Keeping A Secret

Are the employees in your organization aware of their salary grade, of the minimum, midpoint and maximum values 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 valued within the company's compensation program?

If they don't know, why not?

Is this privileged information, tightly held by Human Resources and only doled out in small drips, when asked?  Is it on a "need to know" basis, and sometimes the employee doesn't need to know?

The big secret

Some companies don't tell an employee their grade or salary range; or if they do, that's all they give out - the employee's present status as a single, unrelated piece of information within a huge jigsaw puzzle that is the organization's hierarchy.  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 isn't very helpful in planning their next career move.

As a side issue, 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

• Or something that the employee shouldn't discover

• Or a policy or practice that can't be easily 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.  Employees could face the same stonewall that their parents had to deal with;  "interesting concept, but not for us."

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 dealing with.

• After five years of good performance reviews, why am I still paid at the bottom of my salary range?  This could be the hardest question that a manager receives.

• Why is that job (go ahead, point at anybody) in a grade higher than mine?  No manager wants to defend job evaluation results, especially as it's an usually a subjective process.

• Why is the job I want to bid on only a lateral move?

• 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 by their employees, to have someone else be blamed when employees are upset.  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.  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 clowder of cats.

Creative Commons image "Naughty Secrets IMG_0781" by stevendepolo

Comments

[E. James (Jim) Brennan]

The Mushroom School of Management thought continues to flourish: keep them in the dark, throw lots of dung on them and expect them to grow.

When management finds it difficult to answer those fundamental questions you listed, Chuck, they have failed to exercise proper management skills. No policy that can't be explained should be permitted to exist. If senior executives pressed their compensation staff to educate them on those issues, they could experience the benefits of pay transparency.

When it's kept secret, everyone knows it is bad. When it is open, everyone knows it is defensible.

[SunnyCA]

Before working at my current employer, I always worked at law firms, all of which which published associate salary and benefits for everyone to see. In my current position, I along with about 10 other people in a company of 600+ have access to all employee compensation data. Your assertions are dead on. Years of career band and salary compression, weird "silver bullet" hires and retention offers that made sense at the time, etc. all add up to one stinky pile of numbers.

[Secret Compensation Man]

My current employer has a policy of not telling employees their own pay range. The justification for it was an immature (in work experience terms, mostly) management team that did not know how to have conversations about money, and an HR staff stretched too thin (and in many cases, too inexperienced in pay matters as well) to be able to educate the masses effectively.

Naturally, we have lots of complaints about a lack of understanding of our pay practices and career paths. Even so, trying to advocate for change in this area often feels like tilting at windmills.