Should your salary be public knowledge?
I read a lot about Ricardo Semler and his Semco company in Brazil back in the day, enthralled by the innovative management techniques he used at the company. His Maverick book details a number of 'radical' strategies. Semler let his employees set their own
hours, design their workplace, choose their own IT, share all
information and have no secrets. Every six month
s bosses are evaluated
by their subordinates and the results are posted. Semco has a policy of
complete internal financial openness, even teaching factory workers how
to read accounts so they can understand the company's books.
Salary transparency
One such innovative strategy was to share what people earnt with their co-workers. In doing so they must consider what they think they can make elsewhere;
what others with similar skills and responsibilities make in the
company; what friends with similar backgrounds make and how much they
need to live on. At Semco the strategy worked exceptionally well. Now though we're seeing similar calls for salary transparency in the banking industry here in Britain.
Should bankers salary be public?
As part of the widespread investigation into the banking crisis one of the strategies being mooted is to make the salaries of bankers public. The Semco strategy worked very well because it forced employees to use the in built human sense of 'fair play' in setting their pay (they could do that to). If people took the mickey then everyone would know and their reputation took a battering. With 'subordinates' having such a big say in their bosses future this could be very damaging to your career. Clearly the public perception of bankers is that they are not being fair with their pay, especially since the Fred Godwin situation.
It's an interesting situation though as salary is one of those seemingly taboo areas of British life, one of those subjects that you generally don't ask one another.
Will this strategy work? Would you be happy for your salary to be made public?
Facebook
LinkedIn
Twitter
YouTube
Comments
Perhaps as a result of the Freedom of Information Act 2001 (although it may well have been present before), public sector is becoming much more transparent and there are very few "taboos" left - the publication of salaries and expenses are now common and even the BBC have voluntarily publicised the salaries and expenses of their top 10 earners and then imposed a freeze on salary increases and bonus payments for these people.
What would the impact of extending the FoI Act to the private and voluntary sectors be? If it doesn't affect commercially sensitive material such as designs; prototypes etc, then why not include them?
That's a legal requirement though Colin. Would you be happy to share your salary with fellow employees, in the way that Semco do/did?
The whole issue here is the ability of others to set your salary as opposed to being able to just know what it was. Whilst we may be moving down the road of publicising salaries for people at the top this is a far cry from Semler's position (great book by the way - well worth a read).
From a business perspective I would imagine many business would not want to publish information and not just because of the top earners. Indeed they would probably be happier to publish the top peoples pay than everyone elses. Can you imagine the dissent and loss of motivation when everyone finds out how they compare with people they consider not to be as good as them? And what about all the problems it would cause on equality of pay?
To go down this route I would have thought you would need to start with a blank piece of paper approach. Don't look at all of the current positions but use the Semler approach to getting a salary agreed for everyone going forward. Mind you, there are bound to be winners and losers so you would have to be prepared to deal with the impact of that. Maybe it would be a good thing if some of the overpaid people left?
I think that pay transparency would be a good thing. Why hide what people earn? If they want it hidden because they appreciate that they are over paid, then its for the greater good to expose that. If they want it hidden because they feel they are paid below what they deserve, then transparancy would expose this unfairness and a measure of office resentment torwards the managers should help that.
Maybe that would be ok in an ideal world but how many firms could cope with the implosion if they went for it?
Is your view tempered by the thought that maybe you feel that you would be a potential winner from this?
Hayes Job Evaluation is a good way of ensuring parity in salaries because it evaluates the job in a very consistent way and then allows you to compare the job score against jobs with similar scores across other sectors / organisations and what they pay for that size of job.
Publicising the pay scale doesn't, in my view, add any value to this process.
In terms of sharing my salary, I'm happy to do that with colleagues, friends - in fact anyone who's interested. The job I currently hold was advertised in various national papers; internet websites and the likes and the salary was published as part of the job advert so I'm sure many of my colleagues know the salary I'm being paid.
I know what my reports are being paid, I just don't know what my counterparts and superiors are being paid because they were in post before me so I didn't get to see the job advert!
I echo Simon's sentiment, transparency would be good.
I'm assuming that most organisations, regardless of size, have some kind of process to determine the salary they think is commensurate with the position being offfered so being transparent would only bring scrutiny to your process of determination?
Are there any companies in England that are as open and transparent with wages as Semco are?
I am not aware of any that work like Semco anywhere else in the world let alone the UK - would be interesting to hear if there are because it isn't a new book by any means.
No, it's probably 15 years old by now so you would think if it's as inspirational as it appears that there would be a lot of imitators.
Take your point Colin but the advertised pay and the actual aren't always the same - depends on the environment/type of company you work in. Some firms advertise a maximum pay to attract candidates and offer less to start with - to see how you get on. Equally I have seen people negotiate higher pay than that advertised (and that includes local government jobs!). In one job interview they actually offered me more to try to attract me without me asking for it (I didn't go but that was for other reasons). So what you 'see' isn't always the whole picture
The pay bands are designed to allow flexibility in paying different people different amounts who do the same job but perform at different levels. I actually broke the pay bands for some of my staff arguing that they were worth more than that due to their execeptional capabilities and performance - which was evidenced and accepted up the line. If that was publicised at the time it would have created a clamour for others to be rewarded to the same level without necesarily being able to justify it. Think of the time and effort to try to demonstrate this to each member of staff individually and the negative impact that they didn't get it. Nobody would trust the managers opnions.
Comes back to my earlier point - to make it work you have to go the whole hog and set salaries for everyone by everyone having a say. Starting afresh would avoid any negative baggage about past behaviour.
I don't think the issue is the inspiration of it but rather the cultural aspects and how you would actually go about it. It is a massive move but probably easier to do at the start up stage than later on. The problems of trying to change would be enormous and there may be plenty of lack of buy in at many levels of the organisation.
I wonder how many people would actually vote for a system where they are rewarded based on the Semco model rather than maintain the status quo?
Salaries are open in large areas of the public sector and in some countries such as Norway. I spent many years working in companies that published salary bands and most people knew what bands linked to what jobs however those bands could be wide.
Problem comes with bonuses/commission. Some of these were well publicised where everyone got a certain % based on total company performance. Sales commissions weren't as they were based on individual peformance/agreed goals.
I wonder if the UK is ready to "vote" in total transparency and in any case given the number of multi-national companies here is it a realistic target??
We are small software company in London and we try to work in the Semler way. Salaries are transparent as is all financial information and bank transactions etc. I think it has worked pretty well for us. We are not perfect by any means but the company was set up because of the founders having read Maverick.
The other company that I know of that is also inspired by Semler is Happy (www.happy.co.uk). I know the owner and they are a really nice bunch of people. They now give courses on how to build great places to work.
Thanks Zahid - good to know that there are some places out there that are trying it and being successful.
How do potential new recruits respond when you tell them how you work?
While I think that transparancy would certainly help in removing alot of the pay inequality (especially between sexes), it is at the end of the day your right to keep private infomation just that - private.
I'm happy for people to know how much I earn, coz its lots :D
Ray: At first I think they find it a bit bewildering and may feel a bit lost as they really have to try and find their own way around etc. After a while they get used to it and I think really enjoy it. We have people who work for us full-time who might only come to the office once every two months. We have no idea when or where they do their work. The only thing we really care about is that the work gets done and we focus on results not effort.
Others like to come in every day 9-5 and that is fine as well.
Zahid - I like that idea of working. Although of course - it would be always nice to know how they're doing their work - the idea that you don't have to be looking over their shoulder and constraining their work practises should be lauded.
Thought this deserved hitting to the top of the list after the whole gender pay inequality thing recently. Certainly if pay was made public it would throw the whole thing out into the open.