Many companies maintain a taboo around salary discussions, but a study shows that this lack of pay transparency could harm employee morale. Research examined employee ratings of compensation satisfaction at over 1,300 firms before and after the SEC's 2018 mandate requiring the disclosure of CEO pay ratios. Contrary to past beliefs, employees often make their own assumptions about compensation. The research indicates that employees now have greater access to pay information, challenging the notion that secrecy leads to workplace satisfaction.
"Employees do their own research, and they are already making assumptions about pay. The conventional approach to keeping salaries secret might be damaging employee morale."
"The SEC mandate requiring companies to disclose the CEO pay ratio has led to significant changes in employee perceptions of fairness regarding compensation."
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