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Interviews General Queries 2 years ago
Posted on 16 Aug 2022, this text provides information on General Queries related to Interviews. Please note that while accuracy is prioritized, the data presented might not be entirely correct or up-to-date. This information is offered for general knowledge and informational purposes only, and should not be considered as a substitute for professional advice.
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I always wondered about the stigma against revealing hourly rates and salaries to coworkers.
I just started a company and we made a "transparent salary" policy where everyone knows exactly how much they make. At any point we encourage our employees to ask for a raise and to justify WHY they should get one. We encourage conversations that start as “I see that Dev B is making $80/hr and I make $50. I also see that the project I’ve worked on has made 50% profit. I believe I deserve a raise”. At that point we will either agree, yes you do deserve a raise, and give it, or explain to them why we can’t afford/justify the raise and specific actions THEY can take to get a raise. We will explain what Developer B is doing that justifies his $80/hr rate, and what Dev A can do to to improve to that level (be it getting more training, taking more initiative, taking a more client-facing approach, improving team-work skills, etc). We are also transparent with our clients. We tell them how much each resource is being payed any how much overhead we anticipate. We aren’t in this business to make huge margins on one project. Our margins are actually quite close to cost when you factor in the overhead (training, R&D, management, software, etc). However, how we DO spend a significant amount of money on R&D and training compared to most firms, which ultimately produces significantly higher quality products.
Where can this approach go wrong? I am specifically looking for any case studies, laws, or even anecdotal reason to either tell me why the policies I would like to implement will or won't work very well, and to see what pitfalls of each approach are. I would like to start digging deeper into why the "don't share" policies exist and whether there is any logical backing for them.
I have worked in both types of systems. When I was a government employee, all salaries were a matter of public record. In private industry I have never worked anywhere that is was acceptable to discuss salary (in some places not even my direct boss knew what my salary was). (And yes I am aware that legally you are protected if you discuss it. In practice, that is not so true as a company can always find a reason to fire you and in many places in the US, they don't even need a reason. Discussing something the company doesn't want discussed is a career-limiting move.) And many people are reluctant to discuss their finances and do not want their salaries published. There is a strong culture of keeping financial information private in the US.
What I have found is that both systems have their flaws and create discontent. In the open system, there will always be people that other employees believe are being paid too much. In the open system it becomes difficult to get a large pay raise because then every other employee who thinks he is as good as or better than you (pretty much 100% of other employees) will try to justify a big raise too. If they don't get one, they will not be happy. To control costs, in open systems pay tends to be specified in bands around job classifications and if you are at the top of your bands, the only way to get a pay raise is to get a new job title. It is nice to think the raises will always be by merit but that is actually not true as the raises are decided on by people who are influenced by things other than merit even when they think they are not. There is no such thing as a meritocracy in any workplace, because no two people can agree on what is the best performance that should be rewarded.
However, when salaries are kept secret, is is much easier to discriminate against groups of people. It is also much easier to give your cousin that 50% pay raise when everyone else is being held to 2%.
Secret systems favor the good negotiators. Open systems tend to favor the people who are there the longest or those who are most adept at manipulating the bureaucracy. Neither one is fair over time.
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