Are the employees in your organization informed of their salary grade, or of the minimum, midpoint and maximum of their salary range? Do they know where their job stands in the company's hierarchy (mine is bigger than "x," but smaller than "y")? In effect, do they know how they and their job are being viewed by the company's compensation program?
If they don't, why not?
Is this privileged information, tightly held by Human Resources and only doled out in small drips, when asked?
Is it a secret?
Some companies don't tell an employee their grade or salary range; or if they do, that's all they give - the employee's present status as a single, unrelated piece of information within a huge jigsaw puzzle. In such a case the employee is unable to find out the grade or salary range of any job other than their own. Without a frame of reference, such a restricted disclosure is not very helpful in planning that next career move.
Employees also won't know if they're being treated fairly.
Limitations on disclosure are strictly for the benefit of the company. No one will say that the employees don't want to know, or that such information isn't important. Instead, reluctance to disclose is inherently a management decision meant to advance tactical considerations in support of their own agenda. In other words, it helps management freedom of action when employees are kept in the dark.
But what's such a bad idea with informing employees about the broader compensation structure, to let them know where they stand within the organization?
- Unless there's something to hide
- Something the employee should not discover
- Some policy or practice that cannot be defended
Given these potential cautions, while the concept of open disclosure often gets the heads nodding as a grand idea, negative practical implications may point in the opposite direction. It's the old "but not for us" ploy.
What could go wrong?
When the pay structure is posted on the wall for the first time, there for everyone to have a look-see, the phones will start to ring. That signals the start of the "what about me?" questions. Let's look at a few common scenarios that managers would dearly love to avoid hearing about.
- If the midpoint is 100 and the employee is at the minimum, say 80 (-20%), even after five years of good performance reviews, how does the manager explain that?
- Why is that job (point at anyone) in a grade higher than mine? No manager wants to defend job evaluation results, especially as it's an inherently subjective process.
- Why is the job I want to bid on only a lateral move for me?
- If my job is so important (manager said so), then why is "job x" in the same grade?
Management doesn't want to get these calls, because often times they're woefully unprepared to answer the employee's questions. And they want to be liked, to have someone else be blamed. So wouldn't it be easier if the employee just didn't know? Wouldn't it be easier to operate the business with employees left in the dark about their grade and salary range status, rather than face potentially awkward questions out in the light?
It does make sense, but for who?
Chuck Csizmar CCP is founder and Principal of CMC Compensation Group, providing global compensation consulting services to a wide variety of industries and non-profit organizations. He is also associated with several HR Consulting firms as a contributing consultant. With over 30 years Rewards experience Chuck is a broad based subject matter expert with a specialty in international and expatriate compensation. He lives in Central Florida (near The Mouse) and enjoys growing fruit and managing (?) a brood of cats.
Image courtesy of arka D
Too many already follow the Mushroom school of management: keep people in the dark, pile manure on them, and expect them to grow. Doesn't work well with humans. Once they learn enough to find a job where the employer will explain WHY they are paid what they are paid, they will be gone.
Most people would rather earn a bit less while understanding their salary status and knowing what their pay progression prospects are, than earn a tad more but be treated like a fungus.
Such employers do serve a useful purpose, however... they offer basic training for your future talent at no cost to you. They are also the negative example that makes you look so much better.
Posted by: E. James (Jim) Brennan | 06/30/2011 at 01:14 PM
This is an excellent article. I do feel that the best ingredient to a good compensation structure is transparency. It is hard to change culture however if you are in a company where this "just isn't done." And sometimes a comp structure is too complicated and difficult to be fully transparent, which could be an argument for simplifying.
Posted by: Amy Wireman, GPHR | 07/01/2011 at 11:40 AM