Partially recommendable! This researcher at the Harvard Business School is onto something!
In principle, general pay transparency is very much a dangerous double edged sword! It is no panacea! According to a well known German proverb: With money the fun stops! (Bei Geld hört der Spaß auf!). With money things quickly get very serious, contentious, and ugly! It fuels envy!
Pay transparency clearly has strong negative economic effects:
- Exceptional or high performing humans may not get what they are worth
- It reduces competition in many ways
- It introduces rigidities and kills dynamism into the economy
- It reduces economic freedom
- As with privacy, some people may not appreciate that the amount of their income is on public display
This HBS professor highlights:
"EQUITY IS SOMETHING THAT HAPPENS WHEN EVERYTHING IS OUT IN THE OPEN. ...
But, what about the original intent of pay transparency, making workplaces fairer and increasing workers’ bargaining power? Cullen notes that through transparency, pay equity is being achieved at the cost of high salaries for some—but perhaps it’s worth that tradeoff."
But, what about the original intent of pay transparency, making workplaces fairer and increasing workers’ bargaining power? Cullen notes that through transparency, pay equity is being achieved at the cost of high salaries for some—but perhaps it’s worth that tradeoff."
She must be very naive and myopic!
"It’s a sticky but common dilemma for managers: A valued employee finds out that a coworker earns more, gets upset, and demands a raise. If gender or race figure into the wage gap, tensions can escalate fast.
Companies, including Whole Foods, Starbucks, and the social media tool Buffer, have been touting their pay transparency policies as a means of ensuring fairness. But, as it turns out, pay transparency doesn’t necessarily increase workers’ wages, writes Harvard Business School professor Zoe Cullen in a new working paper. ...
Meanwhile, the legal landscape has shifted in recent years toward transparency. Laws and policies that protect workers’ ability to discuss their compensation with colleagues without fear of repercussions have gained popularity since 2004. ..."
Meanwhile, the legal landscape has shifted in recent years toward transparency. Laws and policies that protect workers’ ability to discuss their compensation with colleagues without fear of repercussions have gained popularity since 2004. ..."
"The public discourse around pay transparency has focused on the direct effect: how workers seek to rectify newly-disclosed pay inequities through renegotiations. The question of how wage-setting and hiring practices of the firm respond in equilibrium has received less attention. To study these outcomes, we build a model of bargaining under incomplete information and test our predictions in the context of the U.S. private sector. Our model predicts that transparency reduces the individual bargaining power of workers, leading to lower average wages. A key insight is that employers credibly refuse to pay high wages to any one worker to avoid costly renegotiations with others under transparency. ..."
What If Closing the Wage Gap Means Everyone Earns Less? - HBS Working Knowledge Companies are under pressure to share more data about employee salaries, but research by Zoe Cullen reveals how pay transparency doesn't always help workers.
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