On the lack of transparent salaries and career progression in the workplace
When people look for jobs, they implicitly accept that it will be up to the employer to put a price on their work. They can negotiate at the onset, but once they accept a job offer, they have locked into a specific financial arrangement with a set of expectations of secrecy.
In this piece I show how these common expectations about employment and financial “compensation” make no sense. They make no sense because they are limiting for people, by depriving them of information they could use to make more informed career choices. And as shown in the Dilbert comic strip above, they also set a very negative tone for the relationship between employer and worker. This is very counterproductive for businesses that wish to cultivate a positive culture and retain their team members as they grow more experienced — which is basically everyone who is serious about success, and whose business model doesn’t depend on radical labor exploitation.
Not only does the usual “need to know basis” in employment relations sow the seeds of distrust, but it also often culminates in a sense of betrayal when employees realize how unfairly they have been treated compared to their peers. This is probably the most salient point. It happens all the time. It probably happened to you, your family member, your close friends — in other words, everybody. Are we to believe this is just the way of things and there is no other alternative? Hell no.
And yet these arrangements persist, not so much because they make sense, but because they are the natural consequence of an antagonistic culture where people are regarded as resources to be exploited (human resources, anyone?). For clearly, you don’t provide context, vision and transparency to resources. You squeeze the blood out of them and toss the husks aside, not bothering to see where they land. This extractive way of viewing people is one of the most damaging facets of our society.
So the bottom line is this:
- Don’t work for a company that makes career and salary progression opaque forcing you to meet targets and objectives in the dark while occasionally doling out rewards and incentives.
- Do encourage greater openness in salary levels, transparency and fairness. Relate to others on your team to establish a basis of solidarity both with company and people, where the basis for financial progression seems fair to everyone.
- And hit the clap button if you agree that companies should be much more transparent with their people so as to make career progression, including salary changes, more easy to envision, plan and follow-through. It will help share the message with others.
If you are interested in engaging in detail with this argument, or if you already disagree, read on. It may just make you change your mind about how you think about your own salary, and your career progression — as well as how you relate to those you “manage”, also known as people you work with and who may depend on you for guidance, and for decisions on salary changes and promotions.
The present arrangement: exploitation through opacity
I’ve perhaps overly dramatized how unpleasant salary discussions and financial arrangements can be with many employers. Surely there are some interactions, that even though they remain opaque and in-transparent, are nonetheless functional and relatively pleasant and the basis for a decent working relationship? And of course, there are many such experiences. That’s because many people treat each other kindly and warmly even in spite of the strange underlying extractive norms in the working relationship. Thank goodness for human decency.
And yet, my point is not that such pleasant arrangements cannot possibly exist, but rather that they are encumbered by the specific norms of opacity and in-transparency in working environments. These norms contribute to hostility and unpleasantness. It’s quite common to see testimonials on LinkedIn and so on where people disclose how poorly they have been treated, with employers who underpaid them, strung them along until they finally got wise and moved on to a different company.
What are these opaque arrangements? At heart, they are about hiding the financial details of the company how the salary offered to you compares to others, so that you are unable to understand whether the offer is an invitation to a mutually beneficial relationship, or an exploitation relationship. Two key characteristics stand out and are worth describing at greater length:
1. Making personal circumstances the main determinant in salary differences for the same role.
Once people have gotten through the interviews so as to prove out their skills and fit for a role, a job offer is to be taken as an entry point into a negotiation. This allows personal circumstances to come into the fray — whether the job candidate has a social background to be more or less ambitious, and whether they have other competitive offers. So the resulting agreed upon salary will vary significantly depending on one’s personal circumstances. These circumstances do not play a role in the value contribution different employees provide, it is merely a buffering range whereby a company is willing to accommodate better off employees by giving them a better deal than others which they can more directly take advantage of.
Does this sound fair? It’s not. And as the years go by, the differences magnify. For once an employee is at a company, their salary increases will frequently depend on their personal circumstances. Those who have few alternatives and offers external to the company will rarely draw promotions, praise or salary increases. Those who are actively pushing, actively courting external opportunities and who make their management aware of the plethora of other opportunities they have will elicit more attention, higher raises, and other actions by the company in an attempt to retain them at the company. Eventually, someone will feel cheated.
The degree of underpayment accrued through a lack of promotions and salary increases is so wide-spread, that I’ve had high-level executives tell me that if one wishes to maximize title, role and salary, one should hop around from employer to employer. As many people will learn through their dashed hopes, it is much easier to sell yourself well into a large job, than it is to be rewarded as a diligent employee and be promoted internally. So this is another sign that the current system is woefully inefficient.
The conclusion of these dynamics upon hiring and continuing within the company, is that personal circumstances are weaponized against employees. The disadvantage imposes large costs for those with less privileged backgrounds, as well as often interlinking with gender and racial bias. Those that have a lack of alternatives often find themselves losing out compared to peers who may more aggressively succeed and receive benefits or who more closely match the employer’s biased ideal of a highly-valued worker, irrespective of how well they do their jobs.
2. Suppressing discussion of salaries so as to prevent discussion of fairness.
It is understandable that salaries are treated as confidential. Partly, this is to protect the privileged from being exposed to their peers. Partly this is to cover up the unfairness when someone is clearly being underpaid compared to their value to the company and to the salaries of others of similar performance. The confidentiality mostly protects the company, as it can fully reserve the right to unilaterally set salaries. Without this cover of opacity, people can ask questions about salaries generally, about margins, about company investments and so on.
Companies pretend that it is obvious that the financial operations of the company should be secretive and hidden from those very people who create the value for the company. This pretense is itself the master trick that companies feel serves them, but which in the long run prevents a genuine culture of achievement and mutual trust from emerging. Instead, employers should treat people like adults and let them in on the business that they are a part of. And yet, as employees, we lack the cultural education — and often the financial wherewithal — to resist these dynamics of exploitation. So we end up often going along with subpar arrangements, and thus help normalize them.
Even well intentioned companies get caught up in this poor affair. They are likely to assume that hiring, performance reviews and HR generally are standard (if dull) parts of doing business. By not reflecting, by not realizing how shoddy these norms are, they inadvertently set themselves up for distrust even when they could be doing everything else right. This is the reason to reflect on the management choices at hand, rather than do what others do.
Once the salary distributions are out in the open, and once the rationale for these salaries is also clear, the company culture can create a real meritocracy where people share in on the belief that the company appropriately cultivates and rewards talent. (This is a preview of the approach I will detail further below.)
In sum, confidentiality allows the game of privileges, preferences, small advantages to work to the benefit of a few winners while throwing the wool over the eyes of the people of the company at large. By not knowing company salaries broadly, people cannot truly assess what their likely financial situation will be if they stay at the company for years longer. Thus, it allows for inertia and wishful thinking to take hold.
A different way
I think there is a different model that yields substantial benefits. I’ve written about embracing transparency and my experience practicing this approach at my place of work in this piece.
