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    When Salaries Are Not Secret

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    gollasrinivas
    Hank faces a challenging situation where employee salaries were disclosed publicly. The document recommends that Hank embrace a more open culture by creating an openly transparent salary system. It suggests publishing salary ranges or "bands" for each job to allow employees to understand how their pay compares but without disclosing specific salaries. Taking these steps along with clearly defining objectives and tying rewards to meeting objectives can create an environment of trust, collegiality, and high performance. While it will require more work from managers, transparency and linking pay directly to performance can boost productivity.

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    When Salaries Are Not Secret

    Uploaded by

    gollasrinivas
    673 views2 pages
    Hank faces a challenging situation where employee salaries were disclosed publicly. The document recommends that Hank embrace a more open culture by creating an openly transparent salary system. It suggests publishing salary ranges or "bands" for each job to allow employees to understand how their pay compares but without disclosing specific salaries. Taking these steps along with clearly defining objectives and tying rewards to meeting objectives can create an environment of trust, collegiality, and high performance. While it will require more work from managers, transparency and linking pay directly to performance can boost productivity.

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    When salaries are not secret

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    Hank faces a challenging situation where employee salaries were disclosed publicly. The document recommends that Hank embrace a more open culture by creating an openly transparent salary system. It suggests publishing salary ranges or "bands" for each job to allow employees to understand how their pay compares but without disclosing specific salaries. Taking these steps along with clearly defining objectives and tying rewards to meeting objectives can create an environment of trust, collegiality, and high performance. While it will require more work from managers, transparency and linking pay directly to performance can boost productivity.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as DOC, PDF, TXT or read online from Scribd
    Download as doc, pdf, or txt
    673 views2 pages

    When Salaries Are Not Secret

    Uploaded by

    gollasrinivas
    Hank faces a challenging situation where employee salaries were disclosed publicly. The document recommends that Hank embrace a more open culture by creating an openly transparent salary system. It suggests publishing salary ranges or "bands" for each job to allow employees to understand how their pay compares but without disclosing specific salaries. Taking these steps along with clearly defining objectives and tying rewards to meeting objectives can create an environment of trust, collegiality, and high performance. While it will require more work from managers, transparency and linking pay directly to performance can boost productivity.

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    WHEN SALARIES ARE NOT SECRET

    What should Hank do about the salary debacle?

    The delicate and challenging situation Hank faces could prove to he a big
    opportunity if he looks at it the right way and understands that his choice is not
    strictly about compensation policy but about corporate culture. Hank has a chance to
    embrace a more open culture one that can have the positive effect of boosting the
    company's financial performance. He should turn this disaster into a positive
    opportunity by creating a deliberately open salary system. Hank must realize the
    futility of trying to maintain salary secrecy in today's information environment.
    Countless Web sites let employees examine salary surveys throughout entire
    industries. Individuals can also test their own true market value through the now
    common practice of continuous job shopping.

    Maintaining a relatively transparent salary structure falls into that category of


    corporate behaviors - eliminating executive parking spaces, involving lots of people
    in hiring, limiting the use of titles that can contribute to a collegial and open work
    environment. Indeed, the growing availability of accurate information about the real
    value of workers' skills, abilities, and output is critical to making the overall labor
    market more fluid and more efficient. One of the main reasons that Hank and Harriet
    are worried about the public disclosure of salaries is that they know their company's
    compensation system is not entirely performance based.

    A good managerial compromise, and a step towards the open culture that can
    enhance financial performance, would he to publish the salary ranges-or "bands"-for
    all of the jobs within the company. Each band will have enough variation to absorb
    most labor-market or individual-performance differences. High performers who are
    recruited from the outside might initially be paid above their salary band. But the goal
    would be to bring everyone within the band, typically by letting the hand, and those
    within it, catch up with the higher paid employees over time.

    Publishing salary bands lets people know how their pay compares with others'
    in the same job and what their jobs are worth relative to others in the company. It lets
    them know the upside potential of their current job and their career opportunities
    within the company. All job openings should be disclosed to employees on the
    corporate intranet-without telling them what everyone else makes. Employees should
    be treated like adults, with access to as much company information as possible. The
    publication of salary bands is only one of the moves that Hank should make to
    establish a more open culture. Taken as a whole, these measures would create an
    environment of trust and collegiality that, interestingly, might ultimately allow to adopt
    Charlie's open-book proposal. Employees must be sophisticated enough to
    understand their manager's reasoning, to negotiate on their own behalf, and to make
    decisions about the relative fairness. It is true, that some employees won't succeed
    with that degree of pressure. And most employees won't resent compensation
    differentials based on ongoing trans-parent pay-for-performance negotiations.
    At every step, managers must clearly define each employee's objectives and
    tie rewards directly to meeting those objectives. The most important transparency
    factor is not whether employees know what others earn, but rather that all of them
    know exactly why they earn what they do and what they need to do to earn
    more.Harriet and Hank make an important point when they say that intangible factors
    require managers to be subjective when evaluating employee performance. That's
    why the ongoing negotiation process is so important. The worth of one employee's
    work today is whatever the day's negotiation yields. That kind of real market
    pressure on both employers and employees will drive worker productivity through the
    roof. Managers right now will have to roll up their sleeves, negotiate short-term pay-
    for-performance deals with every employee on every project, measure every
    individual's performance every day, and keep good contemporaneous records.
    Harriet is dead right: it's going to be an extremely high maintenance system for
    managers. But if you want high productivity, you have to accept high maintenance.

    Submitted By GP-IV

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