3

Lack of salary transparency is killing us all

Salary transparency

Salary transparency is a pretty messy topic for a host of reasons tied to “what makes us human.” I’ll try to run down a few of the core problems, but it might take a hot second. Bear with me.

This varies by family, of course, but generally you’re not supposed to discuss money growing up. In some ways it’s considered “gauche.” If you come from a family like that (many do), there’s a good chance that — unless you try to change this — your financial literacy will not be amazing. You just don’t have the framework and vocabulary for it. There is research all over the place that most people in white-collar jobs don’t understand what their salary even represents. In my mind, there’s a direct line between “couldn’t discuss this stuff as a kid” and “How is my salary calculated?”

That’s Tier I.

Tier II of the problem: companies now have almost all the information, and thus almost all the power. There are a few companies here and there who have chased salary transparency. Buffer is one example. And there are some states and non-profits embracing pay transparency too, but the overall concept is still pretty far off.

Now shift quickly to the micro level.

We’ve all had jobs where there’s some guy named Jason or whatever. Jason does nothing all day, and we all know this, but he’s of a specific rank.  Eventually, everyone is whispering about what Jason makes. “It’s probably about $105K,” someone guesses. A few weeks later: “I heard it’s 160K.” People are livid. “F’n Jason makes 160??!! WHAT?!??!” If we had salary transparency in companies, we would know. So much second-guessing, back-stabbing, assumptions, etc. would go out the window. (Or be replaced by other problems.)

I do understand that many men who come to run companies view much of what they do as secretive and proprietary. The mentality is that they belong to a special club and none of us peons could ever access said club. It’s disheartening to work in these places, but also — these places are the norm. These same guys will discuss “building a culture of trust” at some all-hands or stakeholder meeting. But without salary transparency, how can a culture of trust be built?

Good article on salary transparency

This is about a startup called Chewse. It’s a really strong, long deep dive on salary transparency and figuring out what you want your company to be or represent before it gets going.

I personally believe that most problems with most jobs begin with hiring. If you have a team of target-whiffers over here, look over there at horrible, recycled job descriptions that brought in that team. It’s a direct line. If you want to get better teams and better outcomes, you need better processes for bringing those people in. Well, cue up this on salary transparency:

“Candidates would overwhelmingly say they really appreciate the transparency. It resonates with a certain type of person. In a survey we ran, 90% of our new hires said the policy set up clear expectations for compensation and the offer process. That really says something. People often feel they’re up against a black box when it comes to pay. It’s verboten. You’re not supposed to talk about it. We bring it straight out into the open, and we find it really impresses a lot of candidates,” Lawrence says. “Not only does it tell them a lot about how they’ll be compensated, it says a lot about what it’s like to work for us. Closed salary systems are also really hard on job candidates. It’s incredibly opaque and you’re negotiating in the dark. People can feel like they’re fumbling. That didn’t feel right to us.”

Yep.

So why do we have such crappy salary transparency?

Two big reasons:

  1. Norms about what is “OK” and “not OK” to discuss.
  2. A lack of salary transparency benefits the company side.

Hate to break this to you, but companies don’t want to pay people a lot of money. Hell, most companies barely want to pay people fairly. Companies want to hit targets for stakeholders and reward the upper-most levels. The idea is that “Anyone can make it there!” That idea hasn’t been true for 35 years or more, but whatever. Salary structures at most jobs are opaque hand-jobs designed to foster office gossip, guessing, and finger-pointing among those who have to supposedly “collaborate” all day. How is that even remotely logical?

Would salary transparency fix this?

It would fix it a little bit. Obviously, it would create new problems. If you know Jason makes 160K and you never see Jason do anything of note, you’d get pissed. Then if you had to collaborate with Jason, that “being pissed” would show through. In this way, salary transparency might fray a couple of relationships. It’s OK, though — most ideas of management end up doing that anyway. (Or, you know, killing people.)




 

The thing that always gets me about salary transparency issues is how two-faced they are. It’s absolutely impossible to claim you are a “mission-driven, purpose-laden company” if you lack salary transparency. The only reason these 4, 40, or 400 people are even together is because one entity (the company) agreed to pay them all a salary in exchange for tasks being completed. But the single-unifying force of these people … no one can know exactly how that’s structured? The situation I just described is the literal opposite of trust, which is ultimately tied up in how most “core values” are just buzzwords.

What might salary transparency look like?

Easiest execution would be a database on the Intranet. If you don’t want to be specific, just do ranges for positions. At most companies, people barely know that! (Amazing.)

Other positive would be salary transparency from hiring right through your 10th promotion at the job. Ever been on the interview where they claim they “don’t have a range” for the role yet? LOL. I got a bridge I can sell you. No CFO/accounting team would ever let a job get to posting stage without a range. They always have a range. That line from HR/hiring manager is one of the biggest lies in the corporate book, and believe you me, there are many corporate lies to choose from.

If we want these supposedly open, trusting offices that The Millennial Generation is going to hand to us (or not), could we maybe commence with just a tiny slice of salary transparency?

Ted Bauer

3 Comments

  1. You forgot one important detail. Referring to ‘Jason’ from your article, people can ramp their productivity up or down at will. And when a company’s top performer in position X finds out he’s getting the same pay as slacker in position X, how long do you think it’ll be before he down regulates his output or finds a new job? I believe Lazlo Bock over at Google has addressed this directly and advised not to shy away from pay discrepancies and to pay people according to their productivity. This requires thought and work though, and treating people fairly as opposed to treating them like capital equipment, which is what most companies prefer. Most companies treat them worse than capital equipment in actuality. But to follow that vein, they don’t hire John or Ted, they hire a Graphic Designer, and they’re only going to pay so much for that Graphic Designer regardless of their output relative to other Graphic Designers in the company. So John carries 90℅ of the company output but gets the same salary as all the other GDs in the department. That’s a massive discount for the company, and as long as no one discusses salary, no one knows and John keeps toiling away. And lest anyone think that’s a conspiracy theory I’ve worked for several companies where that was the exact stated reason among the owners and executives why salary was not to be discussed.

    • I agree with all this. The problem is that companies only know how to slot pay scales relative to revenue, right? Or to some “benchmark” they found with a quick Google search? But only 2 in 5 positions, if that, are directly facing revenue. Hell, graphic designers barely directly face revenue. So if some clueless exec has to sign off on compensation models, and all the exec understands is revenue revenue revenue revenue revenue, then how can anyone in a support role or a role with unclear productivity ROI ever make any money? Maybe we should all be in sales. Fuck, we already all are in sales…

  2. Instead of salaries, how about task-based transactions? Each task with a bounty. Would it motivate people to get work done? Removing the dependence of time. Would it cause innovations in working smarter?

Reply If You'd Like