I attended a strange meeting the other day. My client, a large and well-populated organization, was planning to introduce to their non-management staff a new base pay compensation program, and as part of that program grades and salary ranges were being introduced for the first time. Note: The program had already been rolled out to the management staff.
A senior manager had asked to speak with the VP HR and myself, as he wanted to raise a concern before we went “live” with his employees.
They Don’t Need to Know
This senior leader’s concern was that he felt that non-management employees didn’t need to know their grade or salary range. They didn’t need to know how their pay compared to either the market or to their new grade midpoint. He didn’t want HR to tell them.
They didn’t need to know, he said, because that knowledge might create problems for management. What if an employee is low in the salary range? Or high? What are we going to say? He felt that it was better to let employees remain unawares and instead let management worry about those issues. Management would take care of them. “We know better” was the prevailing management wisdom here.
Warming to his subject he went on to state that employees only think of their pay level when they’re first hired, and then once a year when their pay level is reviewed. Other than that they don’t think of their pay level at all – so why should we (the company) raise a possible issue?
His rationale was that, if you give someone a nice increase, they’ll be happy. But if they knew that they were underpaid (the reason for that nice increase) they would no longer be happy (enough) with that same increase. Therefore, they would be better off not knowing how their pay compared with the outside market, or even the company’s own midpoint for their job. Keep them in the dark, but (presumably) happy.
In my view this manager was straight out of Central Casting, a 1950’s-style Lord of the Manor who feels that he knows better and should be able to do whatever he pleases with the employees within his fiefdom.
Apparently, managers with this sort of thinking are still out there, so be warned that you’re going to have to deal with them at some point.
Benevolent Despot
The above viewpoint represents a paternalistic attitude toward employees that I haven’t seen in decades. It’s the “Theory X” philosophy I learned about so long ago in management training, and those who practiced this belief were considered villains.
I would understand if the concern was that “We’re not ready” for full disclosure, that “We have issues to address (correct) before we open that closet door and let the skeletons out.” But this complaining manager didn’t accept the premise that employees should ever be told their grade and salary range. “They don’t need to know.”
The attitude seems to be based on two factors:
- I Am the Manager: As the boss, I know what’s best for my employees, and I want to maintain as much flexibility as possible in order to take whatever action I feel is appropriate. I will take care of them, so some information about their job, their working environment and how they’re treated is information that they don’t need to know about. That knowledge would only be a distraction and disruptive to my plans.
- Fear: If the employees learn about how the company values their job (grade), and how we pay them compared to the competitive market (salary range), they might become angry, or confused, and certainly curious. They might ask “why?” questions that I’m not prepared to answer. They might blame me for the decisions that were made about their pay. I might lose their trust.
Reality Bites
At this client, managers had already been shown the assigned grades and salary ranges of their employees, and some of those managers still believe that that data wouldn’t get out – wouldn’t become public knowledge. But in my experience, as soon as some employees learn that grades/salary ranges exist they will start asking for themselves. And they will spread the word.
The tide will rise against the reluctant bosses, and control of the dialogue will be lost as you start playing defense. You do not want to have to play defense.
What is a manager to do when an employee asks questions? Are there salary ranges or not? If yes, presuming managers won’t deliberately lie, why won’t you tell me? What is their salary range, and would the managers refuse to tell the employee? How does their pay compare to the outside market? Are they being fairly treated?
And who determines at what level the non-disclosure kicks in? Supervisors? Leads? How about high-paid individual contributors like Accountants or Financial Analysts? Should they know? Once you start down a slippery slope the rate of descent into chaos starts to move ever faster, so be careful.
In my view, it’s better to have a planned disclosure strategy, coupled with carefully thought-out management training to better manage how both employees and their leaders (you) should deal with new information. Otherwise chaos (mixed messages, confrontations, lowered morale and distrust of management) could become the new company culture.
If your company culture speaks of fair and equal treatment, transparency, competitive rewards, career development and all the other good things we tend to say about ourselves, keeping employees in the dark about how you’re treating them is a big step in the wrong direction.
You will get the culture you practice, not the one posted on the breakroom wall.
Chuck Csizmar CCP is the 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 "ber-antem," by Dimaz Fakhruddiny
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