How HR Pros Have Proven Complete Pay Transparency Is a Bad Idea

Kris Dunn
March 3, 2010 | COMMENTS

Frank Roche had some great data up over at Know HR on Pay Transparency last year—check it out, because it's the real deal regarding how people really feel about pay transparency—not how individuals want you to feel.

I'm on the record as saying that the employee relations fallout from complete pay transparency dramatically outweighs the benefits. While it's trendy and seems progressive to call for full transparency in pay rates and pay practices in organizations, the folks who are calling for it don't have to live with the employee fallout. 

While I'm here, let me go on the record with another piece of information: HR people have proven to me that complete pay transparency is a bad idea.

That's right. I'm calling out my own, not pointing to other people. Work with me on the following flow chart:

1. HR pros have access to all the pay data for the units they serve.
2. HR pros often have access to all records , including the units they don't serve.
3. While we never sign an agreement or a code of ethics, I expect people to treat that pay data with complete confidentiality.
4. Complete confidentiality and ethics for HR pros, who have access to all pay data, means they never use their access for their own benefit .  At least that's my standard.
5. Many HR pros can't handle the realities embedded in the pay comparisons they make between themselves and others  and, as a result, become vocal about the differences. Worse, they may not become vocal but choose to leak pay data to other parts of the organization.

It's sad, but true. The HR pros I've encountered in my career have proven that you can't have full pay transparency. I'm going to guess that I've worked with 50 HR managers in my career, including bosses, direct reports to me, and peers. Out of those 50, at least 10 have wigged out when they came across pay data they thought proved that they were undervalued.

Except it didn't. And the folks who complained and caused employee relations issues were always the low performers. Their pay was fair from an experience, credentials, and performance standpoint. 

I'll say it a thousand times: With great access comes great responsibility. You have access to all the pay data in HR? You need to get mature—real fast.

I've seen the same things, albeit on a less frequent basis, from accounting pros with access to payroll data.

If HR pros can't treat compensation data with a mature eye and that's a job requirement, what hope does the whole organization have?

Last note—most of the HR pros I've worked with have treated the access with great responsibility. To you, I throw a salute. You're a pro, and I'm glad I'm working (or have worked) with you.

To the rest of you—get out, you're hurting the profession.

Reprinted with permission from Kris Dunn's blog. Dunn is vice president of HR of Daxko, a software company.