Trust & the Pay Information Power Imbalance

Historically, the power and the information driving pay setting rested almost entirely in the hands of the employer.  And that seemed to work - mostly anyway - for a couple of reasons.  One, before the onset of the Internet age, there were very limited avenues for the average employee to pursue in doing their own pay research. Two, the employment relationship was a more secure, even paternalistic one - before the recessions of the early 1980's and 1990's brought the concept of layoffs into previously unseen levels of use.  And before the most recent downturn gave us furloughs, reduced workweeks, pay freezes and reductions - for those that were "lucky" enough to remain employed.

Is it any wonder that employees today feel more compelled to watch their own backs, pay-wise?

The challenge for them - and in some sense, for us - is that the balance of pay information power remains pretty well squarely in the employer's hand even today.

My Cafe colleague Chuck Csizmar recently generated a lot of debate with his post about the challenges of dealing with employees and candidates who bring their own personal research on pay to the table.  In it, Chuck affirms two important truths relative to the pay information debate.  If I may paraphrase:

1) The employer has the right and responsibility to set employee compensation.  Period.  And they have to do it in a manner that not only supports the viability and ongoing economic success of the business, but also in a way that complies with the burgeoning set of compensation regulations pouring out of Washington.

2) The employer must base employee compensation programs and decisions on valid, reliable information about competitive pay practices.  Not the flaky, half-baked, self-reported and self-serving stuff pushed by so many Internet sites.

These truths, though, leave most employees in a tough position and with few good options to validate their own compensation.  This is a problem for the worker of today.  And, in our emerging free agent nation with our record low levels of organizational trust, it's a problem for us, too.

I don't, in all honesty, have much in the way of answers for employees who feel the need to research the competitive value of their skills and experience.  But I do have some thoughts for those of us in the position of managing compensation programs.  A power and information imbalance of this kind has the potential to be a real trust-buster.  If that matters to us, it might be wise to step into the void with some information and education. 

One place to start may be simply putting the afore-mentioned "truths" out into the open for discussion.  In my own conversations with employees, I have found that just getting the game rules on the table can set the tone for more candid and productive discussions about pay data.

The pay information power imbalance isn't going away in the near term, but I believe it is an issue that we would be smart to proactively address.  What experience and advice can you offer on how we best tackle it?

Ann Bares is the Editor of Compensation Café,  Author of Compensation Force and Managing Partner of Altura Consulting Group LLC, where she provides compensation consulting services to a wide range of client organizations.   Follow her on Twitter at @annbares.

Comments

[Jack Cleary]

The Information Power Imbalance can exist not just between the employer and the employee, but also between HR/Compensation and a manager who may be concerned about retention, or fairness, or may just want to oil a squeeky wheel. With the manager I can be transparent and show them the raw data and walk them through it. Does anyone provide this level of transparency to employees? With what results?

[Dan Walter]

Ann,

Excellent follow-up to Chuck's post. I agree that putting information on the table is often a great way to level the playing field. In a vacuum of information people will use their imagination. While there is surely some accurate information publicly available for free via the internet, there is also far too much misinformation. It is not fair yo employers or employees to discuss or negotiate based on falsehoods and wishes.

Providing facts as the foundation for a conversation gives everyone the same starting place. This won;t create automatic agreement, but at least the disagreement can have similar origins.

[E James (Jim) Brennan]

Great observation, Ann! An interim solution is to refer employees to publicly available reliable sources like BLS OES/NCS or Statistics Canada that may lack the industry/size/location/time specificity of the really GOOD surveys of employer-provided pay information. They will reveal a valid and reliable ballpark number which a competitive employer should be exceeding, in most cases.

We sponsored SalaryExpert.com exactly because of the credibility gap that can exist when employees present "magic" numbers from some online dotcom garbage supplier with a business model that does NOT requre (or even desire) statistically accurate and demonstrably verifiable pay numbers. It gives updated estimates projected from each national pay database. Not commercial-quality stuff for employERs, but quite sufficient for employEE enlightenment. When a challenger slaps down a printout of some goofy salary posted in the anonymous ether, you can refer them to those open sources rather than reveal your expensive and easily-misunderstood employer surveys.

Recruiters and talent brokers would rather flash fuzzy but impressive salary imaginings than present facts that are truly expensive to collect and report, if they are to be meaningful. Follow the money. Look at the continually declining number of independent pay survey firms, and consider Sturgeon's Law.

[Ann Bares]

Jack:

I've had opportunity to work with a few organizations that do completely open up the pay information doors to employees (typically by request) - but they are certainly in the minority.

I think that part of the reason it is easier to share the information and have an open conversation with the manager is that employees often, in addition to having poor sources of information, also have difficulty seeing the work they do with an unbiased eye. (Frankly we all do.) The conversation about outside pay comparisons can be even more challenging with the employee who assumes that because they have 10-15 years experience working as an engineer, they should compare themselves to "Principal Engineers" externally when - in fact - their poor communication and follow-through skills have prevented them from moving beyond the classification of "Intermediate Engineer" internally.

Of course, all those organizations handing out inflated titles as a supposedly cheap "reward" aren't ultimately doing themselves any favors in this regard, either.

Dan:

I agree that sharing as much information as possible - even if it is simply descriptive of the overall market pricing process and the specific criteria used to select valid survey sources - helps build trust in the job valuation process.

Jim:

Great points - I have referred a number of employees to the BLS data as one of the best free sites out there.

You also make note of the very interesting point that at the same time we are witnessing an explosion of "fuzzy but impressive salary imaginings" online, the declining number of legitimate, professional pay survey firms is declining due to the difficult nature of compiling valid, accurate pay information - at a price corporations will pay - in a world of ever more complex work and splintered/hybrid roles. Suggests to me that we're heading toward some kind of cataclysmic change in the pay survey biz. Will be interesting to follow....