A London company has a radical pay transparency policy where employees conduct biannual pay reviews
One London company has adopted a radical pay transparency policy which allows employees to see colleagues’ salaries and help them set their own pay.
Staff pay rise requests are also subject to peer endorsement at betting firm Smarkets, which has around 100 employees.
Increases of 10% to 30% are common at the company and staff can see the requests on the internal website.
Susana Pinto, HR officer at Smarkets, oversees pay reviews, which take place biannually. For the review, employees ask about five peers for feedback and a suggested pay increase.
“It’s not just a matter of saying, ‘Hey, I think you’re great!’ It’s actually going to be probed,” Pinto said about the feedback process.
The final pay increase is then dependent on further comparisons to industry data. If an employee is not happy with the final figure they can set their own salary.
According to the company, such moves are rare as employees are aware that they will have to face their colleagues who will know that they have gone against their advice.
“The good thing about the fact that our salaries are transparent is that they, by default, keep the company fair,” Pinto said.
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A transparent pay policy can also help stamp out gender pay inequalities.
Allowing employees to see each other’s salaries is a way to ensure equal pay, said Carglar Senel, software engineer at Smarkets. “It would be super obvious” to staff if there are disparities, he added.
Such openness about salaries is rare in London and despite the policy’s success at Smarkets, several staff are unsure the same approach would work for large firms or different industries.
The system would work best in areas such as sales where there are clear markers of performance, said Jordi Blanes i Vidal, professor at London School of Economics.
“But in settings in which it is not as easy to justify differences in pay – that is, pay inequality – with differences in productivity, pay transparency can be very demotivating,” he said.
However, according to AFP’s report, pay transparency is more widely accepted in other countries such as Norway, where the information is publicly available online.
In Sweden and Finland, the public can request for the information by phone or in person, while in Ireland, employees have a right to request pay information broken down by gender for the same level of work.