I’m a big fan of the concept of pay transparency. I mean, shouldn’t we all be? Years ago, I wrote this blog on Buffer (a social media app) doing pay transparency, and it was interesting to me at the time. Later, I actually applied for a job with Buffer — didn’t get it, naitch! — and it’s not true pay transparency. They mostly give you a range, which a lot of jobs do. I have heard that internally you can look up people’s salaries, which I guess is a more legit version of pay transparency.
There are apparently some signs we’re getting there in terms of pay transparency, though: Maryland just signed a bill towards that end, as did Obama on his way out the door. Most of these pieces of legislation are admittedly aimed at solving the “women and minorities make less” problem (a very real problem), best summarized here:
According to the Labor Department’s weekly earnings report for the second quarter of 2016, women’s median earnings amounted to 81¢ for every dollar paid to a man. The gap widens for women of color, with black women being paid 69¢ and Hispanic women paid 62¢ for every dollar paid to a white man. Taking the gender wage gap out of the equation, black men were paid 75¢ and Hispanic men paid 69¢ for every dollar paid to a white man. Armed with information about what colleagues take home, employees will have the information and support they need to push for equal pay.
I’m all for that. Well, let me rephrase that. Pay transparency will be good if we take the transparent information and do something with it. If we take the information and just keep reporting inequality, then who really cares? We all know women and minorities make less. Unless we’re collecting this data to change it, it’s meaningless. That might be the first part of the issue.
In terms of conventional, white-collar, male-dominated, target-chasing work — I’d argue pay transparency is pretty far off.
Pay transparency: The first tier of issues
It’s hard to truly have transparency around a topic that people don’t understand in the first place, and I’d argue salary is one of those topics. Consider this chart, for example:
Here’s a reference point for it. So, 35% of people who are actually paid above market believe they are paid below market. That’s 3.5 in 10! And then for people paid at market, 64% — 6.4 in 10! — believe they’re paid below market.
This is a lot of tossing yourself on the cross, writ large. “I need to be making more since I put this place on my back every day,” some middle management buffoon screeches. It’s all garbage. I’ll explain most of how salary is set in the next section, but look at this chart. There’s no way we can have standard pay transparency. Absolutely no one knows what’s going on in the first place, and pay transparency would be a match to that gasoline.
Pay transparency and how salary is actually set
You want to believe that companies have a logical process for salary-setting, promotions, etc. In reality, they often don’t. They may have an annual deal tied to performance reviews — in and of themselves a joke — with some process. But in general, most promotions are inherently subjective. They’re typically tied to how close you are to the existing power core + bringing in some big project under-budget that a client/partner liked.
If you doubt me, that’s fine. But consider some C-Suite numbers. 20 years ago, the average number of C-Suiters was 5. Now it’s 10. That’s double. You have a “Chief Strategy Officer” — even though all execs need to own strategy — because the existing execs want to reward their favorites. That’s typically how salary works.
The dirty little secret about white-collar pay transparency
There are certain terms in business that should mean something and drive productivity, but are typically used as weapons by management. Some examples?
- “Best practices”
- The entire concept of email
Salary’s in this bucket too. Your salary should be a reflection of how hard you work and what you bring to the table for the company, but again, often it’s subjective. As a result, managers can use it as a weapon. Some classics include:
- “There’s a scarcity of promotions out there, so you better work your ass off this year”
- “We don’t have the resources this year for raises, but you’ve been doing well. Keep at it and next year is your year!”
- “Who told you that James makes $15K more than you in the same role? That’s not true.”
Let me take those three statements and now tell you what they really mean:
- “You ain’t going nowhere because you make me look good and I need that.”
- “I myself just got a $20K pop.”
- “James actually makes $24K more than you do. I like how he kisses my ass and you annoy me.”
Do I sound resentful? Sure enough! But this has happened to me, all my friends, all their friends, and some of my family. How can we have pay transparency if “who makes what and hey you could make more” is an ultimate managerial weapon?
The tech company model with pay transparency (annoying)
Most business journalism about pay transparency tends to only look at tech companies. In general, tech companies are a bit more forward-thinking and younger. It’s logical that some might be embracing pay transparency. (Like Buffer, above.) You think some 100 year-old company with embedded execs chasing perks like dogs in heat would ever embrace this topic? No. You need to take stuff with a grain of salt. You read an article about some company in the Mission District with a spreadsheet of salaries and it sounds cool. We’re moving towards pay transparency! That’s one company. In 15 years, when they have 12K employees, it’ll be hierarchy to the max. Pay transparency? Toss that out the window. That’s how stuff evolves. Understand that.
Pay transparency and the 17-trait porn star
Perhaps nowhere are salary topics more frustrating than during interview processes. Negotiating salary in interviews is hardly a widely-held skill set. But on the corporate side, as I mentioned here, there’s a bigger issue. To wit:
Let’s say you have a job that needs a background in marketing automation, but you also want an active porn star who speaks five languages, plays classical piano, and has written three novels. That’s a lot to ask from one person, right? You’d assume the salary for this role should be fairly competitive?
Let me scroll down on this imaginary job posting, and … oh, OK …
So, I need 17 highly-specific skills and yet, you find that to be worth $63,000? Once people with those 17 skills hear that number, they will exit your funnel — your “talent management pipeline,” sorry — and then you will be left with a bunch of also-ran losers with 8 of the 17 skills.
In this way, your efforts at “pay transparency” actually turn off the candidates you need. See the issue?
Any other thoughts on pay transparency?
My name is Ted Bauer. I mostly make money through freelancing and ghost-writing for others, so if you need that service, let me know.