Transparent pay strategies can entail openly disclosing employee salaries to other employees and potential recruits. The logic behind this is that it places everyone on the same page regarding expectations for salary and creates a fair conversation for employees that want to discuss pay rises. Founded in 2014, software development company Applifting’s open pay policy of disclosing the salaries of all 200 members of staff has been in place from the start.
Filip Kirschner, co-founder and chief operations officer at Applifting, says: “We didn’t feel any need to keep salaries secret as we knew the value of the deals and projects we all worked on. It’s more important to us that the reward system is fair and transparent. We’ve developed a competency model that describes all the skill levels from a trainee to a senior. This way, everyone at the company knows what to do to grow and earn more money. People love the freedom of it as their progress is tied only to their willingness to learn and work.”
As well as helping to attract new talent to the organisation, the policy has meant that employees are not in the dark when it comes to pay rises. Last year, when inflation skyrocketed, pay was increased across the whole company, twice, by 5%. “We felt it was fair, and we plan to do it again in the future,” says Kirschner.
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Implementing an open pay strategy can have its challenges, not least ensuring that a system is fair to everyone. While there are some principles generally applicable to all roles, each job comes with its specific obstacles, says Kirschner.
“[Employers] need experts to oversee the models to ensure the skills therein are logically ordered and kept up to date,” he explains. “There’s also a lot of communication involved, but in our case, that is both the challenge and the solution. As long as we are willing to talk and reach common ground, no obstacle is too great to overcome.”