Work It podcast: Why are salaries kept secret?

Wage transparency is all the rage on TikTok, where people talk about how much they earn. But for most of us, discussing salary publicly is still taboo. How do bosses decide who gets a higher salary, especially when two people are doing the same job?

Skills, impact and size of company are some key factors, says Lionel Low, senior client solutions principal of ASEAN at Mercer. He explains all there is to know about rewards and renumerations.

Here's an excerpt from the conversation: 

Tiffany Ang:
At the job interview, why is it that when some applicants ask HR or the hiring manager, "What is the salary band for my job?" companies are not willing to reveal that and you only know that band once you start the job? 

Lionel Low:
To be frank with you, in a lot of companies, employees don't even know the salary ranges after they join the company. Usually, it's made known to their managers, but not the employees themselves. But I think your question regarding pay transparency still stands, and there are a few reasons why companies generally don't disclose pay ranges to employees. 

Firstly, it's competitive knowledge. If your competitor knows how much you're paying, it's very easy for them to go to their management and articulate and justify a higher range, for example, and that creates an outwards spiral in the market, which is not very healthy. 

The second point is that humans being humans, sometimes we are not easily satisfied. And there are surveys out there that shows that most employees feel that they are above average in performance. But all of us know that (the) average is defined by where majority of people is anyway. If everybody thinks that they are above average, actually they are average. But most people tend to have a pretty high impression of their own capabilities, be it, rightly or wrongly. 

Tiffany:
(But) a group of people will feel that this is aspirational, right? So if I know what is the top end of that salary band, it means, if I'm quite close to that, there's a chance of a promotion coming. But you're right. I think most people will look at where they stand within the salary band and they will go, "Why am I so far away from the upper limit?" or "I should have known where I am in this range before I commit to the job."
 
Lionel:
I have also seen employees who are at the top of their range, and they are not happy. Their mindset is that "Oh, the range is wrong because I'm hitting the ceiling soon." So, disclosing the range, especially in Asia, where it's an employee's market rather than an employer's market always results in more unhappiness.