What’s your Value?

Recently I have been participating in many discussions around the topic of salary transparency. And since the debate has gone online, I felt that this was the right moment to put my thoughts in a post.

To start the conversation, and make things easy to understand, I am in favour of salary transparency, and here are the reasons why. To follow the hype, I’ll also try to describe it as agile user stories…

As an employee, I want to know my colleagues salaries, so that…

I know that the company pays its employees (and consequently me) fairly, and also that I’m not receiving less than others in the same position as mine because of political decisions. And despite a common argument against salary transparency, its not enough to know my salary, or the market average to have this information. Salary is relative in my opinion, and the whole idea of having a fair salary falls apart if someone in the same conditions as me receives much more than I do.

I have a clear idea of a career path inside my company, based on more senior employees revenue, and know what are the possibilities I have if I succeed in getting a better position.

But by far the principal benefit is that I know the value that I have to the company. And this information is the most important to make me feel part of an organization or not. If I don’t know how my salary is in comparison to others, I will be always guessing how much the company I work for values me.

And this is what most people discuss about. But I want to bring another point of view to this discussion, and that is

As a company, I want my employees to know everyone’s salaries, so that…

The revenue gap between the higher and lower positions inside the company gets narrowed, and this will naturally happen when salaries are disclosed, since all high salaries will start to be questioned.

I can have easier salary negotiations with my employees, and this situation will also naturally happen, since nobody will ask for huge raises when they know that this will be seen by everyone in the company. And if they ask, it is simple to explain why they cannot get it.

But again, by far, the most important point is that I want my employees to feel like the company belongs to them, and the only way of doing that is being as transparent as I a can.

As cited in this New York Times article about salary transparency, most people carry a mental image of where they stand in relation to their fellow workers and significantly that image is likely to be wrong. Besides that, most employees believe that the company they work for is much more profitable than it is in reality.

This way, I want to give my employees all the information I can so they can see that their salaries are fair, and don’t feel cheated by the company. As Ricardo Semler wrote in his book Maverick, a company that doesn’t share information when times are good loses the right to request solidarity and concessions when they are not.

And since I’ve been in many discussions around this topic, I’d like also to talk about some of the common arguments against salary transparency that I’ve heard so far.

“The employee’s privacy should be respected…”

I agree, and I don’t think that salaries should be posted in the internet or that salary disclosure should be mandatory. I just want companies to foster an environment where salaries are discussed, and persons who want can publish their salaries and also ask and question other people’s salaries without this being a taboo. And after you have some salaries open, it is easy to have an idea about pay levels accross the company, and also to start questioning why some persons don’t want to talk about their salaries… : )

“Work conditions are not based only on the salary…”

That is also true, and also not a reason to keep salaries secret. Employees are adults, and so they are able to understand that the work environment and other benefits are also important when choosing a job, and part of the “value” that they have to the company. And if in the end they still don’t feel valuated, maybe it’s better for both parts to end the relationship.

“Knowing all the salaries is a burden, because you start to evaluate persons based on how much they make…”

This is another one from the series “my employees are 10 years old”. If someone doesn’t want to know how much others make, he/she will just not read the document or not ask questions. But I believe that most employees are mature enough to understand that performances are not linear functions. And persons should be evaluated, in my opinion, by how much they make. Not just, but also by that. If someone performs the same job as me, and provides the same results, why should he earn more than I do?

Well, I wanted to say more, but this post is already too long. Now the debate continues.

What is your opinion?

Cheers,

Francisco.

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4 comments
  1. I’m 100% against salary transparency. Transparency is only good for the average/weak employees, because it decreases the variance of the salary in a given position.

    I like to think of myself as a great employee so I prefer to be able to negotiate my salary separately from everyone else.

  2. @Domingos

    I’ll have to disagree with you. Salary transparency will only be negative to the average/weak employees who are able to get good salaries because of political reasons.

    One of the main points in salary transparency is that you’ll have to “prove” that you deserve your salary, so you will only get benefits from it if you are confident about your value to the company.

    When you say that salary transparency is bad “because it decreases the variance of the salary in a given position”, is because you are thinking about employees as persons who cannot understand differences between salaries, and not as adults who can appreciate the value of other colleagues’ work..

  3. somename said:

    I agree with domingos.

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