In my last Human Resource Management class discussion, the topic was brought up as to what was a better method, open or closed pay systems. I feel that if a company chooses to use an open pay system, they are not only telling their whole staff what each employee makes but more importantly, they are telling their competition. A staff member can feel underpaid once he/she finds hears of what another employee is making and does a similar job. This can result in decreased job performance of an employee and could potentially take on the domino effect. Also, if a company is using an open pay system, they are basically giving their competition the green light to go ahead and offer our top employees more than what that company is paying them. This could also cause friction in the workplace in a sense that employees of that particular business begin to feel that they can potentially being earning more at another business.

 

This is why I feel companies should use a closed pay system. It plays a big role in privacy within the organization and other employees. It’s kind of like in high school when all the students would get their tests back and immediately after class everyone is comparing test scores and what not. Even though the school has a closed grading system, there is nothing the school can do prevent this. In comparison, employees may talk outside of the office about what each other makes but there is nothing the business can really do prevent their employees from talking. As long as they are documented as a closed system and are not making it publically known, a company will be much more successful.