More tech companies have stopped keeping employee salaries secret — and they're seeing results

It's natural to feel squeamish talking about money, particularly when it's tied to the value of your skills and hard work.

"In most of the Western world, salary just isn't something people feel comfortable talking about," writes researcher David Burkus in his 2016 book "Under New Management: How Leading Organizations are Upending Business as Usual." "To many people, it's the polite and right thing to do to keep salaries secret."

However, what workers — and many employers — may not realize, is that keeping salaries under wraps is proven to be more harmful to performance, hiring, and the economy at large, Burkus, who is an associate professor of management at Oral Roberts University, tells Business Insider.

Mackey and others at Whole Foods believe the policy has created a "shared fate" among employees. "If you're trying to create a high-trust organization, an organization where people are all-for-one and one-for-all, you can't have secrets," Mackey explained in the 2014 book "The Decoded Company: Know Your Talent Better Than You Know Your Customers."

Whole Foods was undoubtedly ahead of the curve. Burkus mentions a 2001 survey of US employers found that more than one-third had instituted policies prohibiting their workers from simply discussing salaries. And a 2010 survey by the Institute for Women’s Policy Research revealed nearly half of US workers reported they were either "contractually forbidden or strongly discouraged" from discussing pay with coworkers (although, as of 2014, 10 states had passed laws protecting employees' rights to discuss salaries).

Todd Zenger, a professor at University of Utah's Eccles School of Business, wrote in the Harvard Business Review last year that pay transparency is "far from a panacea ...[and] a double-edged sword, capable of doing as much — or more — damage as good." Zenger says open salaries create an obsession with pay and cultivate "inflated self-perception" among employees, in addition to becoming a costly agent for change for employers.

Burkus, however, thinks the reason companies shy away from pay transparency is fear.

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Yet, that fear is beginning to melt away, says Burkus, thanks in part more robust research on pay transparency and .

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Two tech companies, in particular, have made pay transparency a core part of their company culture, becoming dynamic case studies for what an open pay system can do for business.

One New York-based data analytics company, SumAll, launched in 2011 with completely transparent salaries among its 10 employees. Now, with more than five times the number of employees, salaries are posted on an internal network available for all to see, Burkus writes.

While Dane Atkinson, SumAll's CEO, has said the unconventional policy sometimes trips people up during interviews when they're expecting a salary negotiation, new employees end up relishing in the company's openness. In fact, so much so, Atkinson tells Burkus, that employees regularly decline offers from Facebook and Google because they value SumAll's pay transparency policy, which encourages employees to approach management with any qualms about their pay (or others').

Social media management company Buffer ups the ante on pay transparency. Employee salaries at the all-remote company are shared not only among staff, but also with the world.

In late 2013, Buffer CEO Joel Gascoigne listed staff salaries on the company website — including his own six-figure paycheck — and the formula used to calculate those salaries.

The formula, which has been updated since the original unveiling, is based on an employee's role, experience, loyalty to the company, and stock options. In the month after making salaries public, Buffer received twice the amount of job applications, Burkus reports.

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Burkus acknowledges the difficulty in setting up a transparent system at large, established companies — presumably those outside of the highly experimental tech world. He suggests the best model for open salaries is the US government, which uses a tier system.

Further, this open salary tier system can be an invaluable tool for reducing gender pay inequities. According to a 2011 Institute for Women's Policy Research report, the gap for full time-workers was 23%, compared to 11% in the federal government, where pay is public.

When employees are armed with data about their pay and the pay of their coworkers, it provides the opportunity to bring inequities to the attention of management. "Openness remains the best way to ensure fairness," writes Burkus.

More tech companies have stopped keeping employee salaries secret — and they're seeing results

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