I read an article recently about a new trend. Ok. They thought it was a new trend. We’ve been doing that since the mid 70s. But, then again, like the products and processes we’ve developed, our ideas seem to be those to be trendy in a decade or two or three.
The idea now (or back then, for us) seems to be let everyone in the company know what everyone is paid. Now, it was pretty easy for us to do this for our first three decades, when everyone’s base pay was the same. And, we had votes each month that discerned who everyone thought provided the major contributions to the projects. And, divided up the profits for each project among those who made the most contributions. (Our staff knew that only 50% of the profits were distributed; the other 50% covered income taxes, board compensation, and reinvestment in the firm. However, there was leftover money- usually. And, that was provided to our profit-sharing and pension plan for all staff.)
(I admit it. We did employ a “trick”. Everyone got two votes. We simply assumed everyone would vote for themselves once and then list someone else on the second ballot. Sure the votes for each project were inflated (or not) by one vote, but that was easily handled.)
Firms that are following this ‘new’ concept include lots of small companies (of course) and a few larger ones like Whole Foods. And, in these companies, who don’t follow our method of compensation, some folks are pretty shocked as their inflated ego bubbles get burst- recognizing they haven’t achieved that prima donna status they thought. But, besides letting folks know where they stand in the regard of their employer, there’s another benefit to this prctice.
It will be awfully hard for the firm executives to keep getting raises- or their inflated compensation- while not sharing such benefits with their employees. It also will make it harder for firms to play the gender gap or discriminate against minorities, when this practice is implemented.
And, before you complain this is a problem, consider this. Most employees discern pay rates among the staff via leaks or outright discussion. And, many average salaries at various companies are already published (especially for the larger firms)- check out salary.com or indeed.com, if you don’t know that such information is ‘public’ knowledge.
Moreover, when an employee feels that s/he is underpaid or obtains suspect performance assessments, they are more likely to leave- or deliberately underperform. As we suspected when we set up our system way back when, more folks would rather seek and obtain a new job that to deal with pay issues at their current employers. And, employees leaving or underperforming does no firm any good. (Peter Bamberger, Tel Aviv University and Elena Belogolovky, Cornell University.)
I have a feeling open salary data is going to be more of an issue in the future. Firms are now beginning respond to the new requirement to cite executive pay as a multiple of average staff compensation. (Yes, firms have been required to do so for a while, but enforcement of the rule has been lax- read non-existent.) As compliance grows, the ability to hide salary data will become even more problematic. The goal of the rule- that excessive executive pay will become a more difficult practice- will demand open salaries for all. Because once employees are confronted openly with the inequity, you can bet these employees will underperform accordingly!
Pay for Performance. Really! | https://t.co/W7A3iICSqa @AckermanRoy on open salary disclosure. Good idea?
I certainly hope so, Marian!
This issue of pay for performance has always been something I am very touchy about. I hate it when top level executives are rewarded with huge salaries while the ordinary employees who are the ones usually doing the bulk of the work carry home peanuts. It’s just not right. Sometimes even Junior and middle managers get short changed. I speak from experience where this is concerned. I think that disclosure may be necessary to reduce exploitation.
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I agree with you, Keesha. I never should have implied that it’s only the folks at the bottom that are shortchanged.
This practice has been exacerbated by the actions of “hedge funds” that buy stock in companies and demand they fire staff (which included middle management)- so the remainder of folks find they have more to do (to accommodate the fact that there are fewer of them to effect the funcitons needed) at no additional pay is also true.
I’m afraid I doubt if knowing salaries would stop inequities. I’m afraid the attitude would still be, “If you don’t like it, quit. And don’t complain, or you’re fired.”
I could easily be that cynical, too, Marian, but…
1. When executive compensation is listed, the stockholders will begin to take notice. And, understand why their dividend payments are so low.
2. When executive compensaiton is listed- and the staff compensation is listed- it is clear to everyone what is valued (or not) in the organization. And, voting with feet will ensue- and as folks quit, as folks leave, things will change.
It’s exactly why WalMart has begun raising payscales. If you think WalMart that loves to crush suppliers and demand lower and lower pricing would pay their employees more (as if they had a heart)…
Interesting, and timely. Just had a conversation at work where I found out that one of my fellow nurses had misgauged Idaho nursing salaries and therefore placed her “expected hourly wage” at a lower than appropriate rate for someone with her years of experience. And instead of dealing with her fairly and adjusting it according to the standard scale (if we even have one? Everything seems arbitrary these days where I work) they just went with what she stated.
Since it’s a stressful workplace anyway, to find out you’re getting up to $10/hr or more LESS than people doing the same work isn’t making her feel very loyal to our workplace (and really, no amount of salary would make up for current management issues… this is just one example of them.)
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Ah, Elisabeth..
You bring up a very important issue. The pay we provide our nurses (and teachers)- and the decreased staffing levels- makes it very hard to stay motivated. It’s only the inner love and drive that keeps more of our nurses satisfied. And, I also believe that a lot of these problems for teachers annd nurses are related to genderism- most of these professionals are female….
Pay for Performance. Really! https://t.co/PCRNxcBYOj via @RAAckerman I have it made-I just talk to myself. ☺
Very interesting concept and to think you’ve been doing this for years.
It was the only way we thought we could retain the best- and have them continue to perform at their best!
I agree with the comment Keesha left. Sometimes it’s the “little guys” that do the work that makes the “top” look good.
Martha:
I wish the answer was only ‘sometimes’. More importantly, it’s those same guys at the top who continue to declare how it’s THEIR actions solely that produced the results. Like they built their products, like the sold the widgets, etc.