antipaucity

fighting the lack of good ideas

publicizing compensation – why not?

Many (if not all) companies have provisos when you become a salaried employee that you not discuss your salary/compensation package with other employees.

Most people have been raised in a mindset, largely because their parents have worked for companies like this (and maybe their grandparents, too – it is 2013, after all, and this is not a new phenomenon), that they shouldn’t ever discuss how much they make doing job R when their friend does job H – even at a different company.

Let me state, first, that I am not going to promulgate the idea that everyone should go around bragging about how much they make – especially if you are in front of either mixed company, or in front of someone you know is having a difficult time financially- after all, who wants to be the one guy in the room making $35000 when everyone else is in the 6 figures and gloating about it? I sure wouldn’t.

However, (and maybe I’m weird – though I don’t think so) I have never cared about how much you made in comparison to myself. If we are doing the same work with the same experience and we do not have the same compensation, it implies that one of us negotiated better (I have some thoughts about negotiating, too, both published and not). If you manage to get an extra $1 an hour ($2080 more per year), that’s awesome.

Given that the previous paragraph, outside of “basic” jobs like warehouse work, cleaning cars, etc, never happens – why should anyone be surprised that not everyone has the same compensation as the next guy? Somewhere along the line we got the idea that salary+benefits needed to be “fair”. “Fair” is a concept that only exists in economic theories not based on effort. (The first thing to know about compensation is encapsulated in the book Everything is Negotiable – and a related, but highly specifized1 form for salaries.)

There are services like Glassdoor that help to provide “competitive” salary information … but salary is only a small portion of compensation. Let’s say you and I both make $5000 a month ($60000 a year – make the math easy). But you have 2 weeks of vacation, and I have 4. But I took the lower-deductible insurance option, and you took the higher. Which one of us is bringing home more per month? Who cares! My individual desires and needs are, apparently, being met on my package, and yours are with yours. So why does it matter that we not discuss salary information with each other? Transparency is vital in the security world, it also is internally in a company. And between friends (though, of course, the amount of data we dump, and the methods we choose, will vary) it establishes trust.

Do I care if everyone in the world knows how much I earn per year? No. Tax returns are not public, but they’re not exactly private, either (they’re not that difficult to get if you want them). House sales prices are matters of public record. And from a house sale, along with known mortgage rates at the time of sale, you can determine how much someone is spending on their housing payment every month within a decent error margin (eg, $200000 home, 4% interest, 30 year mortgage, 10% down, you have in the ballpark of a $1000 base mortgage payment2 – within about 5-10% (to cover taxes, insurance, and PMI)). Presuming you’re not living on your credit cards, that means you’re making at a minimum $1500 a month ($18000 a year) just to afford to have a house payment. Add-in other normal essentials of 21st century America (car insurance and maintenance (or bike/bus money), groceries, phone, internet, tv, student loan, etc), and you’re at least at the household income level of $40000 (pretax). Likely quite a bit higher – especially if you have a car payment of any kind.

Why go through the miniature exercise above? Because no one seems to mind comparing they car insurance premiums. Or how often they eat out. Or what they like to cook at home. But SALARY! Heaven forbid you ever talk about THAT! That’s the one no-no in discussion of financial data between friends and coworkers. But it’s irrational when in just a few second you can ballpark the minimum someone earns.

We can compare generalities – vacation time, insurance plans, sick policies, maybe even bonuses (but only as percentages – don’t you dare use real dollars when discussing them) … but not the salary.

I read recently an Atlantic article discussing Millennials and the slow break-down of corporate boundaries to sharing compensation information. I think that’s wonderful.

Publicizing (at least internally) salaries (even if it’s in bands, a la FogCreek, HP, IBM, or the Federal Government (and Military)) is extremely positive. It doesn’t disclose stock options, bonuses, etc, but can give some kind of indication between colleagues of their relative value to their employer.

At one former employer, I found out shortly after I started that another recent hire (with more years of support experience) was being paid barely more than half what I was. And had had no options when he started (just weeks before me), when I had a modest issuance. Neither of us was upset about how much I was being paid, but I was disappointed to finally see “in the real world” such salary discrimination going on. The entire reason he was paid so much less than me? He didn’t negotiate well.

It was technically against company policy for him to tell me how much he made. And me him. Technically, it was a dismissable offense.

That’s the ridiculous part of not sharing compensation data – that by sharing it you can have your employment terminated. Employers who are worried about little things like whether a given employee knows another employee’s salary are [most likely] micromanaging – at least from the Personnel Department3.

Additionally, if the company is concerned that finding out how much someone else is earning is going to cause unhappiness amongst the team, they’ve done several other things wrong. They’ve [at least]:

  • hired people whose only motivation is money (or believe that’s the only motivator)
  • intentionally tried to undervalue their team
  • established an immediate sense of distrust
  • decided to treat their employees like children instead of adults who can rationally and intelligently discuss differences between themselves – and not just on their preferred lunch joint

I would love to see this aura of distrust disappear.

If you really do have people whose only motivation is money, you need a better team: they’ll jump ship as soon as something more lucrative comes along – instead of changing only when the work becomes more boring .. or more interesting elsewhere.


1 I know it’s not a word – I’m using it anyway
2 Divide the mortgage amount by 180, and you have the rough base payment on a 30 year mortgage (for the under 5% mortgages I see in mid-2013); your base payment is the home’s cost *2 / 360 (number of months in 30 years) – or just price/180
3 I positively despise the term “Human Resources” – employees are only “resources” to the MBA types: they’re people, and should be accorded good treatment (including referentially) as such