How much transparency is too much? | Opensource.com

How much transparency is too much?

Posted 25 Mar 2010 by 

Rebecca Fernandez (Red Hat)
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Would you post your salary?

Only internally
21% (4 votes)
Completely public
37% (7 votes)
No way
42% (8 votes)
Total votes: 19

Years ago when I interned at Red Hat, the company had an intranet traffic competition. Employees were encouraged to create or improve their page on the intranet, then post a link that told why you should visit. The person with the most traffic at the end of the week would win a prize.

I don't remember who won—maybe the guy whose link advertised “naked chicks”? But I do remember one entry: a certain software engineer posted his current salary “in the interest of transparency.” It was a surefire way to draw traffic—and spark conversation.

The internal email “chatter” list went crazy. Responses ranged from the rule followers--and a few sore losers--who cried, “Isn't this a violation of your employment contract?” to the hard core open source crowd who said, “Hey, Red Hat should publish everyone's salary.” But there was one passing statement that intrigued me: an employee from Norway mentioned that he didn't see what all the fuss was about; his country made everyone's salary public information.

I wondered about the social implications of making that kind of information public. Like most Americans, I grew up being told it was crass to ask someone about their salary. That was something only nosy mother-in-laws had the audacity to do. And Americans aren't alone--my British friends tell me that we're actually quite forthcoming with those questions, compared to folks in the UK.

So what happened in Norway? A quick Google search verified the country began to make this information “readily available” in 2002.

As you might imagine, the wage gap between men and women declined markedly in the following years. Transparency in action? Looks pretty good to a working girl on this side of the pond.

But what are the other ramifications of moving toward “transparent salaries”? Would it benefit business leaders--or just employees? The organizational culture changes would seem to be enormous: from those overtaken by bitterness and envy to those who feel liberated by the knowledge.

What kind of work environment would exist within a company that only hired employees who were willing to have their salary information made available to their coworkers?

I don't pretend to know the answer to these questions. But I'd love to hear your thoughts.

(And if that brave software engineer is reading this... I thought you were significantly underpaid.)

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24 Comments

mmahut
Open Source Evangelist

... is a great way for the employer to control underpaid employees. A lot of people have no idea what they are worth on the market. I think making all salaries public can create great transparency on the market, but I have no idea what could be the economic impact on the country. I'm looking forward to find more information about this situation in Norway. Thank you, great article.

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Jake

I've never been hung up on salary and have gotten into trouble at previous jobs for having pay discussions. Some people get *really* nasty and jealous when they find out a coworker is making more than them. Honestly the way I look at it is I have enough to cover my bills, pay for my hobbies, and put money in the bank so I'm good...Everything else is just gravy.

So yea, my opinion is pay should be transparent.

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Jeremy A. Cunningham

If the company is following fair hiring and employment practices, why shouldn't they be transparent with their salaries? I have never understood the practice of hiding salaries, org charts, and other items of that nature. If you truly believe that what you are paying everyone is correct, then there shouldn't be any issues. I would expect that would encourage those lower on the ladder to try harder, knowing what wages are possible, or not, within a company. "If I work hard, I could be making X!"

It would also keep companies honest about hiring new people at higher "competitive" salaries than the long term employees are making. (in addition to the gender wage gap issue)

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echapin
Open Enthusiast

Absolutely. In addition to the benefits of reducing the gender wage gap, it would add a whole new level of accountability for each employee to live up to their salary. And not just to your manager anymore -- you'd be held accountable by each and every one of your co-workers, too.

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cgrams
Open Source Champion

I've often heard Whole Foods given as an example of salary transparency-- they make all individual salary information accessible to all other employees. According to this Fast Company from a few years back on the subject http://www.fastcompany.com/blog/charles-fishman/how-much-money-do-you-make ) they are one of the few companies to do this (there may be more now).

Interestingly enough, this kind of transparency is very core to the philosophy of John Mackey, Whole Foods CEO. Here's a blog post he wrote a few weeks ago about how to create a high-trust organization, and one of the key themes is transparency.

http://www2.wholefoodsmarket.com/blogs/jmackey/2010/03/09/creating-the-h...

But I've also heard from people who have worked at Whole Foods that it is not an entirely positive experiment for a number of reasons.

I was pretty impressed with John Mackey's blog post a few years back when the Bord of Directors transparently increased executive comp from 14x to 19x the average pay:

http://www2.wholefoodsmarket.com/blogs/jmackey/2006/11/02/compensation-a...

nice example of transparent communication.

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Pam O'Keefe

It really doesn't make any sense not to publicize salaries, does it? What is the point? Perhaps people on the upper end of wage gaps are the ones who are most interested in keeping salaries a big secret. Wouldn't want the fat cats to lose anything now, would we? No. Wait. Perhaps we would.

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Unidentified

I used to work at a state university. All the faculty salaries were published in the university news paper. Don't remember ever giving it a second thought.

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jhibbets
Open Sourcerer

I believe that all employees who work for state and federal governments have their salaries available for search. I'm sure there are plenty of sites out there where people can look up things like this. And I agree with you Rebecca, I grew up the same way. Talking about salaries was / is a no-no.

It's just a number, right?

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Stephen Smoogen
Community Member

Yes, most state and federal employees either have public or near public salaries. By near public, you may not know the exact number but you know that a person of A employment has to be within X and Y ranges. It is useful in some ways but can be depressing when comparing yourself to private employment as you always think they are making more (they may be, but not the LOT more people think).

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Stephen Smoogen
Community Member

One of my first grasping of transparency of companies was before I joined Red Hat in 1997. Before that I was living in Illinois and some people after hearing my revolutionary talk about presenting numbers to the employees to make them better employees.. pointed me towards Jack Stack. Stack was the CEO of SRC Holdings which was a steel company that turned itself around by making its books much more transparent and having an 'open book' culture. Employees knew what people made, what costs were, where things were going and could gauge if what they were doing was helping in the short, medium, and long terms.

Having employee salaries open is one part.. another part is being able to gauge if a groups efforts are improving or decreasing profits and how to best change. If I ever have the chance to start my own company it is something I would really pursue.

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Rebecca
Open Source Champion

He's blogging for the NYTimes these days...
http://boss.blogs.nytimes.com/category/open-the-books/

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Mark Byler

I have little sympathy for those who are under-compensated because they lack the guts to push for their career goals. I fail to see why my salary, which I've worked years to attain and negotiate, should benefit someone who hasn't done the same. It's none of their business.

Anyway, if you're happy (or unhappy) with what you're earning, why do you care what I'm making?

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Stephen Smoogen
Community Member

I knew a guy who said that a long time ago. Turns out he was the least compensated of the group. The guys who had come in recently were paid much more. Now I would say that is probably an outlier, but that was the case with the entire Apple Lisa team way back in the day. When they found out, many of them left.

In most cases, just opening salaries does not help many in the organization. An organization where individuality is respected/rewarded is not the place for it. An organization that is built around teamwork and team benefits it does work better for.

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Máirín Duffy

Yea, that philosophy rewards the schmoozers and not the hard workers who focus on their passion for their job and not the benefits they get out of it....

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dragonbite
Open Source Evangelist

I moved from the Accounting department to the IT department in the same company and the pay increase was very welcomed.

It wasn't until I got caught in a company-wide headcount reduction and found another job did I find out how under-compensated I was previously! That's with moving into a quasi-state, non-profit agency which admits they cannot pay as much as the private sector.

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Vil
Newbie

"Would it benefit business leaders--or just employees?"

Would it hurt business leaders much? Opening up salaries would make them more fair and less arbitrary.

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Rebecca
Open Source Champion

...on whether the business leaders' own salaries are fair!

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honeymak
Open Enthusiast

in turn, info brings power

that's why all guys are doing information hiding....
just like programming

every text tells u information hiding is a good design
while only open source really brings programming to another level

u see?

information hiding just keeps u at a position that no one touches

that's why open source is a sucess
becoz open source depends on community....not anyone alone
while anyone joins it enjoy this model..."power flows to the right worker people/decision"....

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Todd Warner

I immediately emailed the guy and told him he was being grossly underpaid.

So, maybe for him, transparency worked. I have no idea. :)
-t

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AmiV2
Newbie

Israel is a funny country where the roots were socialist but today the business sector is a majority. Until the 1970's and Bibi Netanyahu (the current prime minister which is giving Obama heart burn with 1,600 apartments in Jerusalem) the country was run by unions and government (read socialist) companies. All the infrastructure (water, electricity, communication, roads) were state companies. So everyone's salary was determined by seniority and skills. Also, everyone knew the salary range in each "rank". It is like the American GS (federal ranking) and the military rank system. So people here got used to discuss salaries and benefits in the open. The trick was to get a higher position. Now came the privatization of public companies. The phone system went first and is now broken into a few companies. Then came construction (up to the 1970's 90% of all construction was by the government INCLUDING PRIVATE APARTMENTS.) Today construction of all building is completely private. BUT the people here did not suddenly become LESS nosy (that includes British moder-in-law ;8-) Today most people do not discuss details of salary but you can ask someone if his salary is in the 10,000 shekel per month or the 30,000. You can ask them if the car they drive is a company car? You can ask how many paid vacation days they get and if they get continuing education or extra retirement investment... more than that you certainly can CALL someone at night at home and ask if a job is open at their company what they think the salary range is. You can even ask them to ask someone about for these numbers.
Americans do have issues about money and about privacy. American also do not think that they have issues about these things. I think it's because the American worker is very isolated from other workers. In Germany you are allowed to talk about salaries in a bar with friends. In France it is not that open but you can talk to friends about how much things costs and what the company will cover (like vacations together with a business trip.) Anyway, you Americans need to figure out how to communicate between yourself better. Otherwise some of you (as someone said the "underpaid") will be taken advantage of. I have an American friend who is a great programmer and worked at great companies for a long time. A few years ago he found out that he was getting paid 30% to 50% less than everyone around him. This has been going on for decades! Now he is depressed about his whole life. He realizes that he has been taken advantage of for years even by bosses who really liked him and were "taking care of him". How do you deal with these problems without open salary surveys and numbers... Oh in Israel recruiters hold salary surveys all the time. They give ranges and are considered accurate. More about Israeli life http://bit.ly/h0X7w

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Colonel Panik

Great article, great discussion, if you like to hear the choir sing.
All the comments here are from the OS world, you are already
riding the "Clue Train".

Rebecca Fernandez asks how would this effect your work place?
How would this effect the business world in general? What we need to know would be what the potentates on Wall Street think of this?

The old Colonel here thinks that if it isn't open it isn't honest.

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David S.

... but does it need to be searchable on the Internet or announced loudly?

I am a Norwegian, and I do like the transparency a lot. As far as I know, your income has always been publicly available in Norway - even before the Internet. You simply had to take the trip down to your local tax office and could look through the taxation lists. Of course this is a favourite hobby every autumn for a lot of retired people.

Some years ago, this information was even made public on the Internet. Now that's not a good thing in my honest opinion. People seem to love to dig into others private life, and especially when the people you dig into do not know about it. This transparency is good when it has a purpose other than to dig up gossip material. And the next thing which makes this a bad thing is that it is a wonderful tool for criminals. The few last years, it has come evidence for criminals using these to target victims. Why do a burglary at John Doe when James Smith earns 3 times more?

Inside companies, I am not sure it is a good thing to make the salaries publicly available. It can easily be used as an argument for jealous people for gossiping and bad talk. They should be focusing on their own tasks and not measure how others works and get paid. I have colleagues which I know deserve a good salary. Of course I don't know if they have that. But that is non of my business. But when I'm having my talks with my managers, I make sure I give a good feedback about those colleagues. And I trust the managers to do their job, giving everyone the proper salary.

If you want to be transparent on salaries in companies, you need to be sure you have employees who can respect their colleagues, no matter what salaries they have. The company must be sure it do pay the right salaries to everyone. And when somebody are disappointed about their salaries, the managers must have guts to be honest and tell them why their salary is lower compared to the others. If that doesn't happen, transparency in this area will not improve the working conditions at all.

My point is that transparency is good, when used for the right purpose. And transparency doesn't mean that the information is available for anyone whenever they want it - but it is available by request, and that request can be logged. That way, everyone who wants this information needs it for a purpose, they know they will be tracked doing it and you will know that somebody wanted that information about you. For me this is a proper transparency, which goes both ways.

But for the case of equal treatment of employees, of course transparency is a good tool.

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Chris Tyler
Open Enthusiast

In Ontario, was have an annual "Sunshine List" which publicizes the pay of highly-paid public workers, ostensibly to increase accountability. The list was established nearly 20 years ago. Problem is, the list starts at $100,000, and the legislation that established the list did not index that amount to the inflation rate. $100K is a good salary these days, but is by no means extravagant, and over the next few years the number of names on the Sunshine List is going to balloon from hundreds to thousands as the upper bands of many of the public sector pay scales cross the magic $100k boundary. Some decades down the road, I suppose that entry-level positions will be on the list. I'm not sure if the lack of indexing was an oversight, or an intentional way of gradually introducing open access to salary data.

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A.T.

in Finland it had been public knowledge for ages -- tax office prints little brochure every year based on cut-off income level. While there is no direct formula and taxes are progressive, one can relatively easy deduct brutto income. They say it had been done to simplify task for those who report tax invaders on luxury items, but I understand it as joke. Few links on topic:
http://bit.ly/9qdJTQ http://bit.ly/9wLdzb

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Rebecca Fernandez works at Red Hat in employment branding. Before that, she was a freelance business writer for 5 years, and before that, a copy writer at Red Hat. (They just couldn't be rid of her.) Rebecca is interested in open source software, education, and the intersection of the open source way with business management models.

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