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Answer & Explanation:This is what your coworker is paid.docx
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This is what your coworker is paid
Office workers have grown accustomed to knowing the intimate details of each other’s lives—
from a colleague’s favorite cat 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—and in
doing so, walking a tightrope between information and TMI, or 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 Manhattan 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. 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 sys-tem, he says. The company’s 30 or so employees are each
assigned to one of nine fixed salaries, which range from about $35,000 for the lowest
paid to $120,000 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, Sum- All’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. Ms.
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 Center for
Effective Organizations at the University of Southern California. (Public companies and
government agencies, meanwhile, generally have disclosure requirements about firm
performance or pay.) 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. 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. At Tenmast
Software, a Lexington, Ky., database software maker, the company’s 70 employees have
access to company financials and participate in monthly strategic-planning sessions,
though individual salaries are kept private. Every new employee must attend a financial
literacy course to understand how to interpret accounting statements and business
decisions. That literacy paid off last year when the staff acquired the business through
an employee stock owner-ship plan, giving workers an even greater stake in their
decisions. Angela Lee, a Tenmast sup-port team coordinator, says under-standing her
impact on the bottom line is empowering. She contrasts that to her previous job, where
her project was shuttered, but employees weren’t aware anything was amiss until the
last minute. “I know where we are. I know the bottom line and how it’s going to affect
the bonus I get at the end of the year,” she says. Giving negative feedback— already
challenging for many—can be even harder out in the open. Tim Ogilvie, co-founder and
CEO of Peer Insight, a Washington, D.C., innovation-consulting company, says the firm’s
dozen employees know one another’s salaries, bonuses and performance appraisals,
along with detailed company financials, down to how much money the company has in
the bank. Employees have a say on whether to take on any one client or project and can
weigh in on new hires, he says. Jessica Dugan, a senior design consultant at Peer Insight,
says it can be “totally awkward” con-ducting project evaluations with the entire office
listening in. “You want to be a good colleague and give feedback that will help people
improve, but that’s hard to do in a public forum,” says Ms. Dugan. While sensitive
discussions about performance concerns are held privately, she says that open reviews
“ensure everyone on a project is on the same page.” But such openness isn’t for
everyone. In 2010, Slava Akhmechet, the CEO and co-founder of RethinkDB, a Mountain
View, Calif., 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.
Mr. 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.”
Questions
1. What are the potential advantages of open management?
2. What are the potential disadvantages of open management?
3. Are there any kinds of information that you think should never be openly available in
organizations? If so, why not? If not, why?
4. Why might some managers or employees be resistant to open management?
Source: R. E. Silverman, “Psst . . . This Is What Your Co-Worker Is Paid,” The Wall Street
Journal, January 30, 2013, B6
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