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Should Pay Policies Be Secret or Open? Essay

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Updated: Dec 4th, 2021

Every person works in an organization to earn money. Money is considered the prime reason for a person to be motivated to work thus again emphasizing the earnings. Since money is so important, it is very important for employers to communicate with their employees all the pay policies well in advance before an employee joins the company. Employees should be given ample information regarding the breakup of their salary and each item in the breakup should be clearly quantified. Pay policies should be such that they clearly identify and explain the nature of their job so that they can analyze whether they are being provided with appropriate wages. This information should be disseminated in an organized manner that is easily understood by even a layperson. The method of posting should be adopted for this purpose so that the privacy and secrecy of each employee are maintained and also to avoid conflicts among the different employees working at the same level.

By clearly highlighting the pay policies, the organizational benefits that are achieved can range from increased employee morale to better productivity at the workplace. This contributes a lot to achieve the organizational goals. The pay policies include the date of payment, bonuses, pay cuts, etc. thus these controversial policies must be applied too. On the contrary, if the payment policies are not communicated properly and they aren’t implemented, the employees lose the morale to work and may form different unions of the laborers. Yet having an open policy for everyone may also be harmful for an organization in the form of employees competing and comparing their policies with their colleagues’ policies (Miner, 1974). It results in complaints and misunderstandings among the employees. Different researches state that the open system results in demoralizing the employees rather than motivating them due to the above-mentioned fact.

I have been working in an organization that keeps its pay policies open and this policy has been in place since the company was incepted five years ago. The policies are explicitly mentioned and the rules have been discussed elaborately. This assists me in outlining my way of work, avoiding the policies and situations in which I might suffer from a cut-down or fine in the salary. Open pay policies have a positive effect on the motivation and morale of the employees. It gives them the authority and stability to plan out the working hours, methodologies, strategies, etc. Money is no doubt a motivating factor and if the employees are aware of the salary they will be paid, they work harder, putting in maximum devotion and effort. However, if the payment policies are kept a secret, the employees are unaware and hence they are unable to evaluate their position in the organization.

If I were to design a pay/communication system, I would plan it based on the open pay policy system. The working rules and strategies would be mentioned clearly. I would also mention the fine that would be imposed on the employee in case they are not working up to the mark and according to the requirements of the organization. The bonus and perks would also be mentioned since they prove to motivate the employee to quite an extent. Recreational, health, and maintenance allowances would also be granted so that the employees can live a standard life.

The above paper discusses the open and closed pay policies of an organization. The pros and cons of each system have also been explained elaborately.

References

Miner. G. M. (1974) Should Pay Policies be Secret or Open. The Personnel Journal. Page 39-41. 1974.

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IvyPanda. 2021. "Should Pay Policies Be Secret or Open?" December 4, 2021. https://ivypanda.com/essays/should-pay-policies-be-secret-or-open/.

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IvyPanda. (2021) 'Should Pay Policies Be Secret or Open'. 4 December.

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