In an article entitled Ten things VPs never say, Scott Berkun wondered:
Here’s exactly how much I earn and what my bonus structure is. I’ve often wondered what would happen if corporations had transparent pay scales – public jobs often do (teachers, senators, police officers). No law prevents an employee from posting their paychecks on their office door. In specific to executives, knowing how they’re rewarded explains tons to their organization. Good VPs do communicate what their personal goals are, but knowing even the non-financial elements of their rewards (what are they rewarded on?) might be more useful to the organization that what’s in the project vision. (Of course, this would require that CEOs define the rewards. Begging for a list of “ten things CEOs never say”).
I did work at one, many years ago, and I liked it. The transparency wasn’t obvious–new financial reporting software allowed drill down to individual accounting transactions, which included payroll. Surprisingly, there wasn’t much animosity. A few folks who were dramatically underpaid received raises. Folks who had received comparatively low bonuses and raises seemed to move on a little faster. Beyond that, it just meant one less thing to speculatively gossip about. Overall, it was relaxing. On the other hand, it showed how low my salary potential was at the company, and hastened my departure. If you’re going to underpay, I guess maybe you should try to keep your employees in the dark.
Hmmm, the problema might be the opposite: people tend normally not to be so shy if they feel underpaid. But sometimes transparency might show some situations were some eployees will look like overpaid: peple would start to make comparisons, and that might have a devastating effect. After all, if the company pays reasonably and honestly, transparency is a plus, but one must not forget that money is only one side of the medal.
By: Alberto Brandolini on May 1, 2006
at 3:49 pm