valuable assets at Truss. Aside from the internal benefits, it helps our clients get the unfiltered feedback from us they so value, and also helps us get the information we need to work with them effectively. We have heard directly from several clients that the high degree of trust they have in our consultants is a significant factor in their coming back to work with us again.
Empowered individuals come up with creative solutions to problems, and more often prevent than escalate issues. They act as white blood cells by eliminating problems before they fester. Having actual agency means that employees can eliminate, or at least minimize, barriers to their performance without having to ask for permission. Greater control over projects and resources also increases average happiness level of employees, which, in turn, improves the efficiency of business operations. Last but not least, decisions being made by the individuals closest to a problem improves the quality of solutions which are enacted (since they’re not top-down).
Empowering employees is critical to our ability to grow as a business. We cannot grow efficiently if we don’t distribute ownership.
The effect of empowered employees on leadership is complex. Although leadership may need to ameliorate some of the decisions made, the time spent addressing this set of issues is much less than that invested in managing employees with less autonomy. In the end, we found that increasing employee agency reduces the load on the leadership team.
Transparent salaries grant agency to our employees by giving them the information they need to judge for themselves whether they think they’re being paid fairly. They are able to be fully informed entering into a conversation with their manager about whether they think they or someone else should be paid differently. This in turn also encourages them to be thoughtful and have higher standards for their workplace.
People often think of diversity when they hear inclusion, however they’re separate aspects of a company and its culture. Whereas diversity is focused on bringing all different types of people to your company, inclusion is focused on making sure every single one of those people is included in company activities and feels set up to succeed. Inclusion is necessary for a diverse team to be successful, however inclusion in its own right will make any team more effective, whether diverse or not. Inclusive behavior builds trust, makes individuals more likely to contribute their thoughts and ideas to a discussion, and more likely to take collaborative risks, since there’s less risk of being ostracized for saying something unconventional.
Salary transparency supports inclusivity by norming equal and fair treatment in the face of possible bias. Discrepancies in salary due to bias are one of the most ubiquitous and impactful forms of institutionalized workplace discrimination. Salary transparency is one of the key changes an organization can make to create a more truly equitable and inclusive environment. See Project Include’s recommendations for more on what companies can do to create a more inclusive workplace.
The only argument we came up with against salary transparency was fear. Fear that employees could lose morale after learning something unexpected. Fear that we would not be able to negotiate aggressively to win great hires if salary data were public. Fear of the HR headaches and interpersonal drama that could result, and, of course, fear of investing the time to solve any problems.
Upon closer inspection, we found these fears implied actions. The simple truth is that there would not be adverse consequences if our salaries were fair in the first place. And if they were not, then we had the perfect chance to resolve this injustice. So we took on a set of actions that we should have been doing anyway, including: making sure that salaries were in fact fair (which required adjustments), making sure our reasoning for salaries was sound (which required more robust market research and documentation), creating a rubric for negotiating with candidates, and implementing peer reviews and a leveling system.
Refusing to accept fear as a motivator drove us to solve some problems earlier than we would have and our company was only stronger for it. At the end of the day, our fears became our assets once they had been identified and overcome.
We want Truss to be a place where individuals can do their best work. We also want it to be a place where individuals can fruitfully collaborate and develop mastery. These characteristics enable us to build exceptional products for our clients and take joy in our work. The above values help make that happen.
If you are considering adopting salary transparency or have questions, please reach out! We’d love to share what we’ve learned.