Is Keeping Salaries Confidential Helping or Hurting Employee Trust in Your Company?

Confidentiality of Salary Particulars: Is It Beneficial for Organizations?

My company strictly follows the rules regarding the confidentiality of salary and perks. We even issue warning letters and termination letters for breaches of this policy. Please share your views on this and discuss the potential impact on employees' perspectives.

Thank you,

Regards,
Ashish

Confidentiality is required, but not at a level where a company will terrorize the employee by issuing warning or termination letters. It's a human instinct to want to know how much others are earning, and it's not a crime if I choose to disclose my own earnings to the world. No one on this earth, except me, can prevent me from doing so.

I am aware that some companies adopt this unrealistic strategy to make their employees conceal their salaries in order to avoid competition, the fear of losing employees, and internal anxiety within the company. Interestingly, such practices are prevalent in companies that lack a specific appraisal system or have systems that are deficient in certain areas.

The tactic of pressuring employees not to disclose their salaries has not been beneficial and will not benefit companies. Instead of focusing on this, companies should concentrate on how to recognize and retain the best talent.

Regards,
Ukmitra

I completely agree with Ukmitra. It seems your company has no clue about the word "transparency." They also do not realize that letters or no letters, salaries do come out among peers and friends. If someone came up to me and asked, "How did so-and-so know about your salary," I would tell them very angrily, "HR, payroll, finance, the admin assistant (who deposits the cheques and files the documents), the IT team who has access to even HR files, the courier company who carries my salary slip to me, your bankers, my bankers, my boss, the entire hierarchy, investors and shareholders, auditors beyond, knows it - ask everyone about who leaked it and give me in writing the response and your findings." I would love to see the expressions on the sub-wit who came to me with the stupid question in the first place.

In today's trend of transparency, this seems like a typical stubborn and rigid old-world attitude that many HR departments and top managements are guilty of globally. A large publicly listed company is statutorily required to disclose employees with remuneration above 2 lakhs per month, while the contracts with directors are required to be approved by the Ministry of Company Affairs and shareholders. When the top people have their compensation in the public domain, does it make sense to hide the compensation, especially by issuing a directive, of people down the hierarchy?

An organization where human resources are converted into human capital by right hiring, effective nurturing, identified training, and, lastly, performance-based compensation/rewards through continual appraisal and evaluation that leads to awareness for further enhancement of knowledge would usually like to showcase its right compensation for the right performer policy.

Dealing with humans, the HR of your organization should know that it is human nature to compete to be better than others. Professionally, this gets satiated mostly through higher compensation, perks, and designation than one's peers. Also, working together for 5-6 days a week for 8 hours leads to bonding and close friendship when personal issues are freely discussed. Add to this the ancient human interest in the grapevine. It should be clear by now, from the above, that attempting to regulate such matters itself is futile.

Confidentiality can be maintained until the completion of processes such as wage revision, promotion, etc. Once an order is issued, it is not possible to prevent employees from revealing the contents of the letter. Employees often act in groups and interact among themselves, which is prevalent everywhere. Therefore, management should not worry about confidentiality. Any grievances among employees can be resolved, and it is one of the tasks of the HR Department.

Thank you.

Transparency and Confidentiality in Salary Discussions

Transparency is good, and there are certain things that cannot be stopped. The same goes for confidentiality regarding salary and perks, as it's human nature to be curious about what others are doing or earning in the community, group, or company they work for.

You must be familiar with the success of Facebook and the idea behind it, which is to allow people to connect, come to know each other, and share what's happening.

Therefore, I would say that mentioning the confidentiality issue regarding salary, etc., in the appointment letter is acceptable. However, issuing warning letters and termination based on that is really bad and could worsen the situation if continued.