The job where everyone knows your pay
In a bid to close the gender pay gap, a New York technology company is trying the open approach: revealing salary information to its three dozen employees.
Eight months ago, workers at Fog Creek Software got access to a spreadsheet with titles, levels and the corresponding salary bands of everyone in the company.
Some salaries are more public than others. Chief executive Anil Dash and the other top-level executives all put their salaries on the spreadsheet, for example.
At a meeting an hour later, Dash explained the rationale behind the range, then opened the floor for questions and comments. Some people said they were pleasantly surprised by where they fell. Two people thought they made too much. (The company did not reduce their pay.) Others were glad to have proof that they were fairly compensated.
“We’d done enough prep work where I don’t think anybody was caught off guard or surprised by it, but it was still a moment where people were sort of saying, ‘Wow, I’m actually seeing, you know, how this company runs’,” Dash says now.
It turns out that when it comes to money, people care a lot more about “fairness” than raw numbers. One study found that as income inequality in the US has increased, American happiness has decreased. The study found “perceived unfairness” — not lower incomes — breeds a lack of trust, which, in turn, diminished happiness.
Something similar is true at work. A survey of more than 500,000 people by PayScale, a US website which provides salary data, found that people who feel confident in the fairness of their employers’ pay process were 5.4 times more likely to report high job satisfaction than those paid a market rate. Feeling as if you’re getting paid fairly matters more than actually getting paid fairly.
Fog Creek is just at the beginning of its transparency campaign, says Dash. The company will continue to tinker with ranges and job titles and potentially bring even more transparency, communicating with employees the whole way. “This is an industry that is very, very generous in a lot of ways with compensation,” Dash says. “So why not make it a fair and level playing field?
“Transparency is not a cure-all and it’s not the end goal, it’s a step on the way to the goal, which is to be fair in how we compensate everyone.”