Lifting the Curtain on Salaries...and why it's a good thing!
For years I was taught that salaries were to be kept secret. When I began work, every document that referenced salary reminded me that remuneration was strictly private and confidential.
But why the secrecy? I believe there are great benefits in making this open. It can help form a firm foundation for the company and greatly help you scale. Further, I believe that, as far as possible, the company’s financials should be as open as possible but I'll limit us to salaries first. Lastly I’ll mention the first master key to making it work.
By the way this update was triggered by a conversation I had last week. Check out the video for the background to the conversation, and other insights for how to successfully adopt a more open approach.
Mystery and Intrigue…
I’m pretty sure that there has been at least one occasion when we have wondered how much the person sitting next to us is getting paid...and how much of a bonus they received compared to ours. Not to mention - in some parts of the world - how much people received during cultural celebrations: Christmas, Chinese New Year, Hari Raya, Deepavali and may be others.
Opening up salary ranges I suggest improves accountability at all levels of the hierarchy. A manager can be held accountable for salary decisions she makes in order to hire, develop and promote a team member. Team members can be held accountable for their job responsibilities and performance in line with their salaries. A manager should be able to defend a decision to pay someone more (or less) and if they can’t, why the difference? When anything is kept secret, there is an opportunity for poor decisions.
The mystery disappears and collaboration is encouraged. If you want to earn more? Then look for opportunities to move up, take on new responsibilities, improve performance and processes and take the story to your leadership. If there are questions about salary and bonuses they can be brought up and discussed openly.
The Master Key…
Values, values, values!
This crucial element I recommend needs to be firmly in place before you open up the curtain on salaries. Values are often overlooked as “fluffy” but they are crucial as the bedrock for, well, just about anything the company does. Do you have them in place; does everyone agree they are how the company runs and how people are treated; are there clear ways and examples of how to live by them every day? If these are not firm I recommend starting there before you begin the journey to more openness.
For more insight and practicalities check out the video here
With a clear set of values, decisions are much easier at all levels. Always ask, “Is this decision consistent with our values and will everyone accept it as such?” If that’s yes, then it’s easy to defend and shouldn’t need further justification.
Money can be a sensitive subject in many situations: in families, in companies, in sports teams, and between friends and neighbours. It’s not always possible to be fully open but the more it can be achieved, tensions can be diffused, accountability can be increased and better decisions can be made…and as with many things, start with your values!
My very best and keep Scaling.