Somewhere in the middle of new employee orientation, more years ago than I shall admit, I suddenly jerked awake when the briefer very slowly enunciated that “It is a fireable offense for employees to discuss their salaries.”
Tom Peters once insisted that in a capitalistic society, where we reward according to performance, why not post the scores? The answer, quite obviously, is that we often don’t reward according to performance, despite what we say. What companies get from such a policy is mistrust, with rumor replacing fact. As the WSJ reported in an article today (paywall), even ostensibly well-run companies like Apple would sometimes rather play games than build a more powerful organization.
The article makes an important point: Don’t kid yourself — people will find out the truth. And some of the better performers will feel betrayed.
Like many readers of this blog, I come from a military background, where you can look at people’s uniforms and know to within a few dollars a year how much they make. And not coincidentally, the best military organizations make a fetish out of building Einheit.
In Boyd’s framework, Einheit is what defines the organization: We strive to improve it within our organization, and one of your primary goals is to destroy Einheit in your opponents. If you build an environment where internal politics flourishes, you’re doing your opponents’ jobs for them.
As the Journal article observes: “So one way for employers to head off internal politics: Be even more transparent.” It would seem logical. Showing that you have nothing to hide is a step towards building trust.
Slightly East of New 
IBM had similar policy although penalties weren’t as severe. Early 80s, local silicon valley paper had series on salaries and if you job-hop’ed every year or so … you were likely to be paid 50% or more than somebody that remained at the same company for decade (there were lots of other observations about silicon valley job culture).
I copied the articles and wrote an “open door” (official letter to management) explaining how I was significantly underpaid. I got back a written response from the head of HR saying that my complete employment history for the past 10-15yrs had been reviewed and I was being paid exactly what I was suppose to be paid.
It turns out I was doing a bunch of advanced technology and the company had decided to form a new group to work under my direction and I was interviewing new graduates (with advance degrees) for the group. It turned out that HR was offering them starting salary 30% more than mine. I took the original “open door”, the written response from head of HR … and wrote a cover letter further explaining the circumstance regarding the offers for new hires that were suppose to work under my direction.. I never got any official response, but within a month I had a 30% raise (putting me on level playing field with new hires I was interviewing).
note … however, I had been told several times previously that I had no career in IBM … having offended some numbers … frequently by fixing something (or refusing to fix something) they had messed up.
I agree with your observation that transparency is a step towards building trust, but I would disagree with the Journal’s conclusion that transparency will head off internal politics. On the other hand, internal politics isn’t going anywhere, and I suspect it is internal politics that actually is what eventually gives you the einheit need, if not wants.
It is not the salary that a manager wants to hide, it’s the amount of control an individual has within a corporations that a manager feels they need to hide.
In a military organization the amount of control a person has is on his/hers chest, and conformity to that hierarchy structure is what enforces control, so salaries-hiding is not really that important.
Here’s a comment that came in from Hans Norden, http://AnticipatedOutcome.com:
What I wanted to say is very Deming related. Pay for performance is a strange idea because we work together. Moreover, most employees cannot make real changes to the system; they have no authority. In order to make a difference, one needs to change the system as 94% of ALL results are systemic.
Also, judging from the cheating with SAT scores in the DC school district by principals, if you drive quantitative results and make compensation or even tenure dependent on delivery, you WILL get any results you ask for, even if it has to be done through cheating. After all, 94% is systemic and if you have no authority to change the system but ARE held to account for the results … then what are your options?
It drives me nuts to see the kind of nonsense that execs embrace as Gospel and the common sense that they reject as heresy.
Perhaps SATs should be thought of as in the same context as employee profit-sharing. While profit-sharing is fake, it does work, and gives some satisfaction to both the employee and employer, just not in the way that it makes common sense.
Profit-sharing, as the reading of any section of a labor contract or classroom text book on management that I have read states, is about increasing employee motivation, and not about either sharing or profit. I think the same could be said about the SATs.
As Wikipedia states SAT is an empty acronym, and the test is not really about scholastic, aptitude, assessment, nor about testing. SAT is just like employee profit-sharing it’s about controlling the movement of people.
The problem is that management really has no control over the employees under their command, and more specifically they have no control over the velocity of those they command.
While I am not religious, I think this can be best thought of as giving Ceasar what is his. It’s Ceasar’s to command and not to control one’s life nor the movement of that life in our daily work. Control is mostly in the form of self-control, which when under force turns into a judgement. The problem is corruption interferes with judgement.
One commands with force, which is represented by the advantage the corporation has in the environment observed, and one moves by the velocity they control in themselves. Where force and velocity meet, as we saw in Boston, it becomes messy.
Hopefully it never comes down to something like that, in the relationship between employer and employee, or student and the ones who have the command of resources.
While the control of resources in the work area does affect profits, the profits declared by corporations are really under the control of management through the commands they make in the financial markets.
Employees, putting resources and practices towards the best advantage, does help the corporation and employee, it just that finance is complicated and there is really no way it can be translated into profit-sharing dollars.
So what it comes down to is that profits are what management declares (commands) them to be, and if it is observed that workers use resources to the corporation’s best advantage (including change if needed) then management rewards the employees with cash.
Of course with students it is high scores instead of monetary reward, but both systems have one thing in common, they try to control the direction over time of people, and that is called velocity.
That is not to say the systems are without merit, nor that the people don’t deserve the recognition, it just means that there is a certain amount of corruption built into the both systems, that transparency only makes worst. By worst I mean transparency destroys the whole purpose of the programs, control.
Probably the best system would enable employees to understand and develop their own distributed OODA loops as they performed work, while at the same time give employers command over these distributed networks in a decentralized structure that they manage.
Sounds more like “To Be or To Do” … and command&control versus leadership. “Key decision maker” reeks of command&control.