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Comment by uiri | Hacker News Reader

It is most likely not the ratio part but the median pay of all other employees part. You need to keep an ordered list of the pay of every single other employee and keep it up to date as people join and leave the company. Then there is the issue of accounting for part time or temp workers.

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> You need to keep an ordered list of the pay of every single other employee and keep it up to date as people join and leave the company.

Is it even possible to run a company without having this information somewhere?

In most countries, certainly not. The tax office will require this information so it is already being stored somewhere.

However, "pay" is different from "wage". What you pay is quite straightforward. What is an equivalent wage or salary is not quite so clear.

Sure, there is a distinction between pay and wage. However, tax offices - at least here in the Netherlands, and the UK - are interested in equivalent wage, rather than the direct salary number.

Really? Tax office is not interested on what was actually paid, but a full-time equivalent pay?

I mean, let's take someone who is working three days per week (not unusual here) for a compensation of 1500 € per month. That means 60 % of full working time. He or she gets 60 % of "full time" salary. The tax office would want to know the FTE salary of 2500 € per month, and not what was actually paid?

I think we're not speaking of the same thing...

I think you're right, we're talking about different things :) I misinterpreted your comment - I was thinking of things like company cars, travel benefits etc. being considered part of the taxable pay package.

Ah yes - that is true as well. How to convert that kind of benefits into equivalent pay from which you calculate a median - that's not simple either.

For instance, in some country, a health insurance is tax-free and does not count towards a benefit, while in another it might be taxable income or considered part of pay. You could have expatriate employees in your team whose pay structure is entirely different from the rest. Now, if you have a multinational company, how do you put those employees into the table from which you start to calculate this figure for how much the CEO can be paid? Not simple.

So like

    SELECT MEDIAN(salary) FROM employees

(That's valid Oracle.)

I mean I get that there'd need to be some adjustments to normalize salary to yearly salary and factor in non-cash benefits, but come on.

So what you're saying is all that non-technical HR people have ever to do is normalize all of the employee salary data and load it into a database and then run this query? Easy peasy!

But in production this takes 3 Java developers, 2 Oracle "specialists", one year and a couple million dollars to implement.

Ah, back when I was a programmer without any SQL/DBA skills, I thought like this too. Now I know better than letting unskilled workers (e.g. lots of so-called DBAs, most developers) develop schemas or queries.

If you pay them all the median wage, that won't hurt convergence.

That was my thought as well. They need those numbers (or some contractor that handles payroll need those numbers) for reporting taxes etc anyway. There's no way that it is "cumbersome" to implement. I mean they need to total them up (salaries) for the quarterly reports -- and making one of those must be far more "cumbersome" than to report on a couple of core business stats...

The devil is in the details. Those "some adjustments" are not exactly trivial, if they need to be correct and undisputed. And different people may have different requirements for what is "correct".

Things get trickier when the company is multinational. You might even be prevented by law from handling the salary data of one country in another.

(FWIW, I have some years experience as a line manager in a multinational, with reports in another country; this was not always a breeze even though from what I know, we were a decade or two ahead of most multi-nationals in the level of international integration of corporate IT.)

If HR or Finance doesn't have this, they aren't doing their job. The company should know exactly how much money is going to payroll every pay period and should know exactly how much they are paying each employee. If they don't know this, the company has bigger problems.

And yet somehow they manage to do a payroll cycle every 2 weeks, produce W-2s every year and so on. I don't get it, obviously this would add up to quite a bit of admin work at a very large company but it's basically the sort of thing you can do very easily with a spreadsheet.

Assuming you know what data to include and what not. For instance, it is not obvious to me whether the "company" means a company in one country only, or all the legal entities of a multinational. Should you include part-time workers, and if you should how should you do it (the actual pay or the FTE equivalent pay, and what are the FTE hours for different jobs?)

It's a quagmire.

That doesn't sound like a quagmire, so much as a couple pages of typical regulatory detail.

That's what GAAP is for no?

If that's too much for someone to deal with they're probably not going to last long as a CEO. This is the kind of thing people have HR departments for, and you're telling me they can't crunch a few numbers? Come off it.

It's obviously possible to generate a figure; less obvious that the figure is actually meaningful, once people understand that subtle accounting differences like whether to include the salaries of the staff of the Manila office and whether to include total comp for the sales team with very aggressive bonus structures actually has more effect on the headline ratio than an above-market increase in CEO pay.

And perversely, laying off workers to outsource their jobs to an offshore BPO firm almost certainly gives the appearance the company is improving the staff pay...

It will definitely be meaningful specially for those huge multinational with CEO's earning extreme amount. Given that the article said something like 300:1 ratio of salaries in some companies even if your median wage salary is off by 2 i will still give you an idea that the CEO gets over 100 times the pay of a median worker. It might need some work to process and I am fairly certain the protest didn't start for that reason. Companies decided that they don't want to expose to massive gulp in payscale and then found the reason to protest.

It's definitely much _less_ meaningful for a multinational company than for one where all its workers live in the same city.

Certainly. Just to illustrate this, assume a small and simple multinational company that has headquarters and marketing (100 staff) in the US and manufacturing workforce (150 staff) in Vietnam. That's all the workforce.

The median salary in the company will be about $200 per month (because a majority of workforce is in a low-pay country). If the CEO makes $250,000 per year (which is not particularly much for a company of this size), she'll earn an outrageous 100 times as much as the median in the company.

Now let's assume that activists are unhappy with this 100 times difference and there's a boycott in order to reduce the CEO pay in proportion to workers. Guess what will happen?

Half of the workforce in Vietnam is kicked out and the gap in production is bought from a manufacturing partner in Pakistan (where the workers will earn $150 per month).

CEO pay is unchanged, but the median pay is now $2500 (pay of a not-high-status sales assistant in US). The CEO now earns only 10 times as much as the median worker!

Did things improve for the poor workers? Well, you could say so, because some people in Pakistan got a job, but the actual outcome still is that the people who work on the product now get less than before.

Road to hell is paved with good intentions, and naive activists are hit by the law of unintended consequences. Yes, the CEO-to-median figures are not very meaningful for a multinational company.

Let's be honest, and not pretend that this has absolutely anything to do with the difficulty of acquiring this information and providing it, and so much more to do with the "the less done to publicize how much I made, either by itself or in comparison to my employees, the better".

I assure you that every company I've ever worked for has had that list of salaries at the tip of their fingers. This would be next to zero additional effort if it's only salary ratio. The problem is - you can easily play games with bonuses, stock options, etc... to make it appear that the CEO has a low salary.

Why yes, I run a company and have no idea how much my employees are compensated, and funnily enough, not even my own salary. This is probably why my books never balance every year. I knew shouldn't have fired our accountant.

What kind of a business doesn't know that already?

Now that I think of it, the best-run company I ever worked for was completely open-book; everybody could always see what everybody else was making.

> You need to keep an ordered list of the pay of every single other employee and keep it up to date as people join and leave the company.

Holy shit, you're right! We need a Hadoop cluster with AT LEAST 128 nodes to even come close to the amount of hardware necessary to process such data!

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