Salary Transparency
February 5th, 2008 | Categories: off topic, strategy
Wages and salaries have traditionally been a taboo water cooler topic around the workplace. It’s almost as if people have something to hide. In large big corporations, bureaucracy and politics play a big role. But in smaller firms and start-ups this isn’t usually the case. Therefore, I see no reason why secrecy is such a big issue around money. Transparency would remove any doubt and provide a new motivation tool.
Salary transparency would flatten the hierarchy and create a whole new sense of culture. I think any small organization could benefit greatly from this. The ability to view co-worker salaries would force companies to compensate properly - based on experience, education, and performance - rather than politics and executive judgment.
Seriously though, why shouldn’t it be like this? Obviously, a 45-year old worker is likely to be making a lot more than a 25-year old based on knowledge and experience. But this provides motivation for the younger worker - something to strive toward. Performance should definitely be taken into consideration.
I bring up this point because it is one of the few examples of politics and bureaucracy in many small firms. So why not eliminate it? I think that all companies should post salaries on the wall, in clear view, for everyone to see. Revolutionary idea? Not really, but it would motivate employees to work harder and put the slack asses out of a job.
February 5th, 2008 at 12:32 pm
interesting idea - i think it’d work really well. for a year. right until the point you have to start giving people raises or adjustments and people start complaining about differing % increases.
at this point, the politics and bureaucracy would accelerate exponentially.
February 5th, 2008 at 12:39 pm
Ed -
Salary adjustments and raises should be based on performance metrics. It’s hard to argue against tangible numbers.
Cheers,
Aidan
February 5th, 2008 at 1:56 pm
it is hard to argue against performance metrics.
but, if we’re working together and our salaries are based on metrics then the best thing for my salary, the best thing for your salary and the best thing for our mutual employer are three distinct things.
(plus, there’s the politics/bureaurocracy around which metrics to include and how to weight them)
February 5th, 2008 at 6:59 pm
Your sounding like the US Government and military. The salary of their employees is no secret. Everyone from E-1 to E-9, O-1 to O-10, and GS-1 to GS-15, knows what everyone else is making, and if you want to move up the ladder well then you must prove based upon performance metrics and goals. Only problem is that once someone moves up to a high level, and then they sit around do nothing and still get paid the same as they did if they did nothing but work all day.
February 5th, 2008 at 7:20 pm
Tomahawk -
Under this proposed system, employees are not “safe” at a given level. Most will move up the ranks over time, but those who slack or underperform will get demoted or fired. This creates accountability that isn’t present in many large bureaucracies like the government or military.
Cheers,
Aidan
February 5th, 2008 at 9:14 pm
This post prompts a number of questions:
-What about an employee’s role/function and how should this impacts compensation?
-With a flat hierarchy who performs a performance assessment?
-How do you ensure that an assessment is completed in an objective manner?
-Are you proposing a completely matrixed organization which is comprised of identical employees? If this is the case, how do you attract employees who possess a specialized skill that you require to accomplish a business goal?
Personally I think that salary transparency is not a bad idea (other comments have highlighted some specific problems that I think are definitely worth considering). That said I do not believe that salary transparency would facilitate better performance management for the vast majority of employers.
December 21st, 2008 at 2:02 pm
I believe that organizations should work “as if” salaries were public and transparent… But the costs of making it really public would be high for the individuals and the company’s culture.