Loose Lips May Save Your Ship

The adage, “Loose lips sink ships,” kept people from spreading rumors or unhappy truths about things that could harm morale or jeopardize safety during World War II. In the decades since, the sentiment has taken hold in our workplace cultures, limiting transparency and, especially, making it taboo to share or discuss pay with anyone—at least until now. Although some in older generations are still uncomfortable talking about compensation, the trend is shifting strongly to cultures of transparency.

Rather than toe the line, today’s employees demand to know more about everything. They want to know details about their companies so they can understand the purpose, challenges, and successes as well as the whys and hows of decision-making. Employees want to feel connection, build relationships, and be considered trusted partners with leadership.

Pushed by employee demands, pressure from boards and shareholders, and by new state and local laws popping up throughout the country, companies are increasingly becoming more transparent, even about pay. And they’re benefiting greatly by loosening up.

Seventeen percent of companies are now disclosing pay range information, even in locations where it's not required by state or local laws, according to a new WTW survey. At least 62 percent of employers are planning to disclose or considering disclosing pay rate information in the future.  Those that follow through will have a better chance of hiring the 60 percent of Americans who say they would consider switching to a company offering more pay transparency, according to Forbes.

The Meaning of Transparency Today

Transparency is not simply about leaders being more forthcoming with company information. It’s more about willingly and purposefully communicating everything that interests, inspires, motivates, and supports everyone on your team. Effective leaders believe in transparency because it helps engage and align their people, promotes inclusivity, and supports autonomy in making decisions. Transparency creates openness between leaders and employees and among working groups and colleagues.

Transparency is a philosophy that embraces the free sharing of information, managing expectations, setting boundaries, and providing feedback. It is both internal and external, involving everyone in the organization as well as communications with candidates, customers, and the public. Building a transparent workplace environment takes consistent focus and ongoing intention.

Transparency Breeds Long-term Success

Being transparent costs nothing and trickles through your organization to make you more successful by increasing productivity, which results in better overall performance. More specifically, transparency:

• Increases employee engagement by lowering absenteeism and turnover, reducing stress and burnout, improving collaboration, enhancing customer service, and creating a greater sense of well-being.
• Builds trust by fostering open dialogue which in turn, increases creativity and accountability, and strengthens commitment.
• Creates stronger customer relationships as highly engaged employees provide better service.
• Encourages communication by creating a safe, empowered environment for sharing opinions, innovative ideas, and feedback.
• Develops stronger culture and values by demonstrating that management trusts, respects, and appreciates employees at all levels.
• Translates to faster, more accurate hires through more precise job descriptions, timely and honest communication, and open discussions and collaboration during interviews.

You gain additional benefits when transparency includes information about salaries and benefits. Openness about compensation:

• Creates a competitive edge in attracting top talent, especially in tight labor markets.
• Increases retention when employees see they are being paid at least market value for their work and don’t need to look elsewhere for higher pay.
• Cuts gender, race, and ethnicity pay gaps by exposing and correcting areas where there are inequities, creating a sense of fairness that helps retain employees.

Pros and Cons of Pay Transparency

Pay transparency is quickly becoming the norm. It flows naturally in cultures built around openness and trust. It can range from only publishing salary ranges internally to posting every individual employee’s compensation package publicly. Although some organizations fear that disclosing information about pay could harm their cultures, create hiring challenges, and unnecessarily increase staffing costs, these kinds of issues rarely occur when policies are well thought out.

Begin by asking employees how they feel about pay transparency. Then carefully define your philosophy and match your compensation disclosure policies to your cultural values and practices. Here are things to consider in the process:

• What is the primary intention behind setting your specific pay transparency policies? To encourage constructive communication? Support your core values? Prevent pay inequities? Foster overall cultural transparency?
• Understand and communicate how the value of being transparent fits with your other core values.
• Define clear guidelines and limits or boundaries that should be in place to accomplish your goals. Don’t allow the guise of honesty to hide inappropriate or offensive communications, harassment, and other toxic workplace behaviors.
• Expect pay ranges to come up in conversations with candidates and employees. Make sure managers understand your policies and are prepared to answer questions about why and how you’ve developed your policies.
• Understand the law around pay transparency in your state and community.

How to Build a Culture of Transparency

A lack of overall transparency in a workplace culture, including openness around compensation, results in mistrust and dissatisfaction. People assume you must be hiding something. Here are things to build into your more transparent community:

• More communication. Transparency can only be achieved through effective, consistent, ongoing communication. It begins at the top. Model being honest, direct, respectful, and vulnerable in your messaging and feedback. Invite dialogue by sharing and talking about successes, failures, and lessons learned.
• Align business objectives with goals so employees understand what is expected and how they contribute to overall performance. Don’t just tell them what to do, tell them why.
• Establish clear salary ranges for all roles and share them with existing employees and candidates. If there are discrepancies, reveal them along with the actions you are taking to correct and prevent them.
• Make certain every employee sees a clear path to opportunities for development and advancement. Support them in learning the skills and getting the experience they need.
• Be open and fair with current employees who will feel underappreciated, as well underpaid, if they see your postings for similar jobs to theirs at higher compensation. Or perhaps an entry-level position at higher pay than they make after years on the job. They deserve an explanation about the decision-making process, the steps you’ve taken to be fair, and perhaps a pay adjustment.

As children, we’re taught that honesty is the best policy. We’re also taught that if you don’t have something nice to say, don’t say anything at all. Transparency is a complex concept for individuals and organizations. Companies that loosen lips in the right way learn the truth and benefit from the knowledge.