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Monday, November 08, 2010

Why Are Salary Ranges Secret?

You really do need to know where you stand in a salary range to make wise career choices. So, why won't your HR department reveal this "secret" information?

Why are Salary Ranges Secret?

6 comments:

Anonymous said...

Ugh, you're going to make my life miserable. I already get enough employees asking for raises with one of those free salary.com reports. I've found them to be consistently off in terms of accuracy. But hey, you get what you pay for right?

Suzanne Lucas said...

Anon, I agree about the data there. I think I'll go back to add a disclaimer just so you don't have to suffer too much.

Anonymous said...

I've been a compensation analyst for 25 years, and I agree, in theory, that salary ranges should be made public within a company. I guess that makes me a fan of 'pay translucency,' not 'pay transparency,' which would entail divulging what individuals earn. Since that is frequently based on performance appraisals that cannot be made public, translucent is the best we can hope for.

In theory, employees, when shown the simple math and the statistical rigor that we use to define ranges and then collect the market data to assign jobs to ranges, should be able to understand the logic involved and accept how it impacts their own paycheck and work situation.

Unfortunately, in my experience that has been a case of 'not so much.' With almost no exception, even when employees understand the range, they question their actual or comparative place in their range. (Of course, I can't say anything about comparative numbers, as I am unable to confirm or deny their rock-solid belief that the guy in the next cube is making more than they are. Hint: frequently the guy in the next cube is lying. I know this, because people keep telling me what he makes and it's always wrong.)

When I have been free to explain the process of market pricing to an employee, I have more often than not been told that I am a) stupidly matching their job or b) a shill for The Man. If the job is slotted because it's unique and can't be priced with survey data, I've been told that I'm not comparing the job internally correctly even though all these decisions are made in a group setting.

Here's the part that may be insurmountable: no one wants to admit that maybe their work is not as valuable as the next guy's. And I get that, really; nothing is more central to an adult's good feelings about themselves than the thought/belief/and sometimes delusion that what they're contributing is very, very valuable and that they are the very, very best ones at that job. And the question of pay cuts close to some very primal bone; for example, the one that's connected to protecting one's family, and the one connected to just plain surviving. People get very emotional and the potential for irrational behavior becomes much higher.

Pay translucency could work, with the best line managers ever, who make sure that their employees get unbiased feedback and constructive criticism. In a company where employees' faith in their own managers may not be so rock solid, sharing even salary ranges is fraught with uncertainty and would require, again in my experience, a full time equivalent just to provide the background necessary, field the questions and defend the decisions of the company.

By the way, frequently this lockdown on pay information comes, not from HR, but from the senior management of the organization. The HR professionals I have worked with over the years almost uniformly support more sharing in the compensation arena, as do I. I get a little tired with people blasting HR as the villain in this piece.

PV said...

No matter the policy (disclosing or not the ranges), it is highly necessary to be open to discussion about the benchmark methodology.

People providing personal benchmarks are ready to be challenged on their data if done properly. In many cases, they recognise it may not be really accurate and feel positively surprised we take the time to listen to their queries.

I would recommend the following paper from Anne Bares (Compensation Force): http://www.compensationforce.com/2010/10/taking-a-stand-for-quality-in-the-pay-data-battle.html

Mike said...

I'd also like to point out that by having the pay and reasons for pay discrepancies known, you can eliminate a great deal of pay discrimination. If a company is actively doing it on purpose it becomes immediately clear, and if it's a situation of more systemic discrimination it becomes known and the issue can be dealt with in an appropriate manner.

There's no good reason to hide this data, and it really smacks of someone wanting to use that information imbalance to take advantage of others.

YoungHR said...

The article is really worth to be bookmarked! I really feel that employees should be aware regarding their salaries. So that they can judge themselves better. Salary is the reward that they receive for their part of daily work so it is better to pay them as per their potential rather than snatching their rights!
HR Manager