Freedom at Work: Open Books (Part 1)*

Posted by jlubans on June 05, 2013

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I had not meant to overhear. Really. No ear to the keyhole for me, please! Regardless, my executive colleague in the next office with an open door was talking to someone on the phone – maybe an investment firm – about his confidential salary. He mentioned the amount, loudly enough for me to hear. I bolted from my office but not before learning that his salary was about 25% more than mine! I was a recent hire in a position on par with my next-door-colleague. We had similar backgrounds. If anything, I had more experience and professional achievement but somehow I was being paid less and he was being paid more. Ouch!
I was dismayed and unhappy about the apparent inequity. And, I kicked myself for not negotiating more cannily.
Now, many years later, a University of California study about making salaries public provides some rationale for my hurt feelings:
“The results were what you might expect for those whose pay was below average within their peer group: they weren't thrilled. They were more likely to be unsatisfied with their pay/job and search for new work. The worse the individuals' pay was relative to the median, the worse their satisfaction.”

Open books are essential to the democratic workplace. Employees get to see the financials – the budget - and, sometimes they get to see how much people are paid.
(Taking this a step further, a few freed-up organizations allow workers to set their own salaries. But, while many embrace the principles in my DW definition only a few have given workers a salary setting option. More about that in a future essay).
Opening the books – raising the curtain on the operating budget and the payroll, letting people see where the money is going and who is making what - is relatively simple. It can be limited to read-only access. Of course, you could opt for more democracy, like a Vermont town meeting, where people see the budget, debate it and then vote on it!
What’s the worst that can happen by revealing salary lines? Well, probably the worst is the exposure of historical inequities. Lacking those, there may be some initial confusion and gnashing of teeth, but then things will begin to sort out – the less deserving will understand why they are paid less and the more deserving will understand that they are compensated for doing a better job than most. And if wrongs need to be righted, then let’s get to it!
Now, for the faint of heart, you can opt to raise the curtain partially, say ankle height. Not all salaries need to be disclosed. Staff can be given the option to disclose or not.
Why am I so sanguine about making a payroll public? Well, there is the reassuring fact that many public employee salaries (including libraries) are already a matter of public record. With a few e-clicks, you can find out what your nemesis at work is making and whether you are better or worse off than she is. Those open record orgs behave like any other hierarchy – they are no better or worse for salary disclosure; it is simply an accepted tradition. For salary disclosure to really matter, other democratic virtues have to be in place. Salaries are often regarded as motivators; the greater the salary the greater the motivation. Truth is salaries have little to do with motivation. If adequate they are like organizational wallpaper, a reminder of a pleasant working environment. If niggardly, they de-motivate. Most of know the real motivators, respect, achievement, recognition, and camaraderie, along a few others, far outrank salary in an individual’s drive to be the best she can be.
I have worked in both public and private settings. Usually, I kept salaries secret, off limits. “Why, you blasted hypocrite”, you exclaim! Not really. For one thing, secrecy was the rule in those organizations. But, I will confess that confidentiality helped me avoid the hassle and embarrassment of having to explain why Mr. X – often inexplicably - made more than Ms. Y.
I now think that secrecy creates more problems than it avoids. People want to be treated fairly; an open payroll should make fairness manifest. If they are not being treated fairly then people need to know and they can choose to move on or, if there is apparent discrimination, to appeal for adjustment.
However, even some famously liberated workplaces only partially open the books. One of the more progressive companies, New Belgium brewery, plays its cards close to the corporate vest: “The company is earnestly open book--laying out everything but salaries (emphasis added) and providing an exhaustive education in financials.”
It is important to be “earnest”, someone said, but, New Belgium’s not revealing salaries does suggest there are some secrets the Fat Tire Tribe is not ready to deal with, regardless of ceremonial beads and investiture mojos. What is there to hide?
Bottom line, as they say, people desire fairness. Eyeballing salaries helps us make decisions about fairness. If we believe we are being treated fairly, then salary becomes less of a morale buster or fodder for unproductive grousing. A 2011 Atlantic magazine article backs that up, concluding that “knowing how much money other people make would benefit workers and make the labor market more efficient”

Overhearing that my peer was more highly valued than I was did make a difference for me. When a new CEO arrived, I re-negotiated my salary; I knew what to ask for. Did I get it? What do you think?

*Note: This is the second of several blog entries on how democratic workplaces behave. The first installment was about work schedules.

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