January 16, 2009 at 7:27 am
Steve,
You start out by talking about opening the books so everyone knows the financial health of the company. Then you talk about whether everyone should know everyone else's pay. They are two completely different topics.
You don't have to know everyone's pay to know the company's financial health. You can be shown the total amount paid in salaries without knowing individuals' pay. The term "opening the books" doesn't have to mean that everyone has access to every detailed transaction.
I worked for a company that published monthly income statements and balance sheets. You knew at a glance what shape the company was in.
To answer the question about knowing everyone's pay... I say no. My pay is a private matter between me and my employer. Only a few people should know what I get paid. It's nobody else's business. Nosey Rosies should mind their own business.
January 16, 2009 at 7:30 am
You made very good points. I agree that it would be good to open the books the way you indicates and only post a total output of salary.
January 16, 2009 at 7:38 am
Very interesting discussion indeed and after reading some of the threads, I will have to agree with Grant's opinions. Being "fair" is very subjective indeed and if everyone was paid "fairly" based on the job description alone, there would be more resentment in terms of remuneration. Moreover, if there were no pay bands, there would be no more salary negotiations and employees would always be settling with what they get paid.
As far as Steve's point about the executives' and managements' pay being disclosed is concerned, even I wouldn't mind boasting about my millions of dollars in stipend and even more so in stock options and bonuses!! The common man working on a JOB (Just Over Broke) does not need to have his/her pay disclosed in public; there is no charm in listening to the fact that the average Joe making $35000/year is barely surviving!
January 16, 2009 at 7:38 am
I think that if a company started out that way, and stayed that way, regardless of size, it would be fine. There would have to be clear and definite policies on pay rates, and why each person is getting what they are. Outside of companies with those two things, I think pay should be private.
One of the things I hate about job hunting is naming the salary I'm looking for. There's no really sane way to do it in most cases.
How would you feel if you had to guess what was a reasonable price for every item you buy when grocery shopping? Too low, you don't get to buy the thing, but they let the next person in line bid for it, without letting them know what you bid. Too high, they let you pay that. And all bidding is secret. Reverse the math (low = you get the job, high = you don't), and you have "what salary are you looking for?".
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January 16, 2009 at 7:42 am
while certainly raising the possibility of resentment, I like the idea of open pay, if somehow there was a fair way of setting salaries, and achieving raises. For mainly the simple reason than if you look at some of the places where compensation is open and know, say professional sports, in tends to lead to increased salaries, especially for the star performers.
January 16, 2009 at 7:42 am
Yes this is an interesting debate. Here's my incoherent rambling... I worked in State government for nearly 11 years and worked on the State's Budget System amongst many other things. Even though the budget and salaries are public knowledge I think few people really looked into it that much. Union pay grades governed the salaries folks made. Unfortunately those pay grades are well below private sector pay grades. Of course salaries are the full compensation package either, paid time off and insurance along with the work environment and additional factors to consider. Not to mention responsibilities.
While in state government I knew I had responsibilities that went well out of the scope of my job description. I also knew that my total compensation put me near the top - at least until I was promoted and lost 12% of my compensation with no corresponding reduction in responsibility. I knew specifically what some of my coworkers made and generally what others made. I knew what their responsibilities were. This didn't make me happy. I also knew that my supervisor made little more than I did. This didn't make me happy either. What it did do was encourage me to find another job. First I moved to another agency where my responsibilities were reduced while my compensation remained the same. A while after that I moved to the private sector where my compensation took a 35% jump.
I do not know what my coworkers at this company make even though as the DBA I have access to the data. However I am happy with what I'm making and doing. I am happy with the people I work with. I am happy with the flexibility my supervisor gives me. And I'm happy with the other benefits a private sector company provides.
Interestingly though I was just reading the SEC filings for my company and saw that the upper management of the company is making 3 to 5 times what I'm making. Does it make me unhappy? No, it actually makes me excited that there is room to grow and negotiate. I haven't been here 20 or 30 years like most of these folks. My company is doing well despite the economy so I'm excited about the future when the economy turns around and we continue our growth.
So what does this mean? Um, I'm not sure. Maybe that there is some middle ground. Maybe that money alone shouldn't be your driving factor. Maybe that knowing you're doing a good job, can own a nice home AND make your mortgage payment and car payment, that you can put food on the table and savings in the bank, that you can enjoy an occasional vacation and enjoy life is better than knowing specifically what others around you are making.
January 16, 2009 at 7:43 am
At a previous job I gained access to the salaries for the whole company. For the most part it was just interesting. Then I looked at the salaries of those on my team, and I thought it was fair with one exception. The most incompetent person on the team who I was trying to train to do a few things was making $10,000 more than me. This did not sit well as I was just told by management that my salary was toward the upper end of the scale for this position so pay raises would be fairly small. This made me lose all trust in my management. Needless to say I left this company shortly after. So I would say it is not a very good idea to share this information with everyone in the company.
January 16, 2009 at 7:46 am
I have always been a big proponent of open salary structures. It forces us to be honest as employers with how much we pay people, and, as employees, how much we feel we are worth. It also helps eliminate favoritism and gross disparities in pay because they are out there for everyone to see instead of hidden. Bottom line: secrets make you sick!
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January 16, 2009 at 7:47 am
The general consensus seems to be that knowing your co-workers salaries would lead to jealousy and resentment. This would only be true if pay is unfair.
To argue this a slightly different way - in most Western countries, women are paid between 20% and 30% less than men for doing the same job. This is completely unfair, and unacceptable. The only way to stamp out this practice is for everyone's salary to be known.
Ignorance is not always bliss.
With regards to fairness - a sensible annual review of everyone in the company is the correct way to evaluate each person's performance (and from there salaries can be adjusted, or bonuses awarded). Again, all above board, no secrecy, no unfairness.
Ratpick (1/16/2009)
At a previous job I gained access to the salaries for the whole company. For the most part it was just interesting. Then I looked at the salaries of those on my team, and I thought it was fair with one exception. The most incompetent person on the team who I was trying to train to do a few things was making $10,000 more than me. This did not sit well as I was just told by management that my salary was toward the upper end of the scale for this position so pay raises would be fairly small. This made me lose all trust in my management. Needless to say I left this company shortly after. So I would say it is not a very good idea to share this information with everyone in the company.
Only is it not a good idea if the current situation is patently unfair. The best way to solve this is to have the information as common knowledge.
Andy
January 16, 2009 at 7:51 am
Jack Corbett (1/16/2009)
I'm not a big union fan either, because the union shops I've seen just protected incompetence and that led to work falling to the lowest common denominator.
This is a common reaction, so probably not an uncommon experience. But it does not have to be so. Many managers in big public organisations seem to lose the will - or fail to develop the skill - to manage performance, thinking that unions can keep anyone employed. But terms and conditions, representation and employment rights, simply mean they have to be more thorough and work according to a set of rules that are there to ensure fair treatment. It's harder work than just telling someone they are fired; but when it's your own turn to have family issues or depression or cancer therapy, then the need for your employer to follow fair and considered procedures when assessing and improving your underperformance is a life- (well, job-) saver.
But back to pay: I don't feel the urge to compete or judge everyone else's performance, so I don't worry how colleagues' pay compares with mine. We carry some lazy people and some less able people, and we have some really bright sparks who do a lot more constructive work than they are financially rewarded for, but that's just the workplace aspect of life – we're all in it together, and can choose to emphasise collective or personal ambitions.
January 16, 2009 at 7:52 am
I for one don't care who knows my rate. However with that said there are just too many petty people out there. People who on the slightest think their pay is reflective of someone out to get them if lower than anothers and sometimes will file suit against their employeer for discremination. Sure there might be circumstances where this is true but when there is not the company still has to absorb the cost of the litigation which can take it's toll and harm the company beyond repair. Additionally people like to squabble with stupid remarks like why does he make $1000 more than me as I have been here longer not accounting for the poor attitude and lack of work ethic on their part (sorry pay for stay does not work for me, I am a pay for perform kind of guy). And then what about people who you rightly have a gripe about such as the guy on your project team (possible example btw, I have a great project team right now) who commits to things that never get done or only half@$$ get done yet they earn more and never get fired when their piece is what leads to the projects issues or failures. So until people get off their self-centered I am better than you and deserve more than you greedy butt attitude I am afraid (especially in large corps) this is just not feassible. However a summed of a corp job sector I think would provide just as much info but then people get into trust issues with reports anyway, how without the individual numbers do you know it is fact and like when my company introduced a report on my actual compenstation versus pay which I cannot fully see how can I even know it is truely right.
And with all that said I think non-profits should be required like government jobs to have to report details of their pay. Recently here the United Way's CEO pay package got leaked which was over a million. This got people up in arms as we contribute to have our money go to help the community not a single persons pocket. She was let go and now she is filing a suit that it was because of her race and not the ripoff scam of a pay package which she wrote up (and yes the board who approved should have all been sent on their way as wel). Just another example of pettiness from a greedy person.
January 16, 2009 at 7:55 am
I see a lot of people against the idea of exposing salary information. I can see how resentment could rise due to publishing such information, but consider where that resentment is coming from. If I'm making less than somebody else that I feel is not contributing as much as me, I can either sulk, or I can determine why this is the case. If I am not satisfied with the answer or am unable to make an argument to have my own salary raised, I will feel compelled to seek opportunity elsewhere. Is this a bad thing? Should I instead bury my head in the sand and be paid less but not know it?
On the other hand, maybe I make more than others at my level, and others making less are as productive or more so than I am. If these others resent me for my salary but don't take steps to catch up, they're not being adult. If they take action and are denied arbitrarily, I want to know that because it speaks of the integrity of the company or manager. If they are making less and contribute less, but they still feel resentment, again, they're not taking responsibility and are thinking childishly.
I can see the potential for hurt feelings, demoralization, etc. that could arise from exposing salary information, but how is hiding the information better? Ignorance may be bliss, but what you don't know can hurt you. I prefer to work from a position of knowledge versus speculation. Many responses here are from folks who are in positions or cultures where exposed salaries are the norm, and they seem to be surviving the experience.
I can see big advantages to companies and management to hide salary information. Keep the employees oblivious to the lack of balance in pay and they're easier to control. The company always has the upper hand in salary negotiations. Incompetent people in higher positions can remain overpaid without the threat of exposure. I don't see how this kind of confidentiality helps the employee, though.
As far as competition, how can you compete without knowing where the other players are? If the only information I have in a race is the clock, but I don't know where the other runners are or what their times are, what will compel me to give that extra burst of speed instead of slacking because I think I have the advantage. Hiding salary information in my opinion hinders competition and removes the biggest potential motivator for most people.
It also makes it impossible to determine if I have a future at a company. Will moving up the corporate ladder here be of any benefit, or does management make little more than I do as it is, so why bother with the extra responsibility? Again, I might be compelled to take on more responsiblity and perform better if I KNOW there are monetary rewards involved.
All that having been said, here in the U.S., the general culture is hide the salary. To buck that is to open up a can of nasty worms. But I've never been afraid of worms, and I've always been against anything that exists solely due to tradition. Suffer the pain and expose the truth. Quit letting employers rule your lives and keep you in the dark.
January 16, 2009 at 8:00 am
Personally I don't think it is any ones business what I make however, working for a city government, we don't get a choice; our salaries are very public knowledge. I do understand of course since we are paid from tax payer funds (I pay the same taxes!) any monies expended by the city should be pubic knowledge. However, it was very disconcerting this past year to see not only our salaries, but we were ALL identified by name in the local newspaper. Not sure why it was necessary to use our names and not our position but I guess someone figured it was a good idea.
January 16, 2009 at 8:03 am
kwitzell (1/16/2009)
it was very disconcerting this past year to see not only our salaries, but we were ALL identified by name in the local newspaper. Not sure why it was necessary to use our names and not our position but I guess someone figured it was a good idea.
Ouch - that's freedom of information versus the right to privacy, and goes a bit too far in the direction of freedom.
January 16, 2009 at 8:06 am
A totally open list with names would generate resentment, but perhaps reporting the salary (or range) with the position title and years of experience(which is factual) should be disclosed.
We all know that HR lies to try to bring people in at lower pay with less vacation. This is part of their function for the company.
At my company HR lies about all kinds of things like whether they have more keys to the IT area. That is not believable so what is the point!? So then my director goes to the facilites guy, says he's hiring someone new, and gets a key (that doesn't exist).
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