Why Publishing Salaries Results in the Opposite Effect
5 comments
It's easier than that.
One argument you'll hear a lot is that publishing the salary table is more fair to employees. Employers know what they're paying everyone, you don't, so they have more information than you during the hiring process.
The problem is, most of that information isn't relevant when you're negotiating salary. What's relevant is the market. Employees who have been at the company for a while, particularly in engineering, probably haven't been given raises and bonuses sufficient to keep up to what they'd make if they hopped jobs.
Publishing the salary table takes a nuclear option against the ability of employees to negotiate salary. "This is what we're paying everyone according to the formulas we use."
The ONLY party who benefits from open salary tables is the employer.
And really, they're shooting themselves in the foot, because they've just drastically shrunk their pool of potential hires. Particularly engineers. Even if potential hires love your company - they have bills, a family, career plans, aspirations to retire in a few years and start their own company.
And there are a lot of competing companies which would LOVE to negotiate a bit on salary in order to attract the talent they need.
One argument you'll hear a lot is that publishing the salary table is more fair to employees. Employers know what they're paying everyone, you don't, so they have more information than you during the hiring process.
The problem is, most of that information isn't relevant when you're negotiating salary. What's relevant is the market. Employees who have been at the company for a while, particularly in engineering, probably haven't been given raises and bonuses sufficient to keep up to what they'd make if they hopped jobs.
Publishing the salary table takes a nuclear option against the ability of employees to negotiate salary. "This is what we're paying everyone according to the formulas we use."
The ONLY party who benefits from open salary tables is the employer.
And really, they're shooting themselves in the foot, because they've just drastically shrunk their pool of potential hires. Particularly engineers. Even if potential hires love your company - they have bills, a family, career plans, aspirations to retire in a few years and start their own company.
And there are a lot of competing companies which would LOVE to negotiate a bit on salary in order to attract the talent they need.
Employees not focusing on salary may be good for the employer, but even the least money-minded employee will begin to care about the amount of money they are making, at some point. As an employee, there is nothing wrong in focusing/being motivated by money among other things.
I agree that there's nothing wrong with being motivated by money as an employee, but there's lot of strong research that, as an employer, you keep more employees based upon non-monetary aspects of the job. If, as an employer, you start focusing on money, it better be because you (a) want that as your culture, and (b) can pay a whole lot.
I'm curious to watch how this plays out.
Personally, I wouldn't experiment with something that's not the core product in my startup. Too many risks / unknowns already without monkeying with salary stuff.
Personally, I wouldn't experiment with something that's not the core product in my startup. Too many risks / unknowns already without monkeying with salary stuff.
Great point--unless you need your core competency to be "innovator in HR policies", why spend any time there?
When you publish salaries to show your culture of trust and transparency, you are also showing your culture of caring what salaries are. And your culture that it's important to know what other people are making. All of this serves to elevate the importance of salary across your organization (and potentially also trust and transparency).
If your goal for your organization is to have a culture that is that is not focused on salary, it's hard to defend the decision to publish everyone's salaries and make a big splash out in the world in your blog and in interviews about how your culture includes publishing salaries. Salaries, salaries, salaries. You'd be much better off segmenting salary conversations to a particular time (or times) of year, having those as individual conversations, and framing those conversations to your organizational culture--"we want to make sure you're being properly compensated... now let's get back to being great!"
There is a concept in social psychology called the "ironic effect"--essentially, if I tell you to stop thinking about pink elephants, you're going to think about pink elephants. The same problem applies here--if I publish everyone's salary to show how transparent the organization is, I'm also going to bring salary front and center to my organization and its culture.