Pay transparency far cry in India
Workplace politics, disparity in functions hinder adoption of new concept among workforce
NEW DELHI: Seven years ago, Akash Agrawal started Sahaj with one fundamental belief that it will “work towards reducing exploitation in all forms for everyone”. When Agarwal, CEO & Co Founder, Sahaj Software, contemplated and then brought to reality the idea of open salaries at the firm, it took a while for people to understand the thought process behind it.
“We conducted workshops, spoke to our colleagues and implemented it within three months of the inception of the idea. It has been quite successful ever since. We learnt that instilling a process like open salaries has further galvanised our teams to be more collaborative, engaged and more trustful of each other,” he says.
Pay transparency — which necessarily means allowing the pay packages of employees to be seen by others — in India, whether formal or informal, is an effort or policy by an employer and has no legal implication as of now.
Talking about the disruptions this new concept brought forth, Agarwal says, “While the open salary system needed to be embraced, we were facing questions such as - what about the targets? What would ensure high performance and dedication that would do justice to the process?”
To answer these questions with a solution, the company adopted a compensation process, wherein, individuals review their compensation based on their role. “With everyone involved in the decision making of salaries and increments, disputes among people are almost negligible at Sahaj,” says Agarwal.
While talking about one’s pay continues to be a taboo at the workplace or outside, conversations around the subject, suggesting a shift in attitude, have been doing the rounds lately. In fact, there is a movement taking form in some countries, for making pay transparency not just a norm, but a law.
The idea of pay transparency does not stand alone, but comes with the call for equitable pay. Sahaj is not an isolated company with pay transparency as its core principle. Companies like Starbucks, Glitch have been spearheading the movement for some time. In the past few years, Starbucks has stopped asking candidates about salary histories and started providing pay ranges to candidates who ask, according to a case study by LinkedIn.
Types of pay transparency
There are very few organisations in India which have partial pay transparency as on date, which means sharing the pay principles and/ or band/ grade-wise salary ranges with their employees, says Ruhie Pande, Chief Human Resource Officer at Godrej Housing Finance, adding that total pay transparency as a concept does not currently prevail, barring roles at the entry level in industries like retail, hospitality, beauty and wellness.
Indian industry still goes largely with partial pay as they would like to pay more to deserving candidates or to the new recruiting candidates, says Prashant Singh, Vice President and Business Head-CPO, TeamLease Services. 70% of employees in the country agree that transparency is a must and good for business, according to Teamlease, an HR firm.
Singh goes on to add, all traditional and conventional industries still follow partial pay due to union issues, and different level structures. “The new-age companies are starting to approach full-pay transparency as they want to create this culture. Though, in India, the skill availability or scarcity of right resources, disparity in different functions as far as pay structure is concerned and difference between the lowest level and highest level are factors leading to holding the partial pay structure still.”
India Inc. experts seem to believe that pay transparency is a far-fetched concept as the Indian workforce may not have the maturity to accept that someone may deserve to get paid better because they are better at the job.
Pay transparency, except from some roles, is complicated, says Pande of Godrej Housing Finance. “Let’s say the salary details of all employees are shared with employees. The employees who perceive their pay to be lower than their peers will seek a higher pay. However, if the organisation has been true to its pay principles, it will be difficult to give any correction to the said employees,” she explains.
“One other reason why organisations do not prefer pay transparency is that roles are quite different from each other and they may be in different departments/ locations as well. Every organisation may put a premium on certain roles over the others. Comparing and explaining them to employees of a particular department/ location becomes infeasible,” says Pande, adding, at the moment, India Inc is not ready for full-pay transparency.
Gaurav Chattur, Managing Director, APAC, Catenon, agrees with Pande on the point of organisational understanding. He says that even though some organisations are experimenting with pay transparency, it is not a trend that is going to sustain in the long run.
Workforce in India does not always have the maturity to understand that someone deserves a higher pay because they are actually better at their job, Chattur says, explaining, “Players in India have a non-transparent approach because employees very often equate job satisfaction with compensation, and compensation alone. Beyond this, because employees have such a blinded perception, happy employees can turn into unhappy ones knowing the pay details of a colleague which may be incrementally more. An employee may not have the maturity to understand the reason why, but will become disengaged and may create disharmony upon observing pay difference.”
A 2018 LinkedIn survey indicates that an overwhelming majority of respondents (61%) consider compensation the most important part of the job description. A 2019 Global Talent Trends report, again by LinkedIn, reveals 53% professionals, globally, agree pay transparency is very important to the future of recruiting and HR.
Many companies worldwide have considered adopting such policies. However, most of the companies, especially the ones in competitive job markets like India, have refrained from the idea to avoid resentment amongst team members, says Sanjay Shetty, Director - Professional Search & Selection & Strategic Accounts, Randstad India. Shetty believes the issues could be too many to handle for the Indian companies, especially the additional costs of equalising the pay in event of a demand for pay hikes or employee turnover.
“In the case of developed economies that are more stable in terms of attracting talent, transparency can be observed, but companies in the developing nations might have to do things a bit differently due to higher volatility in the job market,” he adds.