Imagine if you went to the store to buy bread, but you didn't know how much all the other people in line were paying for their bread. When you get to the counte

Imagine if you went to the store to buy bread, but you didn't know how much all the other people in line were paying for their bread. When you get to the counter, the baker charges you some arbitrary amount. Today you have enough money to buy bread, but the baker warns you that he may charge more tomorrow. Since you don't know what anyone else is paying for their bread, you can't have any idea if what the baker charged you is fair or not. All you know is that you need to work as hard as you can so that you can be sure you will be able to afford tomorrow's bread. Of course, this doesn't work. Nobody is preventing you from asking your neighbors what they paid for their bread. Once you know what a "fair" price for bread is, then you know exactly how hard you need to work to afford bread, and you have little incentive to work any harder than that. If you own a company, ideally you don't want your employees competing with each other. You want each of them to compete with themselves, pushing their abilities, growing, learning, improving. You don't want them to know exactly how much they need to do to earn that next promotion, because then they will have little motivation to do more than the bare minimum. If you own a company, unlike the baker, you can have some amount of control over the flow of information. This control allows you to manipulate your employees motivations. Like any amount of control over anything, this control can be abused...but in capable hands it can also be wielded to great effect. An open salary policy gives away that control entirely...