Show Me the Freaking Money - Sharing Pay Ranges With Associates...

Sharing pay ranges with your employees - do you do it?

Three schools of thought here:

1.  We share nothing.  Maybe we have nothing (by way of comp ranges, etc.)

2.  We have stuff, but don't share it broadly.  We'll share it with the individual employee if they are interested, during the merit review, and certainly if pay issues come up with an employee who feels underpaid, etc.

3.  We share it all.  Our range structure is published to all employees, and employees might even have access to know the grades for all the jobs in the company.

Ann Bares got me thinking about this with her recent post on the sad state of Pay Communication. 

Markets drive pay.  Companies value jobs based on those markets, and also make determinations about how much skills in a specific profession are worth, based on the ranges that are developed.  So for me, #1 (we have nothing, we share nothing, and we value jobs on the fly) isn't a practical solution, at least for companies with any size and scale. 

I don't think #3 (we share it all) is a realistic alternative either.  The problem with sharing it all is the loss of productivity and angst regarding OPR (other people's ranges).  I've worked for big companies that took this approach, and a significant amount of time is spent with the angst of knowing someone else's range.  No matter that the person with the angst doesn't know the salary or if the comp ratio is .8 or 1.2.  Their range is higher than mine! 

So for me, we're left with #2 - Share range information with the individual employee at natural times, like the merit review.  Tell them how the company creates and updates ranges, and tell them why they are where they are within the range.  Tell them the plan and the room to grow, if they stay in the same position.

Or go with Option #4 - just post a list of all the employees' salaries on the bathroom door.  I joke, but I'm sure that's happened somewhere, sometime, with a frazzled HR Pro ready to go on stress-related FMLA leave at the center of the storm.

Go with option #2....

Comments

[MWR]

In the public sector, Option #4 is pretty much standard operating procedure. Not only are job grades & salary ranges a matter of public record, so are ALL employees' salaries (and performance evaluations, etc.). The downside to this approach was well-put in the original post; the positives (and there are a couple) are the transparency for citizens in how their taxes are being spent, and that management has to have some logic to how salary decisions are made. That doesn't guarantee that employees agree or like it, but welcome to the fish bowl.

[jerry]

I worked for a public university where pay of all employees is public information. Funny thing, it did not generate much interest from employees.

[Andres]

Great posts, day-after-day ... what's your secret? Coming up with good content and an insightful perspective is hard enough once-a-week, let alone daily. Keep up the good work!

[Ann Bares]

Kris:

Thanks for the link and for sharing your own always interesting perspective on pay communication.

I lean the same way you do - to Option #2. A survey I did among my clients a few years back suggested that most organizations (if they have a formal pay plan in place) go that route. Kind of a "need to know" policy. As an employee, I need to know my pay range and perhaps the pay range of the job I am posting for (if I am a legitimate and qualified candidate). As a supervisor, I need to know these things, plus the pay ranges of my subordinates. Pretty straightforward.

To throw another perspective into the hopper, though - check out the post link below, which highlights an article written by the CEO of one of my clients, who is firmly and passionately in the camp of Option 4.
http://compforce.typepad.com/compensation_force/2007/03/transparency_in.html

[The Engineer]

So option #4 is challenging. Is it not only difficult if you can't support the differences in pay levels? Now, I in no way think any employer needs to justify the compensation packages of other employees, but you should be able to explain them. Since you have a system of rewarding performance, angst is only going to show up in the employee who doesn't get it. Strong performers are already happy with the package.

I too work in the public sector. One of our local newspapers maintains a easily searchable website of all base salaries for public employees.