Sunday, March 30, 2008

Everyone's Salary is Public...No Joke?!

So, what would you think if everyone in the company knew your salary and what everyone else made? Don't think this is misprint or an accident - just walk down the hall by the break room and you can find the list up on the bulletin board. If you aren't sure where the break room is just listen for all of the screaming and yelling.

Most of you would find this situation or scenario completely ridiculous and would say that this information is confidential and should stay that way.

Certain salaries or compensation packages are public knowledge and will probably always be. I "googled" college football coaches salary and it took me less than 1 second to find a handful of websites eager to give me this information. Here's one here. Or, take CEO compensation...that's easy to find - here's a list I found. These salaries are always discussed on the news and we expect to be able to get our hands on this information or at least to be able to find this information on-line within a couple of minutes.

So now...what about you? What if this was something your company decided to do? Or, what if you were interviewing at a company and heard that this was part of their "culture"? Would this make you think twice before accepting a job offer? Back when I worked at The Federal Reserve we posted our job titles and salary ranges on the bulletin board by the break room but this was obviously as transparent as we would ever go.

I ran across this article on Portfolio titled "When Salaries Aren't Secret" and it made me stop and think about this concept.

Check out this quote from the article...On the other hand, a radically open salary system could yield major benefits:

1. a fair compensation system based on actual performance
2. employee understanding of the business (e.g., why payroll is usually the largest cost; why certain employees earn more)
3. a culture of trust, as employees and senior managers share more information

So, what do you think? Agree or disagree?

In some companies (or occupations), I can definitely agree with these benefits and see how this would work. For example, in a company that was comprised with a lot of employees with variable compensation and where bonuses or additional compensation was based on sales or performance I could see how this would work. It could also motivate employees to work harder - especially the ones that are toward the bottom of the list. The more variable the compensation in your company the more of a chance that this will work.

Let me know your thoughts...

If you want to read about some ways to start experimenting with this concept go back to the article I mentioned at the top and scroll down to the bottom of the page...enjoy!


Dan McCarthy said...

Michael -
Great idea! Why not? When I was an HR manager and had access to everyone's salaries. It was a big deal at first, then you get used to it. Sales reps and managers are publicly stack ranked by quota all the time, it doesn’t seem to cause any problems. And you’re right, it would promote more compensation equity.

By the way, I got to your blog from the HR carnival. I like it, and added it to my blogroll.