What your Collegue are Paid

By Rachel Emma Silverman

Office workers have grown accustomed to knowing the intimate details of each other’s lives – from a colleague’s favorite youtube video to a boss’s vacation fiasco.

Now a small but growing number of private-sector firms are letting employees in on closely held company secrets – revealing details of company financials, staff performance reviews, even individual pay. In so doing, these firms are walking a tightrope between providing information and too much information.

The warts-and-all approach, most often found in startups, builds trust among workers and makes employees more aware of how their particular contribution affects the company as a whole, advocates say.

Employees at SumAll, a data-analytics company, can click on a shared drive to peruse investor agreements, company financials, performance appraisals, hiring decisions and employee pay, along with each worker’s equity and bonuses.

More efficiently

SumAll Chief Executive Dane Atkinson says the company was launched as an open enterprise. He and his co-founders reasoned that people work more efficiently when freed of doubts about salary, and better understand their individual contribution to the whole group.

Anyone hired into the company must be comfortable with the system, he says.

The company’s 30 or so employees are each assigned to one of nine fixed salaries, which range from about $35,000 (Sh3.066 million) for the lowest paid to $120,000 (Sh10.5 million) for the highest. Raises occur company wide, determined by performance and market conditions.

“It’s not like you come in and [pay] is posted on your forehead,” but having the figures in the open alleviates co-workers’ curiosity and anxiety, says Kimi Mongello, SumAll’s office manager.

“When it’s a secret you want to know it more,” she says, noting that she and her colleagues rarely look at the data.

Mongello is in a low salary band, and is fine with it.

“I shouldn’t be paid as much as an engineer,” she says. SumAll workers who feel they’re unfairly paid can easily bring it up, she adds.

Little privacy remains in most offices, and as work becomes more collaborative, a move toward greater openness may be inevitable, even for larger firms. Companies “don’t really have a choice,” says Ed Lawler, director of the Centre for Effective Organizations at the University of Southern California.

But open management can be expensive and time consuming. If any worker’s pay is out of line with his or her peers, the firm should be ready to even things up or explain why it’s so, says Dr Lawler.

Kept under wraps

Management should also show employees how to read the company’s financial and performance data, he adds. And because workers can see information normally kept under wraps, they may weigh in on decisions, which can slow things down, company executives say.

Once employees have access to more information, however, they can feel more motivated. But such openness isn’t for everyone.

In 2010, Slava Akhmechet, the CEO and co-founder of RethinkDB, a database firm, experimented with open pay, sharing salary ranges internally and posting them (without names) on the company’s website. He had hoped the transparency would give employees a fuller picture of the company and engender a sense of fair play.

But potential recruits saw the salary figures as a starting point, and bargained for pay beyond the fixed limits. Akhmechet also found he couldn’t hire prized applicants without raising everyone else’s salaries or getting them to agree to exceptions, he says.

Mr Akhmechet eventually took salary data offline; now, only he and two other employees know everyone’s pay.

“I still think an open salary model might work in a larger company with significant resources,” he says, but “it is not an effective use of time in early-stage companies.”