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Salary transparency can narrow the pay gap and improve productivity; something we'd all like to see.
By Christine Hourd — Written on Sep 28, 2021
If you ask someone about their salary, especially a baby boomer, then most likely they'll try to avoid the question. But when it comes to the younger generations, millennials and Gen Z, they don’t find it rude to ask someone how much they make.
In fact, they may be onto something that will revolutionize the pay gap.
Several studies show that salary transparency is highly effective in closing the salary gap between female and male colleagues, and also makes companies more productive. So why don’t we see more people sharing their salaries?
That’s because talking about money is awkward! And there’s a good reason for this.
Why is it rude to ask someone how much they make?
We battle social norms every day, especially women. People have been conditioned from many years ago to believe that a woman should be selfless and giving. Making money means control, status, greed, and yes, masculinity.
So when a woman asks someone about how much they make, consciously or unconsciously, there's a bit of judgment or stereotype that makes a woman feel uncomfortable.
It’s also believed that the one who holds the most money has the “ability to conquer, diminish or demean others”, according to Lynne Twist, in The Soul of Money. So, if you were to ask a colleague how much they make and it turns out they make less than you, their power is taken away as the real truth is revealed.
On the other hand, if you were to ask a friend how much they make and they make more, it could alter your relationship with them. Many people are modest about their income, and by admitting that they have a much higher salary it can feel like they’re bragging. Which doesn’t look good on anyone.
The same goes for asking if someone is rich. They’d rather remain under the radar and not open up a can of judgment, gossip, and criticism for making a good amount of money. Besides, what's the meaning of rich, anyway?
Salary transparency has a significant effect on employee performance and the wage gap
It’s been over 90 years since the National Labor Relations Act in the U.S. stated that workers have the right to discuss their pay with others without being penalized by their employer.
Unfortunately, many aren’t familiar with this law and continue to succumb to their employer’s policies and illegal gag orders that keep them from discussing salaries with colleagues.
The reason companies continue to support pay secrecy is because it saves them money.
The unfortunate result of this barbaric choice that companies make, is that without any information to gauge if an employee’s contribution is in alignment with their pay, employees feel like they’re underpaid.
In most cases, when people feel like they’re not getting compensated appropriately, they don’t put in the effort to perform either.
But when companies were mandated to reveal the salary differences and become more transparent, they took the immediate steps to narrow the wage gap before making those numbers public.
This action was necessary so they could avoid the backlash from employees for the discrepancy, and also avoid the possibility of tarnishing the company's reputation and losing customers.
When looking at companies who choose to be transparent — through salary bands, and sharing compensation on the company’s intranet — there’s a considerable difference in the wage gap between men and women compared to companies that don't.
In a report from the Institute for Women Policy Research (IWPR), those companies that were transparent have a wage gap of eleven percent, while those who support pay secrecy have a wage gap of twenty-three percent.
If employees know what their position pays and what they have to do to achieve the higher end of the position’s salary band, then they'll perform better since they have a goal and the steps to achieve it.
If they don’t have this information it can lead to frustration and eventually quitting, even if someone was already receiving competitive pay.
Why it’s important to start the conversation about money and pay gaps
There is still a lot of work needed since only ten percent of private companies in the United States are choosing to be transparent with how much they pay employees, according to IWPR.
Women working full-time still make only 82 cents for every dollar a man makes. And women of color make even less — 62 cents per dollar. LatinX women make just 54 cents per dollar.
Babyboomers will feel the effects of this lack of transparency when they retire. The income you make now determines the amount of Social Security, pensions, and other retirement benefits you’ll receive as you settle into retirement.
If you’re not getting a competitive salary now, you won’t be receiving sufficient disbursements to cover your local cost of living later on.
How to ask someone how much they make without being rude?
There are many ways to increase salary transparency in the workplace. Companies that are transparent use salary bands to identify the range of a position within their organization, or the company’s intranet, as mentioned earlier.
Another way is to utilize your human resources department and allow employees to privately approach them for that information.
If secret salaries are the biggest obstacle to getting competitive pay information from your employer, then you need to start getting comfortable with asking what others are making.
When you start talking about money and what others make, provide some context around the reasons for needing this information. Let them know the purpose behind your inquiry and that this conversation will be kept confidential.
You may find that some have old-fashioned beliefs about discussing their salary, even younger generations. Although, if you want to further yourself and get the appropriate pay, you need to change your straightforward approach. Do this by being less direct and more conversational about the topic.
When it comes down to it, every one of us will benefit from asking how much you make. So if you're thinking "why is it rude to ask someone how much they make?" just remember, you just need to do it nicely and everybody wins.
Christine Hourd is a certified success and leadership coach in Calgary, Alberta. She works with professionals to remove obstacles that get in their way of success. Visit her at The Success Model where you can get more details on her coaching services and programs.