Stronger Culture. Better Performance.

December 1, 2008 in Managing People 7 Comments

Publishing Everyone's Salaries: Not Just My Idea

I caught a little big of flack a few months ago when I suggested total transparency around financial information in organizations, which included telling everyone what everyone else made. A few people pointed out to me that it was easy for me to throw this gauntlet down, since I didn't employ anyone, which is true.

But I wanted to let everyone know this is not only my idea. In Gary Hamel's awesome book The Future of Management, he presents Whole Foods as a case study, and according to him they make available to EVERY employee the compensation information of everyone in the company. They also provide bonuses using metrics by team, and they make the performance data for all teams available to everyone as well. And in case you think their just organic-food-loving hippies, Whole Foods has the highest profit per square foot in the entire Grocery industry.

I know there are costs to being transparent. It's not easy. But personally I think the benefits of creating a higher-trust environment are worth it. It's hard to create trust when there are secrets.

7 Comments

  1. David M. Patt, CAE
    01.12.2008 at 10:58 am

    This reminds me of teachers who announce everybody’s grades to the whole class hoping that will motivate “underachievers” to work harder.
    This tactic has nothing to do with trust. It has to do with manipulating people to make more money for the company.
    Publishing everyone’s salaries generates competition between employees, which, apparently, some businesses like. “Team benefits” force employees to discipline each other, so management doesn’t have to do it.
    Associations are not well-served by internal employee competition. The association should act as one, not as a collection of people competing with each other for cash or other prizes.

  2. Frank Fortin
    01.12.2008 at 1:36 pm

    Jamie, this is an insanely bad idea. Leaders and senior VPs, maybe. But others? Who would want to work for you? This invites micromanaging from volunteers to the extreme. And it strips away more privacy in a day when there’s precious little of it left.
    Sorry. What I earn is relevant to me, my wife, and my boss. That’s it.

  3. Jamie Notter
    01.12.2008 at 2:15 pm

    Ooh, provocative topics get good comments!
    David: I will push back a bit on what you said in that yes, publishing salary information CAN be used in those negative ways, but it doesn’t necessarily HAVE TO. I don’t think the Whole Foods system pits the teams against each other. Their bonuses are measured on metrics that are independent of each other. I think it’s there so they can see who’s doing the best so they can learn from them. But I’d have to go back to read the case to be sure.
    Frank: just to be clear, I’m not universally recommending everyone do this. I just want people to think about WHY they do or don’t. Like in your answer: privacy, avoiding micromanaging. Still, I’d push a little on the micromanaging. That risk is always there. Couldn’t you still draw the line as ED that it’s your decision, even if it were public?
    And regarding your “it’s my business” point–that is one reason why Whole Foods publishes it: they state specifically it’s NOT the employee/bosses business, because they stand publicly behind equitable salary structure, which is not common among big corporations like that. They have a maximum ratio of highest/lowest paid person of I think 80/1 (where Fortune 500s often are at 400/1). So they put that out there as what they’re about, so they need to be able to demonstrate it.
    But that’s them, I’m not saying we all have to or even should be like them. I just like coming back to this topic because I think it’s something that we don’t think about clearly enough or often enough.
    Thanks for your contributions, guys.

  4. David M. Patt, CAE
    02.12.2008 at 10:52 am

    Jamie, you raised another issue with the ratio of highest-to-lowest paid. Some not-for-profits do that (with a much, much smaller range than do Fortune 500 companies) and I think it’s a very bad idea.
    You could end up with a low paid Executive Director or a well-paid receptionist. Neither of those should have any bearing on the other.
    Everybody should be paid what their position and their performance is worth.
    And I agree with Frank, it’s nobody’s business. It just creates friction and jealousy within an organization.
    Executive salaries are already public on 990s, and they should be. That’s enough.