Discuss with HN: salary confidentiality | Hacker News Reader

Discuss with HN: salary confidentiality

20 pointsmannicken23 comments

Hi,

Is it me or do all the non-disclosure of salary agreements seem a bit out there? I mean, anyone else recalls monopolies, which push out their high prices and block competition? Does anyone else see this as an attempt to prevent free discussion of rates, as well as healthy workings of supply/demand, similar to close-sourced software? Isn't it similar to blocking unions? Or firing people for being in relationships inside of a company?

And mainly: should we do anything about it?

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You should read Fog Creek's take on this http://www.joelonsoftware.com/articles/fog0000000038.html

And HN's take on that article:

http://apps.ycombinator.com/item?id=542173

You should read up on Semco, a Brazilian company run by Ricardo Semler. Quote from their website:

The Semco Group seeks to involve people in discussions regarding what is a fair salary for each employee. Of course, there are times when people think their salaries should be higher and the company believes it cannot pay more. What is important is to always provide an opportunity for discussions regarding this type of issue. http://semco.locaweb.com.br/en/content.asp?content=3&con...

Also try one of Semler's books, like Seven Day Weekend, excerpted here: http://www.inc.com/articles/2004/03/7dayweekend.html

His methods might never fly in America, but it's useful to know that open salaries are within the realm of possibility.

I'm always aghast at the cover stories of magazines like SmartMoney where they include a couple's household income.

Salaries are confidential because disclosure of them can damage the company/team dynamic ("Why is she making $5k more than me?!"). It's one of the most private numbers people have.

And if you really want to know what people at a fairly large representative sample of companies make, reference the H1-B database or glassdoor.com

http://news.ycombinator.com/item?id=570952

If she is doing the same work as me, why is she making $5k more than me?

The problem here is unfair payment; by not disclosing salaries, the problem is hidden, but it doesn't go away.

If "we" told "you" why "she" was making $5k more than you, you'd disagree with us, argue, sulk, do subpar work for a few weeks, and then quit. If we could put everyone in a straitjacket salary bracket system, we would, but that would make it harder for us to hire talent. So we do what almost every other company does, and ask people to keep what they make to themselves.

And just how would you go about explaining to one employee that he/she is less valuable and/or doing less work than the next?

You should read what Joel Spolsky has to say about the issue... There are more variables int this than you'd think. He gives a good explaination of why this is a problem in his article on inc magazine:

http://www.inc.com/magazine/20090401/how-hard-could-it-be-em...

The root reason is really simple. The company will have to spend 5k more to keep you, while it doesn't have to if salaries are secret.

That covers the case when talking about salary is prohibited by a company policy.

Why people don't tell their salaries? Well, I do tell to (some of) my co-workers. None ever said to me: Wow, you make a lot of money! - Instead, they say: Wow, I could be making more. - So they'll start looking for other jobs (not counting lots of other factors beside paycheck. Lots)

Anyway, top reasons why people don't tell how much they earn:

1) We deny a chance of making others sad;

2) We fear our bosses will discover that we talked about our salaries, thus a) being the reason why an employee quit; b) being the reason why an employee asked for a raise (increasing the company expenses);

3) Fear of security; Once your salary is "out there", the watercooler talk might be: Wow, do you know how much inerte makes? And you don't know who'll end with this information.

4) Compensation isn't a factor when there's blame to assign: Wow, inerte makes lots of money, how come he did this stupid thing? - As if someone less expensive, with a similar set of responsibilities, is allowed to make more errors.

And you know what? Some of these reasons are true. I know how much 6/7 members of my team earn per month, and I know I am being underpaid. In 3-5 months I am probably asking for a raise. If they deny, I will at least dip my feet into the job market, and see if I can also get 33% or 90% more.

Yes, someone earns 90% more than me for something that I know how to do it. He has more experience on some other stuff, but he's also friends with the boss. His salary is so above the market that I suspect someone is getting something out of this (aka, corruption?).

I tell how much I earn because I do want others to look, if they want to, for better paying salaries or to negotiate their current ones.

I don't think there is such thing as fair payment at all.

From boss point of view: me and her are doing same work, payment is equal.

My point of view: I always deliver my work within deadlines, she is late sometimes, I should get $5K more

Her point of view: I stay extra half an hour most days, he leaves at 5PM sharp, I should get $5K more

Solution? Well, not disclosing salaries more or less works so far.

I don't work anywhere where NDA's apply, but I go out of my way not to find out what anybody else gets paid (and for my own team, I only let HR tell me within certain bands).

Here is a non-cynical explanation (not that I believe that the cynical view that it is for salary suppression is necessarily wrong)

I realise a lot of people here work in startups or other kind of hothoused environments. The reality elsewhere is that a company needs people with all kinds of ability - they need the reliable but unimaginative person (let's call them the plodder programmer) that will come in and tie up all the lose ends that the hero programmer left behind before they got distracted by the latest shiny. The hard truth is the hero programmer will get paid much much more than the plodder, for obvious reasons. If the hero goes around telling everybody what they get, that is demoralising to the plodders - it just rubs their face into it, because they will never be the hero. But they can offer a company years of valuable service and dedicated work. As a geek herder, just because my HPs are worth more, it doesn't mean I value my plodders less.

So I would prefer not to discuss renumeration, though in my world that would be done out of politeness rather than contractually enforced.

Your salary equals:

market value for the kind of work you do + whether your employer pays above or below that + your individual skill level and experience + timing of entering the company + your negotiating ability

All are highly variable values for any individual.

I feel like I recently read that these kinds of NDAs are not enforceable in certain states, but my Google-fu is failing me now. Anyone else know if this is the case?

Edit: bingo! From Joel's Inc. article:

Some companies even make it a fireable offense for employees to compare salaries, or they write something into the standard employment contract prohibiting workers from disclosing their pay. (In the United States, this kind of rule is unenforceable, by the way, but some bosses hope their workers won't know that.)

http://www.inc.com/magazine/20090401/how-hard-could-it-be-em...

Does anyone know which laws (or laws) make this rule unenforceable? Joel (or the journalist) might very well be right, but I'd think one would prefer to know the law before crossing that line.

I think it's an attempt by companies to hold down costs, but it doesn't work; most people within six months of working anywhere, if they are clever at all (no hacking, other than the social kind) knows what everyone else makes, thus causing even more resentment than just revealing it publicly would.

And having salaries out in the open would have a democratizing effect, which would at first be bad for most companies.

It's easy to see why most companies hide them, as counterproductive behavior is often rewarded, especially if it appeals to our monkey-brain instincts.

If I ever start a company, though (which is likely), all salaries (including my own) will be posted in a public place.

Some law firms operate on the principle of transparency of compensation and transparency in how many billable hours each associate is putting in, and those law firms tend to thrive in very competitive fields of law. Sometimes people do work harder if they all know they are part of the same team, playing by the same rules.

That works because the partners (and even the associates) at those firms have a lot of control over how many hours they're going to bill, and because some semblance of a meritocracy assigns lawyers to the most lucrative accounts.

Those conditions do not often hold in dev shops.

If you're in California, salary NDAs aren't binding, mostly because they're totally illegal.

A lot of people make a lot of noise about California being very business-unfriendly due to taxes, etc, but it's very employee-friendly due to things like disallowing most non-compete clauses[0], disallowing salary NDAs, etc. To balance that, we are an at-will employment state.

[0] Unless you, yourself, are a trade secret. Which is pretty rare.

A lot of people make a lot of noise about California being very business-unfriendly due to taxes, etc, but it's very employee-friendly

These two are closely linked. Or, as a former boss of mine put it: Tendencies towards democracy are the certain death of any commercial endeavour. (with tongue in cheek)

I understand the rationale behind such things, but my feeling tends to be that salary NDAs are basically unfair; they boil down to a way to reward people who are better at negotiating. The promise a salary NDA makes is basically

"you & I have cooked up an agreement to increase your salary more than those around you, and this NDA will let us avoid the social awkwardness that would otherwise result."

(and the implicit message is always "more than", whatever the facts) Meanwhile, of course, you'll always be looking at your colleagues, wondering how much more than you they might be making.

Unless you're working in an environment where negotiation is a part of the job, then I don't see why rewarding it makes any sense.

Of course, there's nothing to stop your better negotiators going and finding a better deal elsewhere - but I see no reason why "better negotiatiors" equates to "better programmers", and there's always going to be some reason why some of your employees might want to move on.

Wow, never heard about salary-NDAs before this, sounds totally odd to me. Are they really commonly used? Where?

the best reason, in my opinion, is to make it so that a company only has to pay the least amount possible to keep an employee on staff.

its not particularly "fair", but thats how it works. helps improve bottom lines of companies. always at least try to negotiate :)

Not just that...

It's also good to compensate excellent performers without every other member of staff getting jealous... :-)

thats what i'd use bonuses for :p

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