We've flogged the topic of pay transparency and employee sources for pay data enough lately - both here and over at Fistful of Talent, with good friend of the Capitalist Ann Bares pitching in as well.
Still, there's room for one more post, right? Penelope Trunk had a post up recently advocating that the pay data for every employee in your company should be public knowledge in your firm. PT gets paid to mix it up, so that wasn't a surprise. In addition, her point regarding the need for managers to have the skill to defend the differences in pay is valid. What she doesn't tell you is this:
1. There's a basic privacy issue involved. Lots of employees don't want others to know what they make. That's a pretty big trust issue related to managing a workforce. In fact, I can't think of a bigger problem with opening up pay data.
2. Your current slate of managers isn't capable of defending the differences in pay between positions or within the same position. If Penelope had a company with 40 managers, most of them wouldn't be ready for this either, regardless of experience. It's not their fault. The free market is a dynamic thing, and they didn't start the fire - and most aren't capable of diffusing an irate employee on this topic.
In the comments of PT's post, there's a question regarding the fact that if governmental salaries are public information (and they are in most cases), do governmental agencies face problems as a result?
"I also know that you can easily get most state and federal employees' salaries via FOIA. I wonder if that screws up government offices (more)?"
I think Lance at Your HR Guy posed that question, and it's a good one. My experience with this is that governmental agencies usually operated a pretty strict scale regarding how they bring people in and value experience within the salary range. While that causes less drama, it also costs them valuable talent that can command more $$$ in the free market away from the government.
Lance also notes a free market reason why he has reservations on the practice - the fact that it would make it easier for competitors to poach your talent. Same reason why you have to pause before you publish entire company org charts openly to all employees in the company - who needs to make it easier for others to steal your top talent ?
It's easy and fun to call for total salary transparency. It makes you look progressive. I tasted the Kool-Aid. It needs more sugar, so I'm not drinking.... Most who have managed employee relations with a company/unit of significant size will be like me. Attractive idea, but there are many, many unsolvable issues that will prevent you from squeezing the trigger.