Yesterday, I explained why you should never apologize for being competitive. Because I believe competition is essentially healthy, I think that companies would be wise to give employees something to openly compete for: salaries and compensation.
In the typical corporation, only two groups openly compete for compensation: Sales and C-level execs. Why not everyone else?
Salespeople typically work on a commission. Everyone knows the commission structures and the performance of each salesperson is often posted on a board where everyone can see it.
This helps to create a competitive environment where each salesperson strives to outdo the other. Many companies run contests and provide public awards to the winners. Internal competition equals better results.
Similarly, C-level execs in public companies must declare their compensation in their corporate SEC filings. Such packages provide a measurement of the value of the C-level exec... and a stick for investors to beat up the CEO if he or she can't deliver.
It seems pretty obvious that if "salary transparency" is makes salespeople and C-level execs more productive, the competition it creates should make everyone else more productive as well.
If transparency is a good thing, why not be transparent about salaries, too? Especially since it will foster internal competition. Indeed, some innovative startups like Buffer and SumAll have already gone that route.
Unfortunately, the traditional corporate world seems to think of salary transparency with the same enthusiasm they might feel towards the sudden appearance of a dead mackerel flopped onto their desks.
For example, check out the reaction I got when I surfaced the idea with Anka Wittenberg, Chief Diversity & Inclusion Officer for the software giant SAP:
GJ: Why don't companies simply publish everyone's salary data? That would certainly make it harder to pay women and minorities less. As a follow-up, how competent does a manager need to be in order to forego to the use of salary secrecy to manipulate employee behavior?
AW: While it may seem that simply publishing salaries could be a way to ensure parity, it is not that easy. Salaries are just one part of overall compensation - and other local benefit offerings related to such things as healthcare, child-care, company cars, flexible work time, etc. have to be considered, as well. In addition, privacy laws vary in different countries, so publishing salaries is not necessarily even an option. As to 'salary secrecy,' SAP works hard to give managers the skills, training, and tools they need to properly motivate not manipulate their direct reports, encouraging them to have meaningful conversations with their employees.
Wittenberg's response is a classic corporate non-answer. It sounds seems plausible on the surface but upon closer examination falls apart. Let's dissect it:
- Her first point--that salary is just a part of overall compensation--is playing a word game. If there's non-salary compensation, you could publish that, too. In fact, it might be informative to put a financial value on management perks, like reserved parking spaces for C-level execs.
- Her second point--that privacy laws vary--is simply nonsensical and evasive. The point isn't to publish salary data to the general public but to publish the data internally, which would violate no laws, even if they exist (which I doubt). The idea is that everyone internally would know who's making what... no more secrets.
- Her third point--that other management techniques exist--is irrelevant. Of course there are other techniques. But consider: how "meaningful" can a conversation about salary be when one person (the manager) has all the data and the other person (the employee) has none?
Let's face it, the real reason that most companies fear salary transparency is that the managers and executive are terrified of losing the ability to manipulate employees with the lies and half-truths that are inherent in the current system.
But consider: you sow what you reap. One of the reasons that employees lie to managers is that they're deeply aware that their managers are lying to them. Wouldn't it be better if management would just "keep it real" instead?
But beyond that, salary transparency would foster open competition, which will increase personal productivity and, ultimately, increase the competitiveness of the company. Sounds good to me.