Asking co-workers how much they make could have financial benefit: experts
Experts say knowing what you co-workers on could help you during your next salary negotiation, but could also hinder your relationships with those co-workers. (Rawpixel.com)
When it comes time to talk to your boss about a raise, experts say knowing what your co-workers are earning could be a big benefit – but it comes with a potential cost unrelated to compensation levels.
According to job website Indeed, 83 per cent of Canadian workers report being unhappy with their salaries. Seven in 10 surveyed workers said they would consider changing jobs if doing so meant more money, and yet only 52 per cent said they would even consider asking for a raise in 2018.
At issue in many cases is that workers believe they are already earning about as much money as their employer is likely to give them – not realizing how often wages can vary based on an employee’s negotiating skills.
“Organizations capitalize on the fact that talking about your salary tends to be taboo,” Greg Chung-Yan, an associate professor of industrial and organizational psychology at the University of Windsor in Windsor, Ont., told CTVNews.ca via telephone.
Employers often approach initial salary negotiations as an almost “innocuous question,” Chung-Yan said, asking employees what they would like to be paid. This can put employees at a disadvantage, particularly if they know little about how the company typically compensates its employees.
But while knowing what one’s coworkers are earning can be good for financial reasons, experts caution that focusing on it too strongly can put workplace relationships at risk.
“Regardless of whether you get paid more or less, people tend to judge you,” Chung-Yan said. “There’s always a high risk of someone feeling like they’re not being treated fairly because they’re not being paid the same way. It can lead to a lot of resentment not only with your employer, but with your friends.”
For most people, then, the question becomes how much value they attach to friendships with co-workers– and what potentially jeopardizing those relationships is worth compared to the extra salary that could be gained.
How it helped Mr. Hockey
One of the most significant examples of the power of talking salaries comes from the world of professional hockey.
Gordie Howe, whose name often comes up in discussions about the sport’s greatest player of all time, often earned less than the NHL’s other stars of the era and even some of his own Detroit Red Wings teammates.
As detailed in the 1994 biography “Gordie: A Hockey Legend,” Howe was told by Red Wings management that he was the league’s best player and accordingly being paid the league’s highest salary.
In an age before teams were required to disclose salary information, Howe never questioned the information he was given.
That changed in 1968, during a chance conversation with new teammate Bobby Baun. Howe learned that Baun was earning US$67,000 per year – significantly more than his $45,000 annual salary. Red Wings defenceman Carl Brewer was making even more money, at $90,000 per year. Howe took his complaints to team owner Bruce Norris, who agreed to bump his salary up to $100,000.
The conversation between Howe and Baun is often credited as the first step in NHL players becoming more open to talking to each other about what they earn. Salaries have skyrocketed in the ensuing half-century, with the minimum salary for a full year of NHL duty in the upcoming season set at $650,000 – or just a little less than the $711,000 Howe’s top-of-the-line salary in the 1960s would be worth in today’s dollars.
Strategies for talking salary
Salaries can be considered sensitive or personal information, and there is no guarantee approaching a co-worker with questions will lead to a positive conversation.
Peter Caven, a Toronto-based career coach who works with young professionals, says anyone looking to start such a discussion should be careful about how they make their approach.
“Don’t launch into this sort of a conversation around the water cooler. It’s much better had off-site, outside of business hours,” he said in an interview.
One method Caven suggests using is easing into the issue by first talking about other companies where workers have discovered significant pay gaps, then asking if the co-worker is curious if the same thing could be happening to them.
Putting too much attention on exact salaries might yield less satisfactory results than focusing on overall salary ranges and where one’s own salary fits within that range, Caven said.
“If you were to learn that you are at the 50th percentile in your range, and there were others at the 90th percentile, you might want to ask a question about ‘What do I need to do to get to the 90th percentile?’” he said.
Co-workers aren’t the only people who can be used as salary comparators. Other options include acquaintances performing similar duties in other companies. Reaching out to them might yield similar information without putting as much potential strain on intra-office relationships.
“The benchmark that people use is not just how much people are making in that organization. There’s also the market rate,” said Claire Tsai, a co-founder of the Behavioural Economics in Action Research Cluster at the University of Toronto’s Rotman School of Management.
For people who might not be comfortable asking about salaries directly, websites such as Glassdoor and PayScale offer platforms to compare salary data in relative anonymity.
While the data on these sites can be helpful, Caven cautioned, anyone using it should double-check that the numbers they are seeing are in Canadian dollars and are in fact for similar work in a similar workplace.
Tsai also recommends that people using the sites remember that little is done to check the accuracy of their data.
“There are multiple sources. If people can get different numbers, then they can get an idea,” she said.
But what about employers?
While the benefit of salary-sharing to employees may seem obvious, the effect it has on employers is less clear.
In the short term, any extra money given to workers is money that cannot be spent in other areas of the business. Taking a larger view, however, some experts argue that companies stand to benefit from co-workers knowing what their peers are earning.
“I don’t think employers should discourage employees from talking about their salaries,” Tsai said.
Tsai said she thinks businesses should take things one step further and disclose salary information proactively. As she explained it, companies that are upfront about what they pay their employees are forced to think more systematically about how they determine salaries, potentially reducing cases of favouritism while putting measures in place to quantify everything from sales performance to leadership ability and other soft skills and reward their employees accordingly.
“Employers need to think about ‘How do we decide how much to pay a worker?’ They need to find ways to quantify and identify the factors that are most important to the company – because in the long run, that’s beneficial for the company,” she said.
Chung-Yan noted that businesses that do not follow this approach, choosing instead to keep employees in the dark about salary information and financial performance, can be more likely to become breeding grounds for rumours and gossip.
That, Caven said, has implications for workplace morale – and potentially the company’s reputation.
“I would hope that organizations feel that the more transparent they are on all dimensions with employees, the happier or more confident employees will be in the organization,” he said.