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Letter to Leaders & Swenson Insights

How To Be Transparent About Pay Without Destabilizing Your Company

I usually try to avoid talking about labor or HR issues in Letters to Leaders.

But a new California law begs analysis from a leadership perspective.

On January 1, employers with 15+ employees must include the pay scale in every job posting.


So whether you post on LinkedIn, or Indeed.com or use a headhunter - if you post it, you must include the salary range.

It's a pretty easy law to follow. It's not the following I'm concerned about.

What happens when your employees find out how much everyone else makes?

That's the challenge.

We've had many clients freak out when we advise them to include pay ranges on their postings. (We find that when you include a pay range, applications increase between 50-70%).

"But the other employees will freak out when they find out how much we're paying [fill in the job title here]," they say.

If you've tried to keep employees from knowing what everyone makes, the end is near.

Yes - this is going to cause a hullabaloo. It will happen when employees find out how much the CFO makes. It will happen when they discover how much more you're offering a new employee.


Unless you've been transparent all along.

Unless employees truly understand why you pay what you pay.

Unless employees clearly know what they can do to increase their pay.

The fear employers have is the unknown. (That's the same fear most employees have.)

Transparency reduces the unknown. So does communication.

Trust has become the most important characteristic a leader can have. It's a simple equation:

Communication + Transparency = Trust

And this new law is a perfect way to get started.

Communicate.

  • Tell employees why they make what they make, and what it will take to make more.

  • Acknowledge: some people make more for reasons that are real. They might have a specific skill set; they have more experience or are more reliable.

Be Transparent.

  • Don't hide behind what you pay people; embrace it. Remember, you can't force employees from talking about how much they make - that's been the case for years.

  • If some employees still have problems with how much others make, refer to the bullet points above. If they still can't handle it, then they don't fit your culture anyway.

There are more positives to this.


We've seen employees get upset about pay rates at your competitors. This is true whether you're a private school, a non-profit, or in professional services.

"I heard people at [name of the business] makes $15 an hour more than I do for doing the same work."

Heresay is hilarious.

When we do a little investigation, 90% of the time it's not true: people tend to exaggerate how much they make.

When you're transparent, good things happen. It's going to be uncomfortable at first. But once confronted, culture improves.


And lest you think this law is limited to us California Crazies, a warning:

Colorado, Washington, New York City and other municipalities have already adopted similar laws. It's going to happen to you.

So don't wait for a law to force you to be transparent.

Do it because it's you should; not because you have to.

When we do things because it's right, we become an ethical, trusted culture.


And you become the employer of choice.

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