Publish Everyone's Salary--Why Not?

Are the salaries in my company appropriate?


I get asked this question many times in my consulting practice. Managers ask if they’re paying their people the right salary, are they paying their executive assistants, are they paying their vice presidents, officers, managers? I have a simple reply to the question. If you were to publish the salaries on a bulletin board in the lunch room where everyone could see it, would anybody quit or complain? Most managers scoff at this suggestion, but before you do, let’s examine what institutions, organizations, and companies do this now.

Would you believe that Steve Jobs, the person who won the CEO of the year in 2007 when he started his company after Apple Computer, a company called Next Computers, published the salaries of everyone they hired for everyone to see. Everyone in the company with their name, their title, had their salary published. Okay, that’s one company. Who else? The government. The government employees one in seven people in the workforce at state and federal levels, 14 million people. They all know each other’s salary. They know by their civil service ratings. They may not know it to the penny, but they know it pretty close. Teachers – teachers sign a contract each year. All teachers know what every other teacher makes. It’s a function of time, grade, and education. It’s no secret. These people work hard. They’re ethical, honest people.

Now we look at the private sector. For some unknown reason, the private sector hides what everyone makes. There are significant exceptions to this. For example, hourly salaries and General Motors, the automotive industry, the contracting business. So it’s not hard to understand that perhaps as much as 40 percent of the workforce, including both institutional and private sector employees, have their salaries disclosed to their workers. Why not? What’s the secret unless it’s one of embarrassment that person A who makes $65,000 a year is not better than person B who makes $42,000 a year. Publishing salaries removes any issue with respect to gender or racial segregation with respect to compensation unless you’re one of the companies where there is widespread differentiation between compensation levels and people doing the same job.

But if you’re trying to come up with a fair compensation schedule, why not publish it? what’s the secret? Do you think people will quit because you’re the president and you make $700,000 or $800,000 a year? Well guess what? The salaries of all the officers of public companies are public knowledge. Any employee can go to an annual report or perhaps a report that each public company must file to the Security Exchange Commission, and find out what the officers make, what their bonuses are, what their stock option programs are, what kind of employment contracts they have. So the more we examine the issues of disclosing salaries, the more we find that salaries are public for the most part. But for some reason, companies create problems for themselves by not publishing salaries, particularly midrange companies.

Why not publish them? It will give you an opportunity to listen to people and find out if they’re correct in the first place. People aren’t dumb. They know if Joe makes $80,000 a year but he’s only worth $40,000, they know that’s a problem. Maybe you should know that’s a problem. Maybe you will know if you publish it and you listen to the complaints or people threatening to quit. Maybe Joe is the one who should quit, and maybe he will quit once everyone around him recognizes that he’s getting paid twice as much as he’s worth. In other words, a fast way to determine the appropriateness of your salary schedules is to publish them for all to see.

Some people consider that a violation of their personal privacy. Why? Why is salary protected as if it’s some sacred piece of information about someone's personal life? It shouldn’t be. Why shouldn’t you be proud of what you get paid relative to other people around you. Also knowing what your boss makes gives you an idea, factually speaking, of what you might make if you someday have your boss’s job. There are many, many incentive reasons and disclosure reasons why publishing everyone’s salary eliminates a lot of problems with compensation programs. For one, it should free up hundreds of hours a year that people spend trying to learn what the other person makes. Why not just tell them? Shouldn’t management have to defend or explain what they pay people anyway? Shouldn’t the person’s value be apparent to those around them? If it’s not, maybe the value is incorrect.