The iconoclastic hedge fund manager, Ray Dalio of Bridgewater Associates emphasised about ‘radical transparency’ in the work place, well documented in his book ‘Principles’. This piece in the FT focuses on transparency in perhaps the most opaque aspect of worklife – salaries. “Pay has long been considered a taboo subject in many parts of the world. As Kim Scott, previously at Google and Apple, and author of Radical Candor, puts it: “We behave about money the way the Victorians behaved about sex.”
At Marcellus, we are hoping to establish a culture of radical transparency having started with full disclosure in salaries. As the piece goes onto argue that it is relatively simpler in early stage companies such as ours, yet it might be the way forward for even large established organisations if done with the right intent and understanding of the pitfalls. In particular, the author argues that such transparency in pay can help bridge the gender and racial pay gaps that exist across organisations globally.
“Organisations work “very hard” to make pay opaque, she says. “They know they can’t always justify differences. It’s in [their] interest as an employer not to be open about these things.” Such secrecy puts workers at a huge disadvantage in negotiating salary, says Alison Green, the US management consultant behind the site Ask A Manager, who has compiled an anonymous database on pay. “It also makes it far harder to uncover pay disparities by gender or race.”
….Technology and legislation are shifting attitudes to pay secrecy. At its most extreme, some companies have embraced radical transparency — making their staff’s salaries accessible to each other. Could this be the future?
Social media has made the private public, and websites such as Glassdoor and Salary Expert help workers find information about pay. At the same time, legislation has brought pay under public scrutiny. In the US and UK, listed companies are required to publish the pay ratio between chief executives and workers’ averages. Gender pay gap reporting has been introduced in the UK and France. A new law in Germany allows women to ask for the median salary of a group of at least six men doing similar work, and vice versa.
In 2017, the BBC revealed that two-thirds of its highest paid stars were men. The following year, Carrie Gracie resigned from her post as China editor, writing in an open letter that the broadcaster was “breaking equality law and resisting pressure for a fair and transparent pay structure”.
One BBC employee says that the pay controversy has encouraged some men to share their salary levels with female staff, so they can discover if they are being underpaid. “It can be immensely helpful. The genie is out of the bottle. We believe that transparency is right in court proceedings, in MPs’ expenses. We need to be more prepared to be open with each other about what we earn.”
…Research by the Fawcett Society last year found that 53 per cent of female workers and 47 of male workers would be uncomfortable disclosing their pay to a peer. However, when they believed there was discrimination, 62 per cent of women and 57 per cent of men would share the data.”
Note: the above material is neither investment research, nor financial advice. Marcellus Investment Managers is regulated by the Securities and Exchange Board of India as a provider of Portfolio Management Services and as an Investment Advisor.
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Note: the above material is neither investment research, nor financial advice. Marcellus does not seek payment for or business from this publication in any shape or form. Marcellus Investment Managers is regulated by the Securities and Exchange Board of India as a provider of Portfolio Management Services. Marcellus Investment Managers is also regulated in the United States as an Investment Advisor.
Copyright © 2022 Marcellus Investment Managers Pvt Ltd, All rights reserved.