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The model skips an important part of the reasoning - some people might deserve to be paid more because they're more valuable (due to being more productive or wh

The model skips an important part of the reasoning - some people might deserve to be paid more because they're more valuable (due to being more productive or whatever the equivalent is in a given industry). Pay transparency means that if you want to pay someone more they have to be able to justify it. In a well managed company you need to have some form of employee assessment system to judge how well they're doing. This is already true so that good people get rewarded, but becomes even more important with transparent pay because you have to be able to point to it and say this is why that person gets 50% more than you. You have to be able to have real conversations like "they brought on 2 new clients and delivered all their projects on time, whereas your last project was on budget but two weeks late". Being good and useful (and comparing salaries at other companies) provides the employee upward leverage on price (the inverse version of my role play above). That said - I don't disagree with the conclusions of the paper (showing correlation between pay transparency and reduced pay), but I don't think it's an important conclusion. Pay is a frequency distribution. Talking about the mean/median of that distribution is less important than making there there are good reasons for the people at either ends of it (e.g. "I'm at the lower end because I'm female). To put it another way - I'm more worried about inequality than overall pay level because the people in the middle are fine, it's people at the bottom who need help.

BeFlatXIII 5y ago
The problem with specific justifications is that many roles do not have objective KPIs like this. How do you compare the worst teammate on a successful project with a superstar on a project that was doomed from the start? For that matter, there are also the office intangibles that don’t show up nicely on an evaluation but do cause problems when nobody does them.
- rkangel 5y ago
  These are all problems that exist already and are just highlighted by pay transparency. I agree that they're difficult problems, but they're important ones. You definitely can't do a proper employee evaluation by a completely objective set of numerical KPIs (even in places it seems possible like sales numbers, it results in gaming the system and knock on negative effects). On the other hand, you can definitely have a consistent system for looking at the different areas of people's performance and judging how much they've added. It takes some effort to get right, and there will always be an element of subjectivity but it is possible to do a decent job at it.
  - xwolfi 5y ago
    I dont think it's possible tbh, it will always have to be subject to market forces. It's not up only to one company to reward optimally, it's the entire network which provides employment alternatives to underpaid employees that will eventually lead to an optimum. For instance, I joined my first local company as an immigrant from a vastly different culture and was the only foreigner. It caused issue as I knew little about the way people interacted and they had trouble accepting my particularities. I was blocked out of suspicion, under constant worried monitoring, for fear of rocking a status quo that had lasted for a decade, and was paid well below market rate for what I could have done. Well, gladly a few months in that environment let me learn the ropes of my new culture, I was able to quickly change job while selecting a more balanced company, and eventually tripled that initial salary in 4 years, by switching position or job. I dont want just performance assessment by humans, it's also good to have an open employment network you can adapt to and that can adapt to you. This is something that doesnt exist in my original socialist country and create intense misery, with a 10% unemployment rate. In comparison, my new ultra capitalist country has 3% unemployment and provides new job opportunity every week, at the cost of a small effort on my side to rectify a position of weakness. Employee performance is tied to a social environment that is sometimes nonsensical to an individual judged as a failure, it is important to balance this reward mechanism with outside competition too.
- 908B64B197 5y ago
  > How do you compare the worst teammate on a successful project with a superstar on a project that was doomed from the start? Superstars typically avoid these types of projects.

BeFlatXIII 5y ago

The problem with specific justifications is that many roles do not have objective KPIs like this. How do you compare the worst teammate on a successful project with a superstar on a project that was doomed from the start? For that matter, there are also the office intangibles that don’t show up nicely on an evaluation but do cause problems when nobody does them.

rkangel 5y ago
These are all problems that exist already and are just highlighted by pay transparency. I agree that they're difficult problems, but they're important ones. You definitely can't do a proper employee evaluation by a completely objective set of numerical KPIs (even in places it seems possible like sales numbers, it results in gaming the system and knock on negative effects). On the other hand, you can definitely have a consistent system for looking at the different areas of people's performance and judging how much they've added. It takes some effort to get right, and there will always be an element of subjectivity but it is possible to do a decent job at it.
- xwolfi 5y ago
  I dont think it's possible tbh, it will always have to be subject to market forces. It's not up only to one company to reward optimally, it's the entire network which provides employment alternatives to underpaid employees that will eventually lead to an optimum. For instance, I joined my first local company as an immigrant from a vastly different culture and was the only foreigner. It caused issue as I knew little about the way people interacted and they had trouble accepting my particularities. I was blocked out of suspicion, under constant worried monitoring, for fear of rocking a status quo that had lasted for a decade, and was paid well below market rate for what I could have done. Well, gladly a few months in that environment let me learn the ropes of my new culture, I was able to quickly change job while selecting a more balanced company, and eventually tripled that initial salary in 4 years, by switching position or job. I dont want just performance assessment by humans, it's also good to have an open employment network you can adapt to and that can adapt to you. This is something that doesnt exist in my original socialist country and create intense misery, with a 10% unemployment rate. In comparison, my new ultra capitalist country has 3% unemployment and provides new job opportunity every week, at the cost of a small effort on my side to rectify a position of weakness. Employee performance is tied to a social environment that is sometimes nonsensical to an individual judged as a failure, it is important to balance this reward mechanism with outside competition too.
908B64B197 5y ago
> How do you compare the worst teammate on a successful project with a superstar on a project that was doomed from the start? Superstars typically avoid these types of projects.