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Google Staffers Share Salary Info With Each Other; Management Freaks
Nerval's Lobster writes: Imagine a couple of employees at your company create a spreadsheet that lists their salaries. They place the spreadsheet on an internal network, where other employees soon add their own financial information. Within a day, the project has caught on like wildfire, with people not only listing their salaries but also their bonuses and other compensation-related info. While that might sound a little far-fetched, that's exactly the scenario that recently played out at Google, according to an employee, Erica Baker, who detailed the whole incident on Twitter. While management frowned upon employees sharing salary data, she wrote, "the world didn't end everything didn't go up in flames because salaries got shared." For years, employees and employers have debated the merits (and drawbacks) of revealing salaries. While most workplaces keep employee pay a tightly guarded secret, others have begun fiddling with varying degrees of transparency, taking inspiration from studies that have shown a higher degree of salary-related openness translates into happier workers. (Other studies (PDF) haven't suggested the same effect.) Baker claims the spreadsheet compelled more Google employees to ask and receive "equitable pay based on data in the sheet."
The big difficulty is that salary gets really complicated, really fast. It helps many people, but building the system that is equitable would be difficult, and all the positive outliers could be harmed in the process.
SCENARIO: Money is a little tight but applicants are plentiful. We interview lots of people, and three of them look very qualified and are willing to work for a certain wage in a tight range. All hired. Three months later the group discovers a unique need, needing a developer on a specific tool with specific skills. They'll be hired at the same job title, but because the group need a specialized skill immediately, they will go through a headhunter and ultimately pay a premium for that fourth worker. Now, because all four have the same job title, the critical question: should the company go back and increase the three other workers' pay to the same pay rate of the fourth worker with the specialized skill? Should they refuse to hire the specialist at a rate above the other three?
In some fields it can make sense to standardize pay. Most skilled trades operate this way. There is a standard rate in a region for a Journeyman with specific certifications. Trade unions can help fight for specific benefits. You know that this class of tradesman has a specific skill set and can be hired for $27/hour. You need four of them. All of them are treated as interchangeable.
In other fields it can make far less sense to standardize pay, mostly because there are many variables. Unfortunately software development is one of those fields where it is complicated. It would be really convenient -- both for applicants and employers -- to have such a scale. This is a Java programmer with seven endorsements certified at grade 27, so pay is automatically $x.
But unfortunately for this field, technology is ALWAYS changing, so the scale would be difficult. You were certified in version 3.2, but the system has moved on to version 4.1. Does that individual lose the old certification? If they take the new industry trade group's course do they now have 8 certifications instead of seven? Do certifications expire over time, or transfer between technologies? With the huge number of technologies out there, does that mean we'll have thousands, perhaps tens of thousands, of different certifications for the trade union? How are individual certifications weighted, and how are they equivalent? Is a master Direct3D 12 certification the same value as a master PostgreSQL 9.4 certification? Is a PostgreSQL 9.4.4 certification valued differently than a PostgreSQL 9.3.9 certification? If someone has certifications in other specializations, must those apply in the cost? With the rapid pace of an enormous number of technologies, what prevents someone from getting hundreds of certifications? Such as "I've got 47 certifications, one for each version of the software released over the past two years"? While it works good for slower-moving trades, it does not work so well in software.
Sometimes I feel it would be nice to have programming trade unions. There are many features like collective bargaining for benefits that could be nice. But for actual salary levels, union-based standardized wages would be a nightmare. It would add a convenience factor to ensure new workers have certain minimum competencies, but it unfortunately adds maximum values as well. Nobody wants to know that they could be making more due to market pressure.
By establishing fixed buckets of pay levels, it establishes both a minimum (yay) and a maximum (boo) within a region. If you've got any kind of specialization or exotic skill -- and many of us do -- those same pay buckets that help many people also hurt the top performers.
//TODO: Think of witty sig statement
"Secret salaries" is a classic prisoners dilemma, but with a twist. Here the prisoners are allowed to communicate to achieve the statistically best mutual outcome, but the statistically best mutual outcome also comes with the slight penalty that the one with the best outcome currently (highest paid for position) not only receives no direct benefit, but also receives a slight penalty in that if others use the information to say, get a raise, their highest paid position will be lessened or eliminated.
Now statistically, in a company with thousands of employees, many with roughly the same "position" the logical thing to do would be to share, as odds are extremely good you aren't in that highest paid position and thus can only receive benefit. But the idea that you *MIGHT* be has probably kept employees from doing this before now.
As a hiring manager, I'm given a number and that's what I get to hire someone with. If someone asks for more, I can usually try to accommodate, but if you want 100K and I can only give you 80K, then it comes down to whether you want the job or not.
As for rewarding your work... equity can certainly come into play, but if the principle is that I have to pay you what other people are making, then perhaps I just can't hire you to begin with. Some people would say that maybe I should not hire you if I can't pay you the same as someone else. I don't know if I agree, but I can see that argument. Still, I'm out a worker that I could really use to unburden everyone else on the team.
If you are willing to work for 80K, I am happy to give you bigger merit raises than your peers if you worked extra hard, but if you walk in the door unhappy with your base salary, should I cut into the bonus pool of others just so you can get a massive raise to make your salary equal to theirs? Didn't they deserve their raise too? Or do they deserve less simply because their base number is higher than yours?
Of course, there are policies like equity raises that some businesses have which ensure that people do get on that sort of footing, but that's often a separate pool and not all places can afford it.
What I don't think is that you should consider what someone else makes to be a reflection on what the company thinks of *you*. If you're capable, you may start lower, but I'd probably be happy to see you become a manager or advanced individual contributor where that other guy will never get higher than he is today. You'll start at 80K, but you'll someday get to 150K whereas the other guy will never see the other side of 110. Alternately, you could be selected for more training opportunities or given more interesting work. All of that turns into more money too, either at that work place or at another place you move to later.
The problem is that it is very hard to do what is fair because the conditions in which "fair" are measured in can change. If we're making hundreds of millions of dollars, then its hard to justify giving you low pay, but if we're not, then I can't afford to give you the same higher pay that would be fair when we were doing well. Fairness is a very subjective concept unless you very strictly define what you are talking about.