Why you should talk about salary with your colleagues

• What is pay transparency?

• Should you talk about salary at work?

• What to do if you find out a co-worker is paid more than you

Traditionally, pay has been somewhat of a taboo subject in the workplace, except between an employer and their direct manager. But things are changing.

Over recent years, terms such as ‘pay transparency’ have come to the forefront of discussions around employment, not only in New Zealand, but across the globe.

But what exactly is pay transparency, and how might it impact you? Here, we look at some of the different ways this has been interpreted, and explore how attitudes to salary discussions in the workplace are changing.

Generally, there are two different meanings that can be attached to the term ‘pay transparency’.

To some business leaders, it means telling their employers how their salaries are calculated. In very broad terms, employers usually use a mixture of the following factors to help them determine what to pay different roles within their organisations:

• Market factors and demographics

• Surveys involving competitor organisations

• How niche the skills required for the role are

• How much budget is available

However, each organisation differs in how they do this, and the resources they use. So, under this first definition of pay transparency, an employer would walk their staff through this process so they understand exactly why they’re being paid the amount they are.

An alternative definition of ‘pay transparency’ refers to full openness about the salary, or potentially salary ranges, for every role in the organisation. In a company committed to this type of pay transparency, in theory, you’d have a pretty good idea of what every single one of your colleagues is earning, from the CEO down to the newest intern. 

Regardless of which definition you might be interested in, both of these interpretations refer to a top-down approach. In other words, pay transparency is a policy that a company may or may not choose to implement. It doesn’t usually refer to employees simply discussing their earnings amongst themselves. 

So, is this something you can and should do? Here are some of the key things to consider:

Unless your employment agreement specifically states that you can’t talk about your salary, the answer here is a resounding no. So long as you haven’t signed such an agreement, you’re good to go. If your employer tries to tell you that the Privacy Act means you can’t talk about your salary with colleagues, they’re wrong. This information is personal to you, not them, so you can discuss it if you wish.

Perhaps the biggest benefit of open discussions about pay with your co-workers is that you, or they, have the opportunity to find out about discrimination or unfair pay practices within the organisation they work for.

People should be paid the same amount for doing the same work, but often this isn’t the case. For example, the gender pay gap refers to the difference in the amounts earned by men and women doing the same role. If your employer is engaging in unfair pay practices, they’re going to want to keep this on the down-low because, unsurprisingly, people don’t like being paid unfairly, and might leave if they find out. 

Another benefit of discussing salary at work is that it can provide you with the confidence to ask for a raise. If you know that someone else performing a similar role to yours is being paid more, it’s clear that the organisation is willing to offer more money for your skillset. However, as we’ll discuss below, while you should use this information as a motivation to ask for a payrise, it’s not a great way to actually make your case. 

Similarly, if you were considering changing jobs, knowing that you could earn more can empower you to ask for a higher rate during job interview salary negotiations. If salary discussions at work have sparked a wider interest in how your earnings stack up against similar roles across your region, or Aotearoa as a whole, our free online salary guide is an easy way to do a bit more digging. Here, you’ll find up-to-date information on a huge range of careers and industry sectors, based on data from Trade Me Jobs listings.

While open salary discussions with colleagues have many positives, there are a few things to be mindful of.

Firstly, it can be easy to become outraged by what are ultimately unfair comparisons. As we’ve said, finding out someone in a similar role is being paid more than you can be a great motivator to seek a raise for yourself. However, it’s important to get as full a picture as possible. For example, perhaps this person does perform another specialised role that you weren’t aware of, making comparisons between your two salaries less justified. 

Also, you should be aware that such discussions do have the potential to create animosity. For example, imagine a co-worker finds out that you’re being paid a lot more than they are, despite you both performing the same job. Ultimately, this is the employer’s fault, and not either of yours. But the other person, depending on their understanding, might not see it this way. While we don’t think this should put you off having these discussions if you want to, it’s important to understand that this can happen. 

So, you’ve talked pay with your colleagues and found out that one of them is being paid more than you for the same role. Ouch, this isn’t a nice feeling. The next step is to storm into your manager’s office and demand an on-the-spot pay rise, right? 

No, of course it isn’t. 

While asking for a raise is definitely on the cards, you need to be smart about how you do this. Even though you might think your employer is acting unfairly, and they might well be, they aren’t obliged to raise your salary just because they’re paying someone else more. So this is still a pay rise request, not a pay rise demand, because, if you act as if it’s the latter, you might find they decide to keep your salary where it is.

Here are the steps you should follow:

For the reasons we’ve just given, it’s crucial that you don’t lose your cool. You’re only going to damage your chances if you go in and start throwing accusations around. Also, don’t let this impact how you see or behave towards the colleague(s) in question. This isn’t their fault, so don’t take your totally understandable frustrations out on them.

Firstly, you need to try and understand if there’s a reasonable explanation for the pay disparity. For example, perhaps you do broadly similar roles, but they have an area of additional expertise, or perform some additional duties that might explain things. This is important context for the discussion with your manager.

You also want to do some wider research on pay trends within your sector to build a stronger case for yourself. This research should rely on trusted and up-to-date sources like our salary guide, or conversations with well-informed recruitment professionals. 

Your research also needs to cover your past performance so you can demonstrate why you’re such an asset to the business. One way to do this is to dig out your employment agreement and look at what the core role responsibilities were. Then you can go back through your list of achievements and cherry pick the best examples of how you’ve delivered exactly what the business was looking for.

You need to set up a meeting with your manager specifically to discuss this matter. And the etiquette here is to give them some warning that you’re wanting to talk about pay. This could be as simple as sending them a message saying “Hey, I was wondering if we could schedule a meeting to talk about my current salary/wage?”. This means they won’t be caught off guard by this topic, which will make for a smoother discussion.

Once you’re in the meeting, there are a few important things you need to do, and not do:

• Do: remain professional at all times. Accusing your manager of unfair treatment, even if it’s true, is going to get their back up. Not only will this reduce your chances of getting a pay rise, it will also sour your relationship in the long run.

• Don’t: base your entire argument around the fact that you know someone is being paid more than you. In fact, we’d advise not mentioning this unless you really need to. Frame your argument in the context of wider trends in industry salaries, based on your research. This is a much more powerful argument to make.

• Do: listen to their perspective, Unfair pay practices aren’t okay. But, as we’ve said, there might be a reasonable explanation for the situation you uncovered. If you aren’t prepared to take their perspectives into account, they might lose interest in yours.

• Don’t: downtalk your colleague. If you do decide to mention them as a specific example, don’t go down the route of pointing out the ways in which you think you’re better than they are. Not only is this a bit uncool, this whole conversation should be about what you bring to the table, not what they don't. You may also want to consider not naming the colleague, and just say something like “ it’s come to my attention that one of my co-workers is being paid more than me”. This could help prevent them from being on the receiving end of a tongue-lashing from an unfair manager who isn’t happy about their staff discussing pay.

• Do: be open to other forms of reward. It could be that your manager agrees you should be paid more, but that they aren’t in control of the budget for the role, and know there’s no extra cash. There are other perks, such as additional annual leave, that you might consider accepting for now.

• Don’t: threaten to quit if you don’t get what you want. Because, will you?