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Leaders, Let Your Employees Decide Their Own Salary


Is discussing money considered as a taboo and sensitive topic in your workplace? If yes, you might need to end this practice now and forever.

Why should you make the salary talk transparent?  

The salary taboo is hurting employees. In any salary negotiation, whoever has more information has the advantage. But generally, it is the employers who possess abundant information regarding salary and employees know very little. Thus, it could lead to ‘wage gap’ for the same role within the same firm across the same industry.

See also: Hourly Employee: Reasons and Guide for Employers

Adopting open and transparent communication regarding salary in the workplace can be a booster for employees to compete better and work harder. It can also enhance the company’s image in front of both current employees and future candidates because it can showcase the fairness and equality that all employees are seeking. Moreover, pay transparency is a trust builder between employer and employees.

Why give employees the freedom to set their own salary?

Besides adopting pay transparency, allowing employees to choose how much money they can earn improves their satisfaction and happiness. In a paper on happiness as an expression of self-determination, personal autonomy - that is being able to choose and decide to oneself - is the number one contributing factor to happiness, which is more important than money. Thusly, giving an opportunity for workers to choose their own salary can increase value, morale, as well as productivity of your employees and company bottom line.

Organisations around the world have adopted this practice. London-based tech startup Smarkets, for example, has introduced a form of self-management. They let their staff to actually set their own salary. Smarkets employees said that having the freedom to get what they worth makes them feel more aware of their strengths and areas of development.

“If you get good feedback to support your salary, it definitely makes you feel proud and more drive. On the contrary, it might make you feel deflated at first but eventually will push you to work on the areas you need to or just to communicate what you have achieved better internally,” said Celine Crawford, Smarkets employee.

At the same time, this program can also make you stand out great among other business competitors. The more your employees feel like vital members of the team, they are striving to enhance the overall success of your business. This can also be a great way to attract the best candidate attention, knowing they are given such freedom. Thus, in case of Smarkets, they can eventually harvest the fruit of their own good decisions, salary freedom among employees.

Warning! Rule to salary freedom

It is not total freedom you give your employees, nonetheless, what will you do when employees ask for 7 figure salary that does not align with their job responsibility and skill? Of course, you would not say yes to the request.

Salary freedom aims to consistently keep employees at the top of their market value – and it will work well when there is a “pre-agreed salary discussion”. The discussion should cover employee current skills and responsibility that can be used to decide the amount of money. But employers should remember that this is a discussion and not negotiation. Hence, employers must listen and also give a good explanation (some evidence if possible) to let employees know their worth.

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