Canadian HR Reporter

CANADIAN HR REPORTER CANADIAN HR REPORTER April 7, 2014 April 7, 2014 10 NEWS NEWS "As a society, we have a huge ta- boo around talking about money, about not only what we make but what we owe and what we spend, and there are costs and conse- quences to that taboo." Refreshing or awkward? People fi nd the open policy re- freshing, said MacLeod. "Most businesses would prob- ably benefi t from a dose of sun- shine when it comes to internal compensation rates," he said. " e funny thing is people would shout and scream initially, then it's like anything — you get used to it and it doesn't seem like such a big deal." In the 15 years Ehrnstein has been at Whole Foods, he hasn't heard of any complaints, he said. "It's something that we talk about as an important cultural practice so I think people are sur- prised but usually it's in a good way — you know, team members say, 'Wow, that's pretty cool that you aren't hiding behind confi - dentiality with respect to com- pensation,'" said Ehrnstein. "Pay can be a very sensitive topic for employees and for com- panies and I think there's a lot of fear in providing this level of transparency. But not for us… it really engenders a sense of egalitarianism and community." But it's not certain the average employee wants other people to know what he makes, said Clau- dine Kapel, a principal at HR con- sulting fi rm Kapel and Associates in Toronto. " at could lead to some awk- ward conversations or tensions, potentially," she said. " e reality is very few organizations share compensation information to that degree." But it's an issue that is going to get more attention in upcoming years because the younger genera- tions, especially those heading up smaller organizations, consider transparency to be really impor- tant — and salaries are an open subject, according to Janet Salo- pek, president and senior consul- tant at Calgary-based HR consult- ing fi rm Salopek & Associates. There are some really good things that could come out of an open compensation policy, such as greater transparency and con- sistency, she said. "It makes it quite clear, if it's managed properly... what success looks like for that organization. So there are benefi ts to moving to that type of model." However, there are problems too. For instance, how could an employer focused on succession planning reward its rising stars without people wondering what those raises are based on? In ad- dition, in hot markets such as oil and gas in Alberta, companies of- ten have to off er high salaries to attract people, said Salopek. "I don't think people internally or externally would understand it because they don't necessarily have the information that would allow them to make a judgment as to whether a particular position is a hot position and, as a result, a premium needs to be paid." Privacy concerns San Francisco-based Buffer, a software application designed to manage social networks, intro- duced open salaries in December 2013 as part of its adherence to "radical transparency." In addition to showing its salary formula, it lists on its website the current sal- aries of all employees, including CEO Joel (US$158,800), engineer Sunil (US$137,600) and designer Brian (US$94,000). But it's unlikely this kind of ap- proach could be taken in Canada because of privacy laws, according to Tamara Hunter, associate coun- sel and leader of Davis' privacy law compliance group in Vancouver. While the public sector can al- low for such openness because it involves taxpayer money, the private sector is diff erent. Federal and provincial jurisdictions vary but generally would consider a person's salary and benefi ts to be personal information, she said. " e defi nition of personal in- formation is quite broad, it's just information about an identifi able individual, and it doesn't have an explicit exception for salary and benefits like the public sector statutes do." Generally, the statutes would say a person's consent is needed to disclose that kind of information, so employers would need to ask for that permission when hiring someone, said Hunter. And even if a company only gave informa- tion for particular roles — not naming names — that could still pose a problem. "Privacy legislation talks about information about an identifi- able individual and if you know the person who's in that role and then you know what the amount is for that role, it's more or less in- formation about that individual," she said. There's a reasonableness re- quirement that overlays every- thing, said Hunter, so in PIPEDA (the Personal Information Protec- tion and Electronic Documents Act), for example, an organization can collect, use or disclose per- sonal information only for pur- poses a reasonable person would consider appropriate. If, for example, a job candidate isn't OK with his salary being revealed, and the employer then declines the job off er, that person could complain to the privacy commissioner — and the com- missioner would decide if it's suf- fi ciently reasonable, she said. On the other hand, the em- ployee might agree to such con- sent because it benefi ts him too, said Hunter. " ey may in their mind think, ' at's a fair tradeoff . If I can get that information about other peo- ple that work in the organization, I'm willing to have them receive it about me.'" There would also be issues around consent from existing em- ployees if an employer decided to adopt an open salary policy, and what happens if a consenting em- ployee later decides she does not want her salary information dis- closed, said Hunter. Tips for employers What's most important is that employees fully understand what they are agreeing to in signing the documents, said Hunter. "You'd need both some evi- dence from the employer about why they consider it to be, from a business purpose, a useful prac- tice and you'd also need the fact that the employee understood what they were agreeing to and was agreeing." Communication would be key, said Salopek, and a Canadian or- ganization would need to move away from individual salaries, because of privacy concerns, and instead connect the pay to a particular position and make it formula-based. If an organization wants to become transparent with pay, it needs to make sure its house is in order, said Kapel. "Otherwise, you're going to ex- pose issues that there are internal equity issues or unfair practices," she said. "You need to make sure there's some rationale for how people are paid and why people who are doing the same type of work or in the same job, why there are diff er- ences in how they're paid." e question is how far down the continuum of sharing do you want to go? said Kapel. "I would suspect for many or- ganization, sharing to that indi- vidual level, the juice might not be worth the squeeze because it could create more questions and potentially be a distraction versus gaining you points." Privacy concerns around personal information Privacy concerns around personal information OPEN SALARIES < pg. 1 If an organization wants to become transparent with pay, it needs to decide what information to share and make sure its house is in order.

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