"In a recent study published by the Academy of Management Journal, Prof. Peter Bamberger of Tel Aviv University's Recanati School of Business and Dr. Elena Belogolovsky of Cornell University's School of Industrial and Labor Relations have published a study that explains why pay secrecy is likely to hurt an individual's work performance and prompt top talent to seek new employment. They conclude that pay secrecy weakens the perception by employees that a performance improvement will be accompanied by a pay increase. It also finds that high-performing workers are more sensitive than others when they perceive no link between performance and pay; suggesting that pay secrecy could limit a company's ability to retain top talent."
So who, if anybody, benefits from pay secrecy?
If such information was open, people's perception of their coworkers would be in direct comparison of pay, not of the value they bring. Sometimes the less productive but experienced worker who knows how to handle everything is more valuable than the young hotshot who's fast but makes more mistakes and asks more questions. You also want to reward loyalty with regular raises, so even for equal work, it is unlikely everyone will have equal pay.
A better system may be to tie a quarterly performance bonus to pre-selected metrics. For example, for a doctor, number of patients seen, minus 10x the number of complaints, or for a programmer, number of bugs fixed, minus 3x the number of new bugs introduced. The downside is some people will work exclusively toward those metrics, avoid the hardest bugs, or possibly even sabotage their colleagues. Management can play favorites.
However in today's corporate culture, a person's salary has little to do with their actual value to the company.
Maybe making salaries open would cause companies to assign salaries in relation to value, instead of simply trying to squeeze employees as hard as they can.
Perhaps an issue is that some companies feel that no employee should make more money than their immediate manager, so management keeps things obfuscated to protected themselves? I once worked for a company that forced all of its top-tier developers into management positions; and if they refused, forced them out of the company. It made no sense to me except that the VP of IT was once a developer and rose up through the management ranks, and he expected every other developer to feel the same way.
In Mondragon (see wikipedia), the employees of the company vote on the wage conditions of the entire company, including the CEO, who the employees elect. Everybody knows how much everybody earns. It's a very successful organization.
Sounds like something resembling a co-op. Sure, they can be successful, even wildly so. They're also not particularly attractive to investors, perhaps because they tend to view investors as a steaming pile of turd (which is mostly a fair assessment anyway).
Of course, acting like skilled labor is more important to companies than people with no involvement with a company outside of ownership of some shares is downright un-American, so i wouldn't worry about suddenly efficient organizations rising up to follow their lead anytime soon.
Yes, it is a co-op.
Pay secrecy benefits only the employer, because it can then have different pays for the same job, with some earning much less than what would ask for if pay information was public. Think of it like the inverse of airlines' price segmentation.
I think there are benefits to keeping pay secret as well as benefits to being open about it.
The company where I work is certainly hush hush about it. That leads to some folks being outstanding and underpayed, others are payed hand over fist and should have been shown the door years ago. If the data was made open, I think that there would be a lot of resentment to some folks while others would suddenly start hitting the job websites looking to get their worth.
When it comes down to it, I think there isn't a "this is the right way" of the two, but rather it depends on the company itself. I think if I was to run a company, I would be hiring the best there is and paying them accordingly, setting very high salaries for the role - but making sure that I get folks who will then be worth the money i pay them. With that, I would have open books. If everyone is performing well, there won't be any issues with people being payed differently. If I was employed to manage a company with a lot of stale staff, some performing well, others badly, there would be no way I would show salaries - it will only cause discontent amoung my good workers while basically telling my bad ones that they can keep doing what they are doing without any repercussions.
Back in 90 or so I was working for a government contractor. When I was hired I was told in no uncertain terms that discussing salary with co-workers was grounds for immediate termination.
Yet, our job title was printed on our business cards. And on the bulletin board, in the section marked "stuff we have to post for legal reasons", was a chart showing the salary range for each job title. Pretty narrow ranges too, like "Senior Software Engineer" was $60-%63k.
If you can keep from paying your employees well, you can claim a greater percentage of their productivity for yourself. Who cares what the net effect is on the long-term viability of the company?
While this is arguably a viable strategy, it is not the only strategy used by employers. There are many companies which aim to offer top salaries and/or benefits packages in their sector. I offer Starbucks (benefits), Chipotle (internal promotion), and Costco (pay rate) as examples of companies which have consciously chosen this path.
Despite all common sense, it's better to maximize performance/profits from your employees without regard to their happiness. In fact it could easily be argued that not paying your employees well is best for the company. Exploiting people (workers) is what this game is all about.
True, but that is a fine line to walk. Keep your salaries too low and your employees will quickly look for jobs elsewhere. Also, I am much more likely to go above and beyond for an employer that is going above and beyond for me. So I believe, in some ways, taking care of your employees is taking care of the company.
It sounds like he's describing the current short-term "MBA driven" approach.
Japan has the largest number of long running companies (75+ years) in the world. That includes both large and small companies. They treat their employees very well. Western investors often undervalue them due to high wage costs and staff benefits, but Japanese companies count people as an asset.
If a company wants to be around in 50 years time it should value its employees. If the CEO just wants to get rich quick and then get out exploitation is the name of the game. From an employee's point of view a company that treats them badly is likely to fail anyway, so might as well look for something better right away.
So...Is Soylent over now? Is page hits and comments declining? Did the leader abandon a sinking ship?
Plural=are, not is.The offtopic AC trolley does make me wonder when the next installation of website traffic stats will be posted.
I work for local government, so my salary is a public record. In fact, there's a website that shows the salary (going back three years) of every government worker in our state - whether they work for the federal, state, county, or city. I thought it was kind of odd when some of my co-workers "discovered" this fact. NBD to me.
Yep. Same thing in the military--you can look at someone's rank, ask the number of years they've been in, and know their salary to the penny. And it's never done any harm that I can see.
You would also need to know if the soldier was married, and their job. You get a an allowance based on cost of living in your area if you are married. Also some jobs get paid additional wages because their jobs are hazardous, like deep sea diving.
You usually know if the people you work with are married or not, and what kinds of specialty or hazardous duty pay they qualify for, so the numbers aren't hard to figure out. Another comment in this thread pointed out that it's a little more complicated in the Navy with sea pay, but in the Army and Air Force, where I served, it's pretty straightforward.
I agree, the data is fairly easy to get a hold of. But yeah, you have to consider deployment time. Each branch has a different amount of deployment requirements per year. I know the Navy sends people out for a considerable amount of time. One thing you have to consider when looking at those numbers is BAS (Basic Allowance for Subsistence); If married you get money for food to eat off base and feed your family. Enlisted get more money than officers, on top of that, while deployed you don't get BAS pay, but you do get separation pay for your spouse after 30 days of being deployed. This is why many field exercises usually last just under 30 days, so they don't have to dish out additional pay.
So yeah, you could compile a few data points and get a very accurate salary for a soldier, you just need to know what data impacts military pay.
Maybe not to the penny - but close enough for government work. Time in service is a big factor in military pay, but there are other factors you need to know. Sea pay is calculated on the number of years served at sea. So, an E-5 over 12 who has served 9 years aboard a sea going command probably makes significantly more than an E-5 over 12 who has never been to sea. (He makes significantly more while he is at sea - if he gets orders to Pensacola to drive a desk, he won't draw sea pay while in Pensacola.)
Okay, I was Army and then Air Force, so I didn't know about the sea pay thing. Interesting, thanks.
While it is true that government pay is often public (or within a small range that is public), usually there is no financial incentive for superior performance either.
The point of this article is that people who do better work than their peers should be able to see that they're making more money than their peers, or they'll just do whatever they can get away with.
Certainly I've seen this effect firsthand. When employees feel like they've gone all-out but for whatever reason they get an average or below-average (for them) bonus, it is a huge motivation killer. I've found that even though pay and performance are supposed to be linked at my workplace the reality is that it has more to do with your relationships with the next level of managers and being on the right projects than actual effort. While I certainly endeavor to do quality work, I have to say that knowledge of how the rewards system works in practice taints my priorities.
This is just mildy off-topic, but outrageous enough that it needs to be more widely known:
Chances are your employer has a corporate policy against sharing salary info between employees.
But chances are, they are sharing it with Equifax. [consumerprivacy.us]
One rule for the peons, another for their lords...
So, how does this apply to countries where the culture is to not discuss salaries? (not forbidden, simply not just in our culture) Or does this only apply to immediate-reward instances (like playing a game)?
David Mitchell (UK comedian) has a good rant regarding discussing wages in cultures where this isn't the norm: http://www.youtube.com/watch?v=E837tnxRVS0 [youtube.com] (3min long)
NeXT was a counter example to that - even though salary information was known to everyone, as a company, they are gone..
No they aren't - they convinced Apple Computer to pay them to take over Apple. Pretty slick!
But is the salary information in Apple open to every employee?
One thing worth noting: folks in the US generally have an absolute right to discuss their salary and benefits with co-workers or anyone else, company policy notwithstanding. Your status as a union member is irrelevant. http://www.lexisnexis.com/legalnewsroom/labor-empl oyment/b/labor-employment-top-blogs/archive/2013/0 2/21/you-have-the-right-to-discuss-salary-with-cow orkers.aspx [lexisnexis.com]
My private employer quietly rescinded a rule prohibiting salary discussions a few years ago after someone was disciplined for violating it.
That said whether you'll get truthful information from your colleagues and whether management will care that you make $X less than Carl remains to be seen.
Personally, I think pay secrecy is good. There's always some amount of unfairness in pay. For example, a younger person might produce more than an older person who is getting paid more. But that's a sort of informal seniority system that exists as a result of people expecting ongoing raises throughout their careers.
But knowing other peoples' pay reveals the pay unfairness - whether real or just perceived - which leads to bad feelings that disrupt productivity. We're all better off not knowing the details.
In the cases cited in other comments here where pay is known such as the government and military, the pay is based on a system which is known to all, and "unfairness" is eliminated through the fact of the system itself. In other words, someone might be paid more that someone else who produces more, but that isn't "unfair" because it's known and systematic.
I was quite surprised that someone marked my parent comment as a troll. It was completely well-intended, and my honest point of view. It never even dawned on me that anyone would find this comment to be objectionable in any way.
FWIW, the best way to encourage participation around here is to allow and encourage a variety of viewpoints. I think there has been very little actual "trolling" here so far, so I don't think anything should be marked as a troll unless it's completely clear that it's intended that way.
Alternatively, the folks who run this could add a "Disagree" option, if moderators really want to express that sentiment.
(Again, the above was my honest point of view. Feel free to simply ignore it if you don't find any merit in it. Or, if you *really* need to express your disagreement, the "Troll" option is available to you...)