Why Aren't There More Fistfights in the Workplace? Pay Transparency, etc.
July 21, 2008
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.
Kris,
And then you have those employees who transfer from a high-paying state to a lower-paying state and retain their salary. They dare not tell their coworkers what they make because then it could cause a management headache.
Posted by: Aaron@Effortless HR Blog | July 21, 2008 at 11:44 AM
Kris,
You are being very kind to Penelope Trunk here, because she is totally full of it. This is another one of her ideas that is complete and utter BS. Her gig is to lob bombs and full pay transparency for everyone, everywhere is an idea fraught with peril. You hit the big points as to why this is a bad idea, but it makes me wonder -- has Penelope Trunk actually managed anyone or worked in any kind of serious management role where she had to deal with the implications of such an idiotic suggestion? My guess is no, because it is always easier to throw bombs than clean up after them ....
Posted by: John Hollon | July 21, 2008 at 01:17 PM
can i just say... penelope trunk is a writer for a major newspaper. she isn't an HR pro. she doesn't have to deal with ER issues, morale, team building... of course she is able to advocate for pay transparency. it's easy for her to because she'll never have to do the clean up in the aftermath. rolling my eyes over here... sorry.
Posted by: Jessica Lee | July 21, 2008 at 02:01 PM
ah - just seeing john hollon's comment.
big ditto.
Posted by: Jessica Lee | July 21, 2008 at 02:02 PM
So pay becomes a confidentiality issue. What do you do when you have employees openly discussing their pay? What do you do when you find someone publishing salary information on a blog? What do you do when you have employees come to you with that salary information and demand to talk to you about it?
Kris et al I have my answers, what are yours?
Posted by: Michael Haberman, SPHR | July 21, 2008 at 02:42 PM
Michael,
That answer is easy:
If people want to voluntarily disclose confidential information, they can. That includes a lot of things (including address, social security number, date of birth) that I wouldn't do either but is certainly allowed.
I have a problem with my employer disclosing my information without my authorization. I'd rather be in control of that information.
Posted by: Lance Haun | July 21, 2008 at 10:25 PM
The number one reason I would like to see SOME pay transparency (i.e. a limited amount such as in having and publishing pay grades, etc) is that it would cause employers to think twice before discriminating against women and minorities in their pay practices.
There are typically two camps when it comes to P. Trunk: you either love her or hate her. While I don't always agree with her (or disagree with her, for that matter) I appreciate her work very much. Her blog posts make people think and talk about things.
And, she has one heck of a thick skin.
Posted by: HR Wench | July 22, 2008 at 07:58 PM
I just read the Wired article on Julia Allison, and it seems as if the world falls into one of two camps: pro-Penelope Trunk and anti-Penelope Trunk. According to Julia Allison, that's okay because we're talking about Penelope Trunk and her message is getting out there. So if you don't agree with Penelope, the best thing you can do is stop talking about her.
Also, Penelope worked in VC and I believe she's managing a team at her new Brazen Careerist start-up organization; however, I could be wrong and she could just be a figurehead for some other dude's money and efforts.
Regarding pay transparency: no one with common sense advocates a soviet-style system, but transparency doesn't necessarily equate to violating confidentiality. It could be as simple as transparency around bands/grades or providing employees with data on where employees tend to fall on the spectrum. Or do we think employees are too stupid to understand compensation data? I say, if they're too stupid to understand a compensation process, we shouldn't hire them in the first place.
Posted by: laurie ruettimann | July 22, 2008 at 09:31 PM
Let's get off PT and back on topic. Having managed people and as an HR pro who has cleaned up the mess, I agree that complete pay transparency has too many good reasons for not doing it. But I believe that open information on job grades/bands, pay ranges, and pay strategy and policy is a good thing. It helps employees understand what they make and what they can aspire to. Which brings us back to manager skill in this area - an absolutely critical component no matter how you handle transparency. Managers need to have the information and capability - and the support - to have individual conversations with employees about their pay from an absolute and relative perspective. This includes when an employee knows (correctly) what other employees are making. Without confirming confidential information a manager should be able to explain why an employee is making what they are and what their opportunities are to make more, and what they would need to do for that to happen. And if the answer is uncomfortable then either the manager is not up to the job or the employee's pay is wrong. Both situations should be fixable.
Posted by: Joanne Bintliff-Ritchie | July 23, 2008 at 02:26 PM