88% of organisations in New Zealand do not support salary transparency
CEO states salaries should be based on performance rather than experience or tenure
Job applications increase by 33.9% when the salary is visible in the job ad.
New research conducted by recruitment specialists Robert Walters sheds light on the current state of salary discussions in the workplace. The latest study reveals that a significant percentage of workplaces, specifically 88%, discourage employees from discussing salaries with their colleagues. Despite this, 12% of white-collar professionals admit to engaging in such discussions anyway.
The findings come from a poll of over 2,000 white collar New Zealand professionals. The timing of this research is particularly relevant as many companies are currently reviewing salaries in preparation for the end of financial year review period.
Commenting on the findings, the CEO of Robert Walters Australia and New Zealand, Shay Peters, emphasises the evolving nature of salary discussions. “In the past, salaries were considered a highly confidential matter, even among friends. However, over the past 5 years, the sensitivity surrounding this topic has faded. Salaries are now openly discussed among friends, family, and sometimes even colleagues.”
Previously, employment contracts commonly included clauses that prohibited employees from discussing their salaries or benefits with colleagues. However, since 2022, these clauses have been banned under legislative amendments to the Fair Work Act, which contributes to a more relaxed atmosphere regarding salary conversations.
Salaries not as important
On explaining why people feel more inclined to discuss salaries in the workplace, the recruitment specialists stated that employers’ priorities have recently shifted. In the past, salaries determined whether a workplace was considered good or not. However, evidence shows that now more Gen Z candidates prioritise work-life balance and opportunities for training and growth.
According to a recent study by Robert Walters, work-life balance is the most important factor for 45% of white-collar professionals in Australia, while only 26% prioritise salary. Additionally, 19% value career growth opportunities and 10% prioritise company culture. This suggests a changing preference among employees, and not disclosing salaries allows companies to emphasise their other offerings to potential candidates.
Suggesting that as priorities change, salary importance fades, allowing for more open discussions.
There are clear advantages of salary transparency in the workplace including fair pay and even increased productivity.
However, while the ability to discuss salaries in the workplace has its advantages, the recruitment experts acknowledged certain drawbacks, particularly in relation to performance-based reviews.
Peters stated, “Many organisations base annual salary reviews on individual performance, which can lead to conflicts within teams. Not everyone performs at the same level, even if they have the same job title. Therefore, paying everyone the same salary can undermine the importance of recognising and rewarding individual achievements.”
The recruitment specialists emphasise that salaries should be determined based on performance rather than experience or tenure, marking a significant shift in the long-standing rewards system that has been in place for decades. By rewarding achievements and performance, companies are aligning their compensation practices with the desired behaviors and outcomes.
This can create salary transparency issues, as employees might feel underpaid compared to their colleagues without knowing their performance levels.
Salaries on job ads
In a related finding, the research also highlights that a considerable number of job advertisements do not disclose salary information. This contrasts with consistent research findings that suggest including salary details in job ads can attract a larger pool of candidates.
According to SEEK, over 70% of candidates find it frustrating when salary details are not provided in a job ad, and many candidates will not even consider applying if the salary is not advertised.
Additionally, SEEK data indicates that job applications increase by 33.9% when the salary is visible in the job ad, highlighting the importance of transparency.
However, Robert Walters CEO Shay Peters expresses concern about salary transparency. He believes that including salaries in job ads may deter perfectly qualified candidates if they perceive the salary to be too low. Peters argues that employers often have room to negotiate salaries or offer exceptional benefits, and candidates may miss out on these opportunities if they disregard a job solely based on the salary information.
Not disclosing salaries allows employees to highlight benefits like flexible working hours, financial support, and career growth opportunities.
About Robert Walters
Robert Walters is one of the world’s leading specialist professional recruitment consultancies with a global presence spanning 31 countries. The New Zealand business recruits across the fields of accounting & finance, property, general management, human resources, information technology, legal, risk management, compliance & audit, sales, marketing & communications, secretarial & business support and supply chain & procurement.
