Monday, August 01, 2005

Again with the salaries

Q: Salary information in my company is considered confidential. Can I discuss my conditions with an associate to evaluate my chances for a raise?

A: In the United States particularly, salary information is not considered merely "confidential" but actually "top secret". This approach solves many problems, but it also creates a few.

Let's look at some of the reasons for keeping compensation data under wraps:

MODESTY: One excellent reason for keeping mum is simply modesty. Revealing or flaunting any personal quality invites comparisons and judgments. To paraphrase Martin Luther King, in our dream society people are judged based on the content of their character, not the size of their paycheck.

The Mishna tells us, "Not everyone who does much business acquires wisdom". (1) Our tradition doesn't believe in asking people: If you're so smart - or such a good person - why aren't you rich? God has His reasons for bestowing blessing on certain individuals; it is not a consistent indicator of either good or bad human qualities.

MODERATING SALARY DEMANDS: Employers worry that if salaries are openly discussed, it will be impossible to maintain harmonious working relationships. People doing comparable jobs may be receiving divergent salaries, depending on when they were hired, what their other opportunities were like, and so on. But when they learn of these differentials, lower-paid workers are often incensed and demand a raise. Likewise, some employees would be scandalized if they knew how much their supervisors were earning.

COMPETITIVE ENVIRONMENT: Salary information is vital strategic information for competitors. First of all, it gives them general information on the fiscal health and hiring practices of rivals. (This kind of information can also be of use to suppliers or customers.) It also provides very specific information enabling them to lure away employees.

Many companies explicitly state that salary information is confidential, or "company confidential" (not to be revealed outside the firm). Simultaneously, many hirers demand a salary history or even a pay stub from the most recent employer, creating an obvious conflict.

The downside is that having adequate information on salaries is crucial for fair bargaining with the employer. In the current situation, all the cards are in the employer's hand: they know how much you are making, how much you used to make, and how much other employees are making, how much prospective hires are asking, and even how much comparable employees earn at other companies (if they agree to disclose their salary history, as many do). The poor worker, on the other hand, knows only how much he makes, and some general information on salary scales. The balance of power has been dramatically improved in recent years by Internet sites such as the Salary Center on, but there is no question that the "conspiracy of silence" tends to put the employee at a disadvantage.

Jewish tradition certainly confirms that customary salaries are a major determinant of a fair wage. Whenever the wage is not specified a worker is entitled to whatever is customary. Furthermore, whenever the employer mentions a specific wage but adds, "just as other people are getting", he is bound to pay what others are really getting - even if it turns out to be more than the figure he specified. (2)

So where does this put you? First of all, try to clarify exactly what your company policy is. Perhaps your company doesn't forbid disclosing salary information to co-workers, but only to competitors. Maybe these discussions are merely frowned upon but not forbidden, and a non-obtrusive talk with a co-worker would not arouse the ire of anyone. Finally, it is worth expressing your concerns to your supervisor or to a HR person. Explain that you feel that you are at an unfair disadvantage to the company. Explain your need for more information; perhaps the company can release some aggregate information to give you a better idea of where you stand.

Modesty about compensation information is praiseworthy in itself, and has some important ethical and business justifications. But taken to extremes it harms the free flow of vital market information and puts the isolated employee at a terrible disadvantage. Employers should develop equitable policies regarding salary disclosure, and hires should insist on the right to disclose details of their compensation in a reasonable way which does not harm the employer.

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