I used to think transparent salaries were a good idea. Until I was hiring people. Over time, I learned that it's not just transparent salaries in your own company that causes a problem - it's transparent salaries in other people's companies.
I've worked for multiple HR companies who performed studies, all of which showed that salary isn't the highest priority on employee concerns. Yet, in my experience, the number one reason I lose employees (or have left a job) was money.
Also, yes, I have poached employees from competitors by simply finding out how much they were making and offering more. You want to show me how much you are paying your people? It will tell me either that you are not profitable (if you are paying too much) or it will tell me the exact number I need to beat to take your best people.
And rest assured, I WILL take your best people.
Rest assured, I HAVE had my best people taken as well.
Business is not a democracy. Business is a competition. It is a fight for survival. No business is going to be so transparent to reveal enough to help their competitors. Even those 'transparent' companies who post on blogs their entire process? Trust me, they ain't showing you some of the most important stuff. They are marketing to you.
I don't know how this comment will be taken on HN, but I realized some time back that the number of people on HN who are smart is very high, but the number of people who actually run businesses is much, much lower. So I run a company. My comments are based on my experience.
One issue is that transparency makes discovering someone's salary easy, but discovering their value is still hard (at least for the non-employer). I haven't done all the math, but my intuition based on similar markets is that it would actually cause salaries to converge: high-quality employees are likely to get paid less, low quality employees end up getting paid more.
Which is a wonderful thing for the corporation. Self-monitoring and peer-pressure among employees. "Really Dan, you want a raise, how much more than Jim do you think you are worth?"
Suddenly, you salary is directly related to your boldness and the amount of flack you are willing to take from employees, not your talent or value to the company.
You just made an argument that salaries should be artificially low effectively screwing the employee out of a fair wage for their skill by hiding information from them.
And anyway, money isn't everything. I'd be willing to work for a little less money to have an awesome environment where I am treated well, have good benefits, and do great work I enjoy rather than worked 50 hours a week with micromanagement breathing down my neck stressing me out and doing soul crushing work.
Because you lose people to salary is telling, perhaps your environment isn't actually the best as you imagined, or the salary isn't as fair as you imagined.
However, here's a good summary that argues that pay is actually a very strong motivator, and the discrepancy comes from the fact that saying you aren't motivated by money is considered the socially acceptable response: http://www.utm.edu/staff/mikem/documents/Payasamotivator.pdf
The research about job-seeking behavior is fairly similar, although I can't find the specific sources right now. When surveyed, people say that money isn't the most important thing when they're evaluating job offers, but when asked to compare job offers as bundles of attributes, money ends up being pretty important. Part of the reason is that people under-state how important money is to them, another part is that during the job-evaluation phase, money is concrete, measurable, and knowable, while the other characteristics are very hard to determine.
It's going to sound obvious, but the real answer is that compensation is a piece, but not the only piece, of what people look for in jobs (probably about half).
One of the most interesting conclusion of Douglas McGregor (inventor of the Theory X vs Theory Y management theories you've probably heard of) is that when it comes to the question "what motivates people?", whatever theory you set out to try to prove, you typically find evidence to support its validity.
So if you start with Theory X, for example, "people are lazy and need to be motivated into work through the external means of money and threat of firing", you find plenty of evidence that that is indeed how people function. Anyone who believes otherwise must be mad.
If you start with Theory Y's assumptions, though, "people want to work in jobs where they can be intrinsically self-motivated, and while external factors need to be 'good enough', internal motivation is far more important" - you will find plenty of evidence that this is true as well.
The point is, be very careful of what assumptions you start with, because you might think you can check them with facts, but actually they will shape everything you do and remain largely unquestioned. Therefore, choose your assumptions based on the outcome you want, not based on the assumptions you started with.
You don't loose an employee because of money. You said it yourself that it's not their top concern.
After you have alienated an employee to the point they no longer want to be part of their company, why would they say anything other than it was just money? The money is the "it's not you, it's me" excuse. :)
I work in an industry where salaries are transparent. In my experience, when everyone in the industry adopts salary transparency, it just tends to cause salaries to converge to market rates. Whether this is a good thing or not depends on your point of view. I tend to think this is a good thing for employees, because it causes companies to respond more quickly to market signals that cause increases in salaries. On the other hand, this allows the most profitable companies to essentially set the market rate, which can be uncomfortable for less profitable ones.
> I've worked for multiple HR companies who performed studies, all of which showed that salary isn't the highest priority on employee concerns. Yet, in my experience, the number one reason I lose employees (or have left a job) was money.
I think when people are polled they feel guilty about how important money is to their job decisions, so they downplay it. I always thought that was odd...its a job. You have it so you can afford to do all the fun things you really want to do. I think millennials are still figuring this out.
Your argument doesn't hold because transparency will mean there will eventually be a state of equilibrium after you take many employees and after many employees are taken away from you. Talent snatching cannot go on forever. After that, employees will feel compensated, safe and complacent. If still you want to pay more for other employees then they probably deserve it because the market is supply and demand.
Figuring out who their best people are is more than half the battle, if they are interested in moving at all. If they are, there's a lot you can do without pre-knowing their exact salary to encourage them to move.
It is one of those potentially awkward questions - a candidate has no obligation to answer that question, and in some cases, I believe it is even illegal to ask.
I've worked for multiple HR companies who performed studies, all of which showed that salary isn't the highest priority on employee concerns. Yet, in my experience, the number one reason I lose employees (or have left a job) was money.
Also, yes, I have poached employees from competitors by simply finding out how much they were making and offering more. You want to show me how much you are paying your people? It will tell me either that you are not profitable (if you are paying too much) or it will tell me the exact number I need to beat to take your best people.
And rest assured, I WILL take your best people.
Rest assured, I HAVE had my best people taken as well.
Business is not a democracy. Business is a competition. It is a fight for survival. No business is going to be so transparent to reveal enough to help their competitors. Even those 'transparent' companies who post on blogs their entire process? Trust me, they ain't showing you some of the most important stuff. They are marketing to you.
I don't know how this comment will be taken on HN, but I realized some time back that the number of people on HN who are smart is very high, but the number of people who actually run businesses is much, much lower. So I run a company. My comments are based on my experience.