Starbucks Canada implementing salary transparency

'We believe every current and prospective partner or employee, should understand the rationale for their pay'

Starbucks Canada implementing salary transparency

A well-known coffee chain is joining the ranks of organizations who offer a transparent pay structure.

Starbucks Canada recently announced that it will provide employees with pay ranges in order to become more open with this information.

“We began this work last year with a focus on providing more awareness, as well as understanding, internally and publishing pay ranges for roles at Starbucks. We are now taking one step further in our commitment to being a more inclusive, diverse and equitable company by publishing salary ranges on all job postings for both internal and external job boards,” says Loring Scarrow, vice-president, partner resources at Starbucks Canada in Toronto.

“We believe every current and prospective partner or employee, should understand the rationale for their pay and how to grow their career at Starbucks.”

The ranges will be published on all job boards including the company’s own career site, says Scarrow.

“We want candidates interested in working at Starbucks equipped with the necessary tools to apply for jobs that they want and align with their goals. We want our partners, current and future, to understand how experience, capabilities and performance can help shape their compensation,” she says.

Growing popularity of legislation

The move comes on the heels of governments in Ontario and B.C. recently legislating pay transparency, and it should work well for the organization due to the nature of its business, says an expert on employee compensation.

“There’s not that many hierarchies: you could be a barista, you can be assistant manager, you can be the manager at Starbucks so Starbucks is in the position where you don’t expect a lot of pay dispersion to be revealed because pay transparency reveals existing levels of pay dispersion and when employees and other people see the pay transparency, there’s not much there,” says Kun Huo, assistant professor of managerial accounting and control at the Ivey Business School at Western University in London, Ont.

The majority of workers at Starbucks and other retail establishments are generally short-term and young persons, meaning its implementation should be painless.

“I think they don’t expect a lot of negative reactions, compared to different circumstance when asked to disclose, the pay dispersion between the CEO and the average worker and see how much actually that got, Occupy Wall Street and all that stuff. In terms of Starbucks, publishing information, they feel pretty comfortable that they don’t have to, they don’t have to explain pay dispersion as much,” says Huo.

Pros of publishing ranges

For those organizations that have published salary information, the benefits are clear, says Scarrow.

“We know transparency in pay is important to employees in Canada. For example, a February 2023 Glassdoor survey revealed that nearly two-thirds of employees would prefer to work at a company that discloses pay information over one that does not. We believe in doing so fosters a sense of loyalty, enables employers to attract and retain a more diverse workforce, and strengthens an organization.”

Its popularity is growing, according to Huo, who published a white paper on the topic, that found 55% of organizations want more transparency and 34% of them already do so.

But for some, it’s easier said than done, he says. “It seems that the biggest hurdle is that a lot of firms, they don’t have a defined pay structure.”

“If you leave this to decision to the hiring managers, the hiring managers may look at this a bunch of candidates and the budget they’re given and they could make a very rational decision to say: ‘I need to give this much money to this person in order to fill the position,’ but if you look at the grand scale over this for the entire firm suddenly, all of these additions seems idiosyncratic because you tried to say, ‘Why is this person’s pay this much compared to that person’s?’ A different manager makes a decision under different circumstances, looking at different determinants,” says Huo.

Careful consideration should be undertaken to ensure it is done correctly he says, otherwise, this could “lead to unintended negative consequences for motivating employees,” with sometimes it leading to “individual rational decisions looking irrational,” says Huo.