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Contrarian view: salary disclosure destroys value for people with negotiating skills, which are among the most valuable and useful skills of all. Disclosure ad
by motohagiography 7y ago
Contrarian view: salary disclosure destroys value for people with negotiating skills, which are among the most valuable and useful skills of all.
Disclosure advantages people who collude to apply political pressure (gang up) instead of appealing to principles or leveraging their skill and the value they bring. There is general social and economic harm to facilitating this behaviour.
Disclosure lowers all boats in that it causes mean-reversion in the sample, and reduces opportunity and incentive for people to apply themselves and succeed, and prevents valuable and exceptional people from joining the company because their salary expectations are not "to scale."
Disclosure absolves managers of the need to negotiate effectively, which means you get managers who can't negotiate, which is the worst possible outcome for a company, since what is their job again?
It's great to have data for negotiating. I use a bunch of different data sources and options, and I also avoid organizations who say they "don't negotiate," because it means they literally just bully people.
Have at it.
- deleted 7y ago[deleted]
- throwlaplace 7y ago>Disclosure advantages people who collude to apply political pressure (gang up) instead of appealing to principles or leveraging their skill and the value they bring wut. how exactly do you imagine people that don't have union contracts go about doing this? >Contrarian view: salary disclosure destroys value for people with negotiating skills and conversely how are you at an advantage in negotiations when you have no price discovery? e.g. i bought this tuna sandwich for $10 and i feel great about it because i have no way of knowing that the sandwich shop next door has the exact same tuna sandwich for $5. >Disclosure lowers all boats in that it causes mean-reversion in the sample, and reduces opportunity and incentive for people to apply themselves and succeed what a hot take - "more transparency from the executive class actually hurts the labor class". brilliant.
- jcelerier 7y ago> salary disclosure destroys value for people with negotiating skills, which are among the most valuable and useful skills of all. The world would be a very very shitty place if we had to negotiate for everything on an individual basis. It's much more efficient to find the few people who actually have that skill and let them do it for the group (and we can spend more time actually trying to fucking improve the human species well-being instead of bickering on $$s). > Disclosure absolves managers of the need to negotiate effectively, which means you get managers who can't negotiate, which is the worst possible outcome for a company, since what is their job again? uh.. ensuring that their team is productive by handling their well-being issues ?
- RestlessMind 7y ago> It's much more efficient to find the few people who actually have that skill and let them do it for the group And human nature being what it is, why won't those few people negotiate better deals for themselves while keeping peanuts for the rest? (see: class action layers, bosses of Unions etc).
- wool_gather 7y agoFor the same reason any similar arrangement holds: if it gets bad enough, the torches and pitchforks come out and the group finds themselves a new negotiator.
- chinesempire 7y ago> why won't those few people negotiate better deals for themselves while keeping peanuts for the rest? Because they would be very bad negotiators and wouldn't be hired in the first place. And because they probably are scamming the rest of the group, which is a crime in most developed countries.
- cracker_jacks 7y agoIt's also great to have data for justifying the points you claim. You are claiming that insider trading (information asymmetry) is a net positive benefit for the software industry.
- humanrebar 7y ago> ...prevents valuable and exceptional people from joining the company because their salary expectations are not "to scale." Better signalling about compensation opportunity is good for employees and for employers who compensate well. It's bad for shops who pay everyone the same or otherwise pay poorly. Managers are already given an advantage in negotiations because they have data to refer to. And they use that data opaquely. As in "trust us, you are already paid well". As a counterpoint, professional athletes and salespeople regularly share salary (or sales) figures. They are certainly not all paid equally.
- Normal_gaussian 7y agoI disagree. Salary disclosure removes low outliers, but it doesn't do much to improve those near the mean. Having been disclosing my salary to colleagues (and generally recieving the same in return) I know that people who are close but not far below what they could get... don't really ask, or are satisfied with a below desrved raise. It also shouldn't do much to affect high outliers. If you are able to convince your employer that you are worth X much, the fact that the other employees are being paid on average X/2 instead of X/3 shouldn't remove your value or negotiating position. With respect to disclosure absolving managers of the need to negotiate - managers are rarely in a position to effectively negotiate, in fact many hypothesise that the benefit of the growth of the managerial class is to buffer the leadership class from having to negotiate with the majority of the worker class. Does anyone have a link to the article that was something like "company lifecycles as described by the office" or some such? I can't seem to find it and its highly relevant.
- IggleSniggle 7y agoThat article has really stuck with me over the years. Here it is: https://www.ribbonfarm.com/2009/10/07/the-gervais-principle-or-the-office-according-to-the-office/ https://www.ribbonfarm.com/2009/10/07/the-gervais-principle-...
- WaterSponge 7y agoA guide to corporate awareness. Great to read every year to make sure you're not lost in the madness. "Play your part in the comedy, but don't identify yourself with your role."
- tsycho 7y agoWhile I disagree (or maybe don't understand) the rest of your points apart from the mean reversion one, I did find your comment thought provoking. We should think about the unintended consequences of disclosure, even as we appreciate its positive aspects.
- zeroonetwothree 7y agoWhy should people get paid more for better negotiating skills if those don’t help them do a better job? It’s good that we eliminate that factor as much as possible. I’d rather go for meritocracy.
- ghaff 7y agoNegotiating skills help most people do a better job. Every allocation of resources or prioritization of projects is very much a negotiation. Note that this doesn't have to be a zero-sum process. One of the important aspects of negotiation is that not everyone's priorities are the same. I might be willing to tradeoff something that isn't a big deal to me but is very important to you.
- Silhouette 7y agoWhat is management for if not to establish priorities according to the needs of the business and then determine an allocation of resources accordingly?
- ghaff 7y agoCompanies are not exclusively top-down command economies. Or they shouldn't be.
- Silhouette 7y agoI strongly disagree. Certainly management would normally be wise to hire good people and then listen to their advice and recommendations in a collaborative fashion, but ultimately it is management's responsibility to make these decisions and their subordinates' responsibility to execute management's plan. There are several good reasons for this, not least that management is required to understand the bigger picture and how the activities under them fit into it, while in general subordinates are not. Also, subordinates may have personal motivations that would conflict with the priorities of the business if everyone was free to do their own thing. A very common example is developers who come into a tech firm and want to use all the latest cool technologies because they're fun and look great on a resume, which is often not in the best interests of the business.
- 38911BBF 7y agoOpposite view: Salary disclosure primarily destroys value for people with strong negotiating skills but who are not necessarily the best contenders for the actual job - especially when it comes to highly specialized tech jobs as many of them are introverts. It also enables work force diversity which is actually the best outcome for the company in the long run. Salary disclosure is also a prerequisite for having a public discourse about equal pay and equal rights based on factual information. You might call that to: "gang up", but I certainly wouldn't. Our daughters, girldfriends, mothers and sisters are all living breating people in our lives - maybe even the most important ones we have where as a company is just a thing. My own startups are just a piece of paper, a tax information number, an organizational construct, nothing more. I can create another one in 2-3 days. Close a company and if there's customer demand, another one will just spring to life and fill the gap. I might be sad and in debt for a while, but society at large will not even notice. It doesn't matter.
- motohagiography 7y agoTo say women can't negotiate is the most bizarre and offensively sexist trope I have ever encountered in acceptable discourse. I"m not necessarily making a direct accusation, but we should acknowledge that the very idea is un-serious.
- lxe 7y ago> collude to apply political pressure Also known as "organized labor"
- jedberg 7y ago> for people with negotiating skills, which are among the most valuable and useful skills of all. You're confusing the skill of adversarial negotiation with cooperative negotiation. Cooperative negotiation is a critical business skill within the company. You are all on the same team and should have the same goals. Competitive negotiation is a good skill to have for some external negotiations. If anything, being good at cooperative negotiation is far more important. > Disclosure absolves managers of the need to negotiate effectively, which means you get managers who can't negotiate, which is the worst possible outcome for a company, since what is their job again? Same as above. You're again confusing adversarial negotiation for cooperative negotiation. > Disclosure lowers all boats in that it causes mean-reversion in the sample, and reduces opportunity and incentive for people to apply themselves and succeed In every org I've seen with open salaries, I've seen the opposite. That it raises all boats because everyone demands to get paid the same as the highest salary on the team.
- JoshTriplett 7y ago> In every org I've seen with open salaries, I've seen the opposite. That it raises all boats because everyone demands to get paid the same as the highest salary on the team. That's not an ideal result either. A better result would be that people get more comfortable with conversations about "here's why they make more than you, and here's what you could do to provide more value and earn more salary". Someone shouldn't get paid more because they're a better negotiator. But they should get paid more if they provide more value. I've heard a few stories from people at companies open about salaries that involve such conversations, but not nearly enough such stories.
- jedberg 7y agoYeah, that's the second part of the convo that I didn't mention. Step one, everyone demands to get paid as much as the highest salary, step two, we have a discussion about why that person makes more, step 3, sometimes they might get a small raise. But the point is that it doesn't revert to the mean, but it reverts to the max.
- motohagiography 7y ago
- agumonkey 7y agoThis is all fine and I agree partly That said I hate negotiation because: 1) I'm not a shark I want open honest talks 2) negotiation can be hacked (a lot of people have charm and can lie their way through) so here goes its 'value'. It genuinely sucks life out of me when I have to play these games. To the point that I'm giving code for 1% of its market value to a small business because I actually have a human relationship with him.
- blackrock 7y ago> salary disclosure destroys value for people with negotiating skills I call BS. You, as an employee seeking employment, don’t have much negotiating power. If you really did, then you won’t be seeking a job, that pays money, from someone else. Your best and really only way to negotiate, is to stand firm with your salary demand. And be ready to walk if they try to game you. This is really, your only advantage. It also helps if you’re skilled in what you do. And that you beat out your competition. It helps even more if you’re in a niche field, that is in demand. Like some software development jobs, for critical functions in business. But still, you are salary capped, regardless of how good you are. The company may just opt for someone mediocre to do the job, for less pay. But if you’re seeking a non-critical job, or if you’re in an entry-level role, then good luck, you are at a severe disadvantage. The employer will feel that you should be so lucky to take their offer.
- motohagiography 7y agoIf your skills aren't valuable, then yes, they won't be worth much. If you have invested in developing skills that are valuable, then you have all the leverage in the world. But even if you flip burgers, if you can convincingly commit to being reliable you can command a %15-20 premium. The power to walk away is the greatest power of all. But if the chips are down, you have to eat, and so your BATNA is poor. This means having a job is the best time to look for the next one. If you need one, you're a price taker. If you don't, you are the price maker. The hardest thing to accept is that it's mostly attitude.
- kragen 7y ago> people with negotiating skills, which are among the most valuable and useful skills of all. Skills at zero-sum negotiation, like street-fighting skills, are among the most valuable and useful skills of all to those who possess them and to their allies. But skills at zero-sum negotiation by definition provide no value to society; the value they provide to their possessors is merely expropriated from someone else. This is a significant improvement over street-fighting skills, which provide negative value to society when exercised; a society with more street fights thereby becomes poorer and less happy. > Disclosure advantages people who collude to apply political pressure (gang up) instead of appealing to principles or leveraging their skill and the value they bring. This seems unlikely. Disclosure of the market-clearing price generally just reduces information asymmetry. > Disclosure absolves managers of the need to negotiate effectively, which means you get managers who can't negotiate, which is the worst possible outcome for a company, since what is their job again? Managers whose special skill is zero-sum negotiation will destroy your company. Managers need to be able to build cooperation and trust, which is the opposite.
- motohagiography 7y agoPeople who read about negotiation typically learn it's a positive sum process for creating and discovering value. People who have not often conflate haggling with negotiation. There is a critical theory that arbitrarily paints the process as "transactional," or "confrontational," but it is not something that survives and bears out in a competitive environment. The managers I have seen who subscribe to the co-operation model tend to passively ride billions in valuation into the ground. The ones at successful companies are merely survivor bias from riding growth.
- kragen 7y agoNegotiation is not always or usually zero-sum. Salary negotiation is a kind of haggling, which is an exception.
- motohagiography 7y agoCan guarantee it's not a zero sum haggle. A comp package has a salary number, it also has bonuses, commissions, stocks, options, IP ownership, holidays, work from home time, days/week, travel requirements, travel policy, mat/pat leave, non-competes, and myriad other options that effect the salary number you arrive at. If you agree to a salary number without taking these into account, they will necessarily disadvantage you on these. When someone asks, what is your salary expectation, you answer, we're using the same market data and it's really a question of the total package. A lot of people are only interested in deals that screw you. This is a super fast filter to find them.
- chinesempire 7y ago> Contrarian view: salary disclosure destroys value for people with negotiating skills, which are among the most valuable and useful skills of all. It's like saying that tech conferences destroy value for people with tech skills because people share knowledge... Negotiation skills are mostly useless when the market is regulated, just like most of the western World, excluding the US My compensation depends on a nation wide contract and its base salary The variable part depends on my skills, not as a negotiator, but on my abilities to do my job better than the average I can ask a nice bonus because I produce more value than the average or the same value in less time to the company or the clients I work for It's really not that hard to negotiate when you have something to offer.