5 ms·

Discuss with HN: salary confidentiality

20 points by mannicken 18y ago

Hi, Is it me or do all the non-disclosure of salary agreements seem a bit out there? I mean, anyone else recalls monopolies, which push out their high prices and block competition? Does anyone else see this as an attempt to prevent free discussion of rates, as well as healthy workings of supply/demand, similar to close-sourced software? Isn't it similar to blocking unions? Or firing people for being in relationships inside of a company? And mainly: should we do anything about it?

noodle 18y ago
the best reason, in my opinion, is to make it so that a company only has to pay the least amount possible to keep an employee on staff. its not particularly "fair", but thats how it works. helps improve bottom lines of companies. always at least try to negotiate :)
- arnorhs 18y ago
  Not just that... It's also good to compensate excellent performers without every other member of staff getting jealous... :-)
  - noodle 18y ago
    thats what i'd use bonuses for :p
wallflower 18y ago
I'm always aghast at the cover stories of magazines like SmartMoney where they include a couple's household income. Salaries are confidential because disclosure of them can damage the company/team dynamic ("Why is she making $5k more than me?!"). It's one of the most private numbers people have. And if you really want to know what people at a fairly large representative sample of companies make, reference the H1-B database or glassdoor.com http://news.ycombinator.com/item?id=570952 http://news.ycombinator.com/item?id=570952
- zain 18y ago
  If she is doing the same work as me, why is she making $5k more than me? The problem here is unfair payment; by not disclosing salaries, the problem is hidden, but it doesn't go away.
  - tptacek 18y ago
    If "we" told "you" why "she" was making $5k more than you, you'd disagree with us, argue, sulk, do subpar work for a few weeks, and then quit. If we could put everyone in a straitjacket salary bracket system, we would, but that would make it harder for us to hire talent. So we do what almost every other company does, and ask people to keep what they make to themselves.
  - arnorhs 18y ago
    And just how would you go about explaining to one employee that he/she is less valuable and/or doing less work than the next? You should read what Joel Spolsky has to say about the issue... There are more variables int this than you'd think. He gives a good explaination of why this is a problem in his article on inc magazine: http://www.inc.com/magazine/20090401/how-hard-could-it-be-employees-negotiate-pay-raises.html?partner=fogcreek http://www.inc.com/magazine/20090401/how-hard-could-it-be-em...
  - inerte 18y ago
    The root reason is really simple. The company will have to spend 5k more to keep you, while it doesn't have to if salaries are secret. That covers the case when talking about salary is prohibited by a company policy. Why people don't tell their salaries? Well, I do tell to (some of) my co-workers. None ever said to me: Wow, you make a lot of money! - Instead, they say: Wow, I could be making more. - So they'll start looking for other jobs (not counting lots of other factors beside paycheck. Lots) Anyway, top reasons why people don't tell how much they earn: 1) We deny a chance of making others sad; 2) We fear our bosses will discover that we talked about our salaries, thus a) being the reason why an employee quit; b) being the reason why an employee asked for a raise (increasing the company expenses); 3) Fear of security; Once your salary is "out there", the watercooler talk might be: Wow, do you know how much inerte makes? And you don't know who'll end with this information. 4) Compensation isn't a factor when there's blame to assign: Wow, inerte makes lots of money, how come he did this stupid thing? - As if someone less expensive, with a similar set of responsibilities, is allowed to make more errors. And you know what? Some of these reasons are true. I know how much 6/7 members of my team earn per month, and I know I am being underpaid. In 3-5 months I am probably asking for a raise. If they deny, I will at least dip my feet into the job market, and see if I can also get 33% or 90% more. Yes, someone earns 90% more than me for something that I know how to do it. He has more experience on some other stuff, but he's also friends with the boss. His salary is so above the market that I suspect someone is getting something out of this (aka, corruption?). I tell how much I earn because I do want others to look, if they want to, for better paying salaries or to negotiate their current ones.
quoderat 18y ago
I think it's an attempt by companies to hold down costs, but it doesn't work; most people within six months of working anywhere, if they are clever at all (no hacking, other than the social kind) knows what everyone else makes, thus causing even more resentment than just revealing it publicly would. And having salaries out in the open would have a democratizing effect, which would at first be bad for most companies. It's easy to see why most companies hide them, as counterproductive behavior is often rewarded, especially if it appeals to our monkey-brain instincts. If I ever start a company, though (which is likely), all salaries (including my own) will be posted in a public place.
- tokenadult 18y ago
  Some law firms operate on the principle of transparency of compensation and transparency in how many billable hours each associate is putting in, and those law firms tend to thrive in very competitive fields of law. Sometimes people do work harder if they all know they are part of the same team, playing by the same rules.
  - tptacek 18y ago
    That works because the partners (and even the associates) at those firms have a lot of control over how many hours they're going to bill, and because some semblance of a meritocracy assigns lawyers to the most lucrative accounts. Those conditions do not often hold in dev shops.
sh1mmer 18y ago
You should read Fog Creek's take on this http://www.joelonsoftware.com/articles/fog0000000038.html http://www.joelonsoftware.com/articles/fog0000000038.html
- tptacek 18y ago
  And HN's take on that article: http://apps.ycombinator.com/item?id=542173 http://apps.ycombinator.com/item?id=542173
deleted 18y ago
[deleted]
pradocchia 18y ago
You should read up on Semco, a Brazilian company run by Ricardo Semler. Quote from their website: The Semco Group seeks to involve people in discussions regarding what is a fair salary for each employee. Of course, there are times when people think their salaries should be higher and the company believes it cannot pay more. What is important is to always provide an opportunity for discussions regarding this type of issue. http://semco.locaweb.com.br/en/content.asp?content=3&contentID=567 http://semco.locaweb.com.br/en/content.asp?content=3&con... Also try one of Semler's books, like Seven Day Weekend, excerpted here: http://www.inc.com/articles/2004/03/7dayweekend.html http://www.inc.com/articles/2004/03/7dayweekend.html His methods might never fly in America, but it's useful to know that open salaries are within the realm of possibility.
ryanwaggoner 18y ago
I feel like I recently read that these kinds of NDAs are not enforceable in certain states, but my Google-fu is failing me now. Anyone else know if this is the case? Edit: bingo! From Joel's Inc. article: Some companies even make it a fireable offense for employees to compare salaries, or they write something into the standard employment contract prohibiting workers from disclosing their pay. (In the United States, this kind of rule is unenforceable, by the way, but some bosses hope their workers won't know that.) http://www.inc.com/magazine/20090401/how-hard-could-it-be-employees-negotiate-pay-raises.html http://www.inc.com/magazine/20090401/how-hard-could-it-be-em...
- blogimus 18y ago
  Does anyone know which laws (or laws) make this rule unenforceable? Joel (or the journalist) might very well be right, but I'd think one would prefer to know the law before crossing that line.
asmosoinio 18y ago
Wow, never heard about salary-NDAs before this, sounds totally odd to me. Are they really commonly used? Where?
wooster 18y ago
If you're in California, salary NDAs aren't binding, mostly because they're totally illegal. A lot of people make a lot of noise about California being very business-unfriendly due to taxes, etc, but it's very employee-friendly due to things like disallowing most non-compete clauses[0], disallowing salary NDAs, etc. To balance that, we are an at-will employment state. [0] Unless you, yourself, are a trade secret. Which is pretty rare.
- moe 18y ago
  A lot of people make a lot of noise about California being very business-unfriendly due to taxes, etc, but it's very employee-friendly These two are closely linked. Or, as a former boss of mine put it: Tendencies towards democracy are the certain death of any commercial endeavour. (with tongue in cheek)
tow21 18y ago
I understand the rationale behind such things, but my feeling tends to be that salary NDAs are basically unfair; they boil down to a way to reward people who are better at negotiating. The promise a salary NDA makes is basically "you & I have cooked up an agreement to increase your salary more than those around you, and this NDA will let us avoid the social awkwardness that would otherwise result." (and the implicit message is always "more than", whatever the facts) Meanwhile, of course, you'll always be looking at your colleagues, wondering how much more than you they might be making. Unless you're working in an environment where negotiation is a part of the job, then I don't see why rewarding it makes any sense. Of course, there's nothing to stop your better negotiators going and finding a better deal elsewhere - but I see no reason why "better negotiatiors" equates to "better programmers", and there's always going to be some reason why some of your employees might want to move on.

20 points by mannicken 18y ago

noodle 18y ago

the best reason, in my opinion, is to make it so that a company only has to pay the least amount possible to keep an employee on staff. its not particularly "fair", but thats how it works. helps improve bottom lines of companies. always at least try to negotiate :)

arnorhs 18y ago
Not just that... It's also good to compensate excellent performers without every other member of staff getting jealous... :-)
- noodle 18y ago
  thats what i'd use bonuses for :p

wallflower 18y ago

I'm always aghast at the cover stories of magazines like SmartMoney where they include a couple's household income. Salaries are confidential because disclosure of them can damage the company/team dynamic ("Why is she making $5k more than me?!"). It's one of the most private numbers people have. And if you really want to know what people at a fairly large representative sample of companies make, reference the H1-B database or glassdoor.com http://news.ycombinator.com/item?id=570952 http://news.ycombinator.com/item?id=570952

zain 18y ago
If she is doing the same work as me, why is she making $5k more than me? The problem here is unfair payment; by not disclosing salaries, the problem is hidden, but it doesn't go away.
- tptacek 18y ago
  If "we" told "you" why "she" was making $5k more than you, you'd disagree with us, argue, sulk, do subpar work for a few weeks, and then quit. If we could put everyone in a straitjacket salary bracket system, we would, but that would make it harder for us to hire talent. So we do what almost every other company does, and ask people to keep what they make to themselves.
- arnorhs 18y ago
  And just how would you go about explaining to one employee that he/she is less valuable and/or doing less work than the next? You should read what Joel Spolsky has to say about the issue... There are more variables int this than you'd think. He gives a good explaination of why this is a problem in his article on inc magazine: http://www.inc.com/magazine/20090401/how-hard-could-it-be-employees-negotiate-pay-raises.html?partner=fogcreek http://www.inc.com/magazine/20090401/how-hard-could-it-be-em...
- inerte 18y ago
  The root reason is really simple. The company will have to spend 5k more to keep you, while it doesn't have to if salaries are secret. That covers the case when talking about salary is prohibited by a company policy. Why people don't tell their salaries? Well, I do tell to (some of) my co-workers. None ever said to me: Wow, you make a lot of money! - Instead, they say: Wow, I could be making more. - So they'll start looking for other jobs (not counting lots of other factors beside paycheck. Lots) Anyway, top reasons why people don't tell how much they earn: 1) We deny a chance of making others sad; 2) We fear our bosses will discover that we talked about our salaries, thus a) being the reason why an employee quit; b) being the reason why an employee asked for a raise (increasing the company expenses); 3) Fear of security; Once your salary is "out there", the watercooler talk might be: Wow, do you know how much inerte makes? And you don't know who'll end with this information. 4) Compensation isn't a factor when there's blame to assign: Wow, inerte makes lots of money, how come he did this stupid thing? - As if someone less expensive, with a similar set of responsibilities, is allowed to make more errors. And you know what? Some of these reasons are true. I know how much 6/7 members of my team earn per month, and I know I am being underpaid. In 3-5 months I am probably asking for a raise. If they deny, I will at least dip my feet into the job market, and see if I can also get 33% or 90% more. Yes, someone earns 90% more than me for something that I know how to do it. He has more experience on some other stuff, but he's also friends with the boss. His salary is so above the market that I suspect someone is getting something out of this (aka, corruption?). I tell how much I earn because I do want others to look, if they want to, for better paying salaries or to negotiate their current ones.

quoderat 18y ago

I think it's an attempt by companies to hold down costs, but it doesn't work; most people within six months of working anywhere, if they are clever at all (no hacking, other than the social kind) knows what everyone else makes, thus causing even more resentment than just revealing it publicly would. And having salaries out in the open would have a democratizing effect, which would at first be bad for most companies. It's easy to see why most companies hide them, as counterproductive behavior is often rewarded, especially if it appeals to our monkey-brain instincts. If I ever start a company, though (which is likely), all salaries (including my own) will be posted in a public place.

tokenadult 18y ago
Some law firms operate on the principle of transparency of compensation and transparency in how many billable hours each associate is putting in, and those law firms tend to thrive in very competitive fields of law. Sometimes people do work harder if they all know they are part of the same team, playing by the same rules.
- tptacek 18y ago
  That works because the partners (and even the associates) at those firms have a lot of control over how many hours they're going to bill, and because some semblance of a meritocracy assigns lawyers to the most lucrative accounts. Those conditions do not often hold in dev shops.

sh1mmer 18y ago

You should read Fog Creek's take on this http://www.joelonsoftware.com/articles/fog0000000038.html http://www.joelonsoftware.com/articles/fog0000000038.html

tptacek 18y ago
And HN's take on that article: http://apps.ycombinator.com/item?id=542173 http://apps.ycombinator.com/item?id=542173

deleted 18y ago

[deleted]

pradocchia 18y ago

You should read up on Semco, a Brazilian company run by Ricardo Semler. Quote from their website: The Semco Group seeks to involve people in discussions regarding what is a fair salary for each employee. Of course, there are times when people think their salaries should be higher and the company believes it cannot pay more. What is important is to always provide an opportunity for discussions regarding this type of issue. http://semco.locaweb.com.br/en/content.asp?content=3&contentID=567 http://semco.locaweb.com.br/en/content.asp?content=3&con... Also try one of Semler's books, like Seven Day Weekend, excerpted here: http://www.inc.com/articles/2004/03/7dayweekend.html http://www.inc.com/articles/2004/03/7dayweekend.html His methods might never fly in America, but it's useful to know that open salaries are within the realm of possibility.

ryanwaggoner 18y ago

I feel like I recently read that these kinds of NDAs are not enforceable in certain states, but my Google-fu is failing me now. Anyone else know if this is the case? Edit: bingo! From Joel's Inc. article: Some companies even make it a fireable offense for employees to compare salaries, or they write something into the standard employment contract prohibiting workers from disclosing their pay. (In the United States, this kind of rule is unenforceable, by the way, but some bosses hope their workers won't know that.) http://www.inc.com/magazine/20090401/how-hard-could-it-be-employees-negotiate-pay-raises.html http://www.inc.com/magazine/20090401/how-hard-could-it-be-em...

blogimus 18y ago
Does anyone know which laws (or laws) make this rule unenforceable? Joel (or the journalist) might very well be right, but I'd think one would prefer to know the law before crossing that line.

asmosoinio 18y ago

Wow, never heard about salary-NDAs before this, sounds totally odd to me. Are they really commonly used? Where?

wooster 18y ago

If you're in California, salary NDAs aren't binding, mostly because they're totally illegal. A lot of people make a lot of noise about California being very business-unfriendly due to taxes, etc, but it's very employee-friendly due to things like disallowing most non-compete clauses[0], disallowing salary NDAs, etc. To balance that, we are an at-will employment state. [0] Unless you, yourself, are a trade secret. Which is pretty rare.

moe 18y ago
A lot of people make a lot of noise about California being very business-unfriendly due to taxes, etc, but it's very employee-friendly These two are closely linked. Or, as a former boss of mine put it: Tendencies towards democracy are the certain death of any commercial endeavour. (with tongue in cheek)

tow21 18y ago

I understand the rationale behind such things, but my feeling tends to be that salary NDAs are basically unfair; they boil down to a way to reward people who are better at negotiating. The promise a salary NDA makes is basically "you & I have cooked up an agreement to increase your salary more than those around you, and this NDA will let us avoid the social awkwardness that would otherwise result." (and the implicit message is always "more than", whatever the facts) Meanwhile, of course, you'll always be looking at your colleagues, wondering how much more than you they might be making. Unless you're working in an environment where negotiation is a part of the job, then I don't see why rewarding it makes any sense. Of course, there's nothing to stop your better negotiators going and finding a better deal elsewhere - but I see no reason why "better negotiatiors" equates to "better programmers", and there's always going to be some reason why some of your employees might want to move on.