Comment roundup on secret salaries vs. open

Everybody hates open salaries

When I wrote my post on why secret salaries are a baaaaaad idea I didn’t realize what I was getting myself into. On most other posts I’ve written, 3 out of 4 commenters agree – in this case 3 out 4 thought that open salaries are a really baaaaaaaad idea. How many a’s are there in baaaad anyway?

There’s about 60 comments on the post itself, 50 on reddit, 80 on digg and more on other sites, most of which, as mentioned, are dead set against the idea of open salaries.

Interestingly, the comments from people who have tried open salaries are overwhelmingly in favor of the idea – many cite great benefits. I still think open salaries are a great idea for employees, businesses and the bottom line.

I’ve summed up the major arguments from the comments against secret salaries and my arguments against these arguments below, not so much because I want the last word (well, that too :o) but mostly because most of the arguments are really good arguments, many of which I hadn’t thought about before.

No one will adopt it / it can’t be done
The short counter-argument: Some companies have done it. In some cases it’s failed, in some cases it’s worked incredibly well.

Employees would demand more, People won’t demand a reasonable salary, employees overestimate their value
Experiences from companies that have open salaries, including my own, don’t support this. People are very reasonable about it and perfectly capable of realizing that some people get paid more than others.

If I’m good at bargaining and therefore get a higher salary, I deserve more because as a good bargainer I’m valuable to the company
Great! Then make bargaining skills one of the things that count in determining salaries. That way it’s out in the open and not something that counts in some cases and not in others.

People will start complaining
No, people are already complaining, because in many cases they already know who’s making what. Making salaries open means managers will discover that people complain. That’s a good thing because it brings the complaints out into the open where they can be dealt with.

It’s impossible/difficult to set fair wages and difficult to define how salaries are set
Well this is true whether salaries are open or secret. Making them open makes it easier to set fair salaries, because you know what other similare employees are getting.

The company wants to pay as little as possible / Companies can’t pay more
As I wrote in the post, no company has an interest in paying as little as they can get away with. Companies have an interest in making salaries as fair as possible, not as low as possible. And because making salaries more fair can lead to people being happier at work and therefore to increased productivity and quality, it’s actually good for the bottom line.

Your salary is not connected to your co-workers’
That’s actually true. But you perception of how fair your salary is is totally connected to your co-workers’ salaries.

Employees hired during a drought
What do you do if there’s a sudden drought of qualified employees in the job market and you need to hire employees at signifcantly higher wages than existing similar employees?

Embarassment if a person’s salary drops
Well that’s true: If a person’s salary drops it will be taken as an indication that that person is now less valuable to the company. But what’s the alternative? Keep on paying that employee a salary that’s now unfairly high, merely to avoid embarassing an employee? That’s doing everybody, including the employee, a disservice.

The world is unfair
Sometimes. Does this mean we shouldn’t work towards making it more fair?

Salary is a personal matter
I have a lot of sympathy for this argument because in today’s society salary is quite a taboo. It’s not up there with sexual practices, but close. But why is that? Does it need to be?

Difficult to explain why Johnson gets more, You have to explain/defend every raise, Results in a new line of bs from HR
Is it really that difficult to explain why person A gets more than person B? Shouldn’t a good leader be able to easily and succinctly justify her choices?

19 thoughts on “Comment roundup on secret salaries vs. open”

  1. Alexander: And you know what’s funny? Companies try to convince us to keep our salaries secret, and they imply that it is because they are doing us a favor by giving *us* a higher wage than they give other employees — as if we’re privileged. In reality, this is exactly the opposite.

    Love the site, BTW — I plan to check out “The Seven Day Weekend” since you recommend it so highly :-)

  2. Sounds like both things make salaries a big deal … Keeping them secret sounds strange, having them listed on the Intranet sounds even stranger.

    Why make it such a big deal about this? Sure, people will talk in any case, but why not try to de-emphasize salaries, and just get some work done. Salaries are discussed once a year, and isn’t that enough? If people feel they should have more because they heard Bob earns more than them, than that’s ok, and they can make their case when it’s appropriate.

  3. Yes! Alfie Kohn’s great work on why salaries don’t motivate people made him give companies this advice:
    Pay people as fairly as possible then do everything in your power to de-emphasize salaries.

    I actually think that open salaries over time serve this purpose. They certainly did for us and though they were open in our company, they were still only renegotiated once a year.

    And there’s always the middle ground suggested by one commenter on the original post: If an employee has a suspicion that he’s not being paid fairly, he can go to the CEO and request to know what others are getting and argue his case.

  4. I’ve seen good arguments that free market competition in health care require the free flow of information on pricing; but the health care system is deliberately set up to restrict the flow of such information. Likewise, the internal structure of the corporation is set up to prevent the free flow of information necessary for an efficient labor market. The commenter who said “employees would demand too much,” unfortunately, is channelling the same values that led to the situation.

    As for those who said that “life isn’t fair” and the like, maybe not. But anyone at the bottom who finds himself apologizing for the injustices committed by those at the top, should do some reading on Adorno’s F-Scale and the authoritarian personality. Or on a less abstruse level, get his nose out of the bosses’ posteriors–they’re plenty good at looking out for their own interests without some apple-polisher lamenting that “them pore ole bosses need all the help they can get.”

  5. Interesting… I read Semler’s stuff some time ago and now in founding a company find myself thinking about it more. Has anyone had experience with this in employees spread out across a global workforce? I recall Semler’s guys were all in one place with the same locational economics (though perhaps no longer in his later work). I realize we could say “Make location a factor!!!”…. Somehow it seems harder to explain why a developing work employee makes 10% of a first world employee than explaining a 10% difference in salary between two colocated employees…

  6. I absolutely agree with open salaries. I think companies keep salaries secret to keep people in their place. After all, if you don’t know you’re being paid an unfair salary, it makes it hard complain to management or the CEO or–God forbid!–look for another job.

  7. A gentlemen disclosed a while back that his company suddenly revealed the salary of all its workers and he was displeased with the decision.

    Why? Because he was making a ton of money and admitted that he was probably being overpaid and he didn’t want other employees to know that.

  8. I work for one of the biggest companies in the US and in the world.
    My upper management or probably HR has put everybody’s salary on the screen when they were evaluating the employees. There were all our little and big managers and some technical people present in that meeting.
    I and my husband work for the same company but under different managers. With HR doing this now everybody knows our combined salaries. I was getting bullied about that already with some comments. We left our previous jobs also mainly for the same reason where people were giving us hard time.
    Another lady and her hubby are in the same situation and the lady just left the group. I am guessing there have been problem for her also.
    My manager got demoted to an engineer just like me and competing with me for keeping his job in this bad economy (our company is laying off people). At the same time that he was loosing his position he was requited to write evaluation for his group.
    He knows my political view and he was not agree with that and several time had made different comments about that.
    Guess what , after 11 years working for the company with good evaluation I got a very bad evaluation. Anybody knows a good lawyer for me?

  9. One disadvantage of this is if an employee leaves a company and knows everybody else’s salary, then that ex-employee might use the information for something else to blackmail someone or hire a whole department by giving the salary information to a competitor company. How do we prevent that from happening?

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