What If…… You and Your Peers Posted Your Salary?

Occasionally in this blog I’m going to offer What If’s? These will be an observation, a question, and some ideas.


This first installment of “What If” is pretty scary:



What if everyone in your company knew each other’s salaries and total compensation?


Before you say it shouldn’t happen, realize in many industries it does in varying degrees of transparency. Professional sports is perhaps the best example – where total salaries and incentives are a big part of media. In other sports, such as Formula 1, the totals are often disclosed but not the contractual details.


In publically traded businesses it’s pretty easy to see what your president or key people in the company make – it’s a public record.   That doesn’t tell you what other businesses or BoDs they might be on but you do know their corporate salary and bonuses.


When we look at conventional businesses there are many that are highly competitive and that incentivize work. For example, in the financial industry much of compensation is performance bonus based and, while you might not know the exact compensation of your peer, it’s reasonable to assume they have a similar bonus package and you can estimate their performance compared to you.


As we move to more typical industries like IT compensation is not as transparent. Most of you reading this probably don’t have a spreadsheet with you and your peer’s salaries. Many companies have proprietary or contractual clauses that preclude sharing of this type of data. Some at Google however did exactly that and about 5% of the total employees shared their info.




Read the Google thread and you can see how complicated this gets fast. There’s far more in this than just salary…




Why is this scary to a company and its leaders?

There are a few reasons:


Frist, it gives employee’s knowledge and knowledge is power. In the Google example some employees determined a division manager didn’t pay out bonuses and that resulted in a group with some tough questions. Imagine comparing the data on gender or reporting manager. In reality, a company hires at the lowest acceptable offer and better managers negotiate better raises and these things become very apparent in composite data.


Second, it gives competitors a guide to poaching and pricing. If I know what you make I also know where I need to start to make you an offer to leave. Likewise, if I’m bidding against you on a contract and I know your salaries that helps me create a pricing strategy.


Third, customers don’t always like to hear what their “support staff” make. Ok, I understand the angst – but realize we work lots of uncompensated time on things like proposals and in reality our jobs can be cut at any time with little or no notice.


The second point is a big one in the competitive government contract sector; competitive pricing is the difference between winning and losing many contracts. When all else is equal price becomes the discriminator – sometimes even when all else is NOT equal…


Pretending your staff doesn’t know or share salaries is naiveté. First, friends share info. This is particularly true when leaving or joining a company. How many of us have referred a friend to our company only to learn the details of their acceptance or rejection of an offer?


If you work on proposals and pricing you pretty much know what the company bills positions at to the customer and if you know your salary and bill rate you can easily figure out most people’s take-home. It’s the bill rate minus overhead and profit…


Here’s an interesting paper on the topic – http://www.usc.edu/schools/business/FBE/seminars/papers/AE_9-7-12_BARANKAY.pdf


Thoughts on the topic:

In reality we don’t work for just compensation. Sure it’s a big part and I often say, “If you can’t spend it, drink it or eat it it’s not a thank you.” However, I’m also fond of saying, “Pigs get fat, hogs get slaughtered”. The latter is paying homage to the fact that we ALL contribute to the success or failure of our companies. Sure I want to have great compensation but I also want to help my company grow and keep paying me that salary.


Linked In provides the GlassDoor to help you know where you are in your compensation compared to peers in a discreet manner… The Genie is out of the bottle like it or not!




Comparing how much you get paid with your peers might give you some insight and help you evaluate your performance. It’s hard to know specifically how well you are doing. This is where the pro-sports salary analogy works. In theory: if you are better, you make more and everyone knows your stats and salary. Likewise, if you are a sales guy and paid primarily by bonus – it’s probably good for your fellow sales folks to know your stats. Knowledge breads competition.


Transparent salaries also brings risk – the biggest being loss of competitive advantages with other companies. Companies with good rates will either lose staff to other companies or have to raise rates to keep staff. Both erode that competitive advantage.


My gut feelings:

I’m ok with my staff sharing or not sharing their salaries – it’s their info and their choice. This is because after 25+ years in the industry to assume they don’t is fantasy. We are a small and competitive company – I’m not about to post my employee’s compensation here or anywhere public, but in reality we respond to position rate calls every week – I have one due on the 26th… So I’m often providing competitive information about our company’s staff and hopefully its protected with NDAs and prime contractor’s discretion.


With online tools like Linked In’s Glass Door you really don’t have a choice.


We heard recently in the media about a company that set salaries at a base of $70K – sort of a socialist salary plan I guess. What happened next was those that worked hard were NOT happy with others getting the same and working harder. While this wasn’t a test of transparent salaries per say, it does demonstrate there are at least two factors what you make and what you contribute…


If you’re going to post or share salaries then there needs to be a clear and consistent salary-for-performance equation. That IS something I do believe in! At Cabin Digital we include performance incentives and new business bonuses in EVERY employee’s compensation package – I want every team member to know if you bring new work to Cabin Digital, no matter how small, there is a clear upside for you. Should everyone help a company to grow? Sure. Should the company compensate “extra” for that? Hell YES is my answer!


It’s a simple pattern – all of our staff knows this simple equation: You as an employee HAVE to make more than your pay and overhead to make the relationship viable. Sometimes in bigger companies that concept gets lost as folks feel like “I don’t make money for the company, I’m just a gear in the machine”. That’s when you start to lose the competitive advantage.

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