4 ms·

This is weird because it's such an easy question to answer. "Performance management isn't an exact science and if everyone knew everyone else's pay, it would b

This is weird because it's such an easy question to answer. "Performance management isn't an exact science and if everyone knew everyone else's pay, it would be total chaos and nothing would get done."

londons_explore 5y ago
If everyone knew everyone else's pay, we'd end up paying everyone more money, since those overpaid will complain, and those underpaid will shut up. Such a system will encourage rigid pay schedules (ie. all engineers with 5 years experience get X, non-negotiable). Rigid pay like that advantages poor performers, and good people leave. The end result is a company giving pay transparency ends up either with a much bigger labor bill, or staffed by poor performers. Governments requiring pay transparency though is a weaker effect - since it affects all businesses equally, and then there won't be anywhere for those good performers to jump to - although they may just leave the country.
- HPsquared 5y ago
  The workaround is to formally give good performers a different job title with accompanying higher pay.
  - shawabawa3 5y ago
    Or have discretionary bonuses
    - giantg2 5y ago
      I guess that's a good way to get around the restrictions. However, that will undermine the intent at transparent pay fostering equality/fairness.
- gpderetta 5y ago
  Information asymmetry favors those that have the info. That would be your employer not you.
- Nextgrid 5y ago
  > The end result is a company giving pay transparency ends up either with a much bigger labor bill, or staffed by poor performers. I think that a system based on secrecy and/or asymmetry of information won't last long, and in fact I think the current "chaos" happening in the labor market suggests that a majority caught on to what their "true" market value is despite salary secrecy and companies will have to deal with a bigger labor bill no matter what.
  - ethbr0 5y ago
    Market value << supply:demand When it comes to salary pricing. Companies respond to "We need employees but can't find any" much more quickly than "Our compensations seems off market averages."
- mrtksn 5y ago
  This sounds like a pay optimisation for high performers. After all, good people aren't leaving for Mars but to an employer that pays them fairly(since they know what's their fair pay). Besides, salary is not the only thing that keeps people or makes them leave. High quality management, pleasant work environment, office location and many other things are also part of the decision making. In fact, hiding salaries is a welfare scheme for low performing businesses. It will eventually degrade the quality of the society since it's not meritocratic and only sustainable due to information disparity between employer and employees. The margins of a company shouldn't be coming from the employees tricked into working for less than they can get.
- trashtester 5y ago
  In companies making a good profit, salaries may go up in cases like this. But some companies may not be able to pay everyone the same they pay the best performers. If such transparency is mandated throughout a region, the best talent can react in a number of ways: 1) They can leave the region. 2) They can all work in the same few companies, either those requireing top talent or consulting companies. (Or go solo.) 3) Employers can find alternative ways to compensate them. (Generous benefits, plenty of approved overtime, generes travel refunds or any other compensation that does not require reporting) 4) Top employees can scale back their effort, and either have more free time or do side hustles. Employers may even encourage this, as it may be preferrable to those people leaving. Most of the above will make it harder to run highly innovative companies (presumably those that require top talent), and in the end, I suppose this will drag the economy of the entire region down.
sk0g 5y ago
My go to answer for that question has become "not enough to keep me there". Worded a bit nicer usually, though!
giantg2 5y ago
"Performance management isn't an exact science and if everyone knew everyone else's pay, it would be total chaos and nothing would get done." How's that work for the GS structure then? Or for union jobs in various sectors? The only reason chaos would ensure is if there were extensive unexplainable and unfair practices.
- gbronner 5y ago
  My experience with union guys is that the contractors know who is good and who isn't, and the bad or slow workers get a lot less work or get returned to the hiring hall in favor of a different worker.
- lbriner 5y ago
  It depends on what you mean by "unfair". In plenty of companies I have worked for, you pay quite a lot more than you want for a particular hire not necessarily because they are worth it but because you are desperate and they are nearly good enough. You generally don't get away with putting people's salaries down if they don't perform and if you did, they might leave ending with you being back in the mess. This might be magnified in smaller companies but it could easily squew salary figures and depending on their sex, it could also make the figures look really wrong. This might be "unfair" by one definition but it definitely happens and is one reason why it is hard to be transparent about wages. It can also create resentment if others knew that someone was overpaid.
  - giantg2 5y ago
    'It depends on what you mean by "unfair".' Can it be explained on the basis of value? If so, then good. If not, then it's likely unfair. "It can also create resentment if others knew that someone was overpaid." How can they be overpaid? The salary was set by the market. If the others are underpaid due to lagging the market, then they might just leave anyways. Their value has changed during their tenure and the company has not adequately adjusted for that to stay competitive in the market.
    - pnutjam 5y ago
Piskvorrr 5y ago
In other words, mushroom farming: "shovel them with bullshit and keep them in the dark." It's rather suspicious that any company I've seen that was this evasive, the pay levels did leak eventually (and the speculations about who is paid what for what reason did bring total chaos) - and surprise! It turned out that performance management is not an exact science, but rather a game of "who's friends with the boss", completely regardless of performance.

londons_explore 5y ago

If everyone knew everyone else's pay, we'd end up paying everyone more money, since those overpaid will complain, and those underpaid will shut up. Such a system will encourage rigid pay schedules (ie. all engineers with 5 years experience get X, non-negotiable). Rigid pay like that advantages poor performers, and good people leave. The end result is a company giving pay transparency ends up either with a much bigger labor bill, or staffed by poor performers. Governments requiring pay transparency though is a weaker effect - since it affects all businesses equally, and then there won't be anywhere for those good performers to jump to - although they may just leave the country.

HPsquared 5y ago
The workaround is to formally give good performers a different job title with accompanying higher pay.
- shawabawa3 5y ago
  Or have discretionary bonuses
  - giantg2 5y ago
    I guess that's a good way to get around the restrictions. However, that will undermine the intent at transparent pay fostering equality/fairness.
gpderetta 5y ago
Information asymmetry favors those that have the info. That would be your employer not you.
Nextgrid 5y ago
> The end result is a company giving pay transparency ends up either with a much bigger labor bill, or staffed by poor performers. I think that a system based on secrecy and/or asymmetry of information won't last long, and in fact I think the current "chaos" happening in the labor market suggests that a majority caught on to what their "true" market value is despite salary secrecy and companies will have to deal with a bigger labor bill no matter what.
- ethbr0 5y ago
  Market value << supply:demand When it comes to salary pricing. Companies respond to "We need employees but can't find any" much more quickly than "Our compensations seems off market averages."
mrtksn 5y ago
This sounds like a pay optimisation for high performers. After all, good people aren't leaving for Mars but to an employer that pays them fairly(since they know what's their fair pay). Besides, salary is not the only thing that keeps people or makes them leave. High quality management, pleasant work environment, office location and many other things are also part of the decision making. In fact, hiding salaries is a welfare scheme for low performing businesses. It will eventually degrade the quality of the society since it's not meritocratic and only sustainable due to information disparity between employer and employees. The margins of a company shouldn't be coming from the employees tricked into working for less than they can get.
trashtester 5y ago
In companies making a good profit, salaries may go up in cases like this. But some companies may not be able to pay everyone the same they pay the best performers. If such transparency is mandated throughout a region, the best talent can react in a number of ways: 1) They can leave the region. 2) They can all work in the same few companies, either those requireing top talent or consulting companies. (Or go solo.) 3) Employers can find alternative ways to compensate them. (Generous benefits, plenty of approved overtime, generes travel refunds or any other compensation that does not require reporting) 4) Top employees can scale back their effort, and either have more free time or do side hustles. Employers may even encourage this, as it may be preferrable to those people leaving. Most of the above will make it harder to run highly innovative companies (presumably those that require top talent), and in the end, I suppose this will drag the economy of the entire region down.

sk0g 5y ago

My go to answer for that question has become "not enough to keep me there". Worded a bit nicer usually, though!

giantg2 5y ago

"Performance management isn't an exact science and if everyone knew everyone else's pay, it would be total chaos and nothing would get done." How's that work for the GS structure then? Or for union jobs in various sectors? The only reason chaos would ensure is if there were extensive unexplainable and unfair practices.

gbronner 5y ago
My experience with union guys is that the contractors know who is good and who isn't, and the bad or slow workers get a lot less work or get returned to the hiring hall in favor of a different worker.
lbriner 5y ago
It depends on what you mean by "unfair". In plenty of companies I have worked for, you pay quite a lot more than you want for a particular hire not necessarily because they are worth it but because you are desperate and they are nearly good enough. You generally don't get away with putting people's salaries down if they don't perform and if you did, they might leave ending with you being back in the mess. This might be magnified in smaller companies but it could easily squew salary figures and depending on their sex, it could also make the figures look really wrong. This might be "unfair" by one definition but it definitely happens and is one reason why it is hard to be transparent about wages. It can also create resentment if others knew that someone was overpaid.
- giantg2 5y ago
  'It depends on what you mean by "unfair".' Can it be explained on the basis of value? If so, then good. If not, then it's likely unfair. "It can also create resentment if others knew that someone was overpaid." How can they be overpaid? The salary was set by the market. If the others are underpaid due to lagging the market, then they might just leave anyways. Their value has changed during their tenure and the company has not adequately adjusted for that to stay competitive in the market.
  - pnutjam 5y ago

Piskvorrr 5y ago

In other words, mushroom farming: "shovel them with bullshit and keep them in the dark." It's rather suspicious that any company I've seen that was this evasive, the pay levels did leak eventually (and the speculations about who is paid what for what reason did bring total chaos) - and surprise! It turned out that performance management is not an exact science, but rather a game of "who's friends with the boss", completely regardless of performance.