Salary secrecy and the powerful emotions it unleashes in employees have taken centre stage in a 31 December column at The Guardian. [1]
In the piece, an anonymous, female manager writes: “I recently found out that a man sitting next to me in the office, who reports to me directly, is being paid £20,000 more than I earn annually. It might sound crass, but my reaction to this news has materialised as the five stages of grief. Grief, quite possibly, for my withering sense of self-worth.”
She explains: “At first comes denial. Surely this is a misunderstanding. Though we have our differences, my media mogul managers and I share a fundamental passion for progressiveness and – do I even have to say it? – an aversion to blatant discrimination. The organisation is meant to be famous for it. Then anger strikes. It’s raw and blinding. I’d heard stories about such cases – reported them to death, in fact – but never had I felt so ridiculed.”
The manager notes: “I’ve just had a baby. I’ve been negotiating my return to work. My desk neighbour is undeniably excellent at his job. He’s an ambitious and diligent employee with admittedly a few more years of experience than me. He’s a leader in his field, but when hired, I was deemed senior enough – amply mature, responsible and talented – to commission him, edit him and perform all the other far more mundane tasks of management.
“Perhaps on account of his stellar reputation within the industry, a pay gap is justified, but the sheer size of this particular chasm has burned my ego to a crisp. The money at stake could buy me a car or cover rent in central London for months.”
For contractual reasons, the manager points out, she is unable to raise the pay disparity with her organisation as a discussion point.
As well as highlighting some of the broader problems with salary secrecy, does this piece also demonstrate that workers should not be paid more than those who manage them?
The Institute of Leadership & Management head of research, policy and standards Kate Cooper says: “Particularly in commissions-based environments, managers will encounter situations in which they earn less than some of the people in their teams. For example, this may occur in a sales team that sells expensive cars. Indeed, I have met someone in that line of work who took a management job and ended up earning less than he had in sales. In that case, there’s a trade-off between the highs and lows of commission and the regularity of a steady, dependable salary. But as we all know, a talented salesperson is capable of generating levels of commission that can eclipse even a fairly substantial wage.”
She notes: “The key point to bear in mind with that example, though, is that the information about that pay difference is out there. It’s a known quantity. The situation highlighted in the Guardian column – whereby a manager has found out that a member of her team is being paid £20,000 per year more than her – is a real testament to the recommendations that came out following the publication of the UK’s gender pay-gap stats: that you should pay for the job, not the person who’s doing it.
“If someone is taking a job at a particular level, there should be a salary benchmark associated with that level. The fact that they earned £20,000 more at their last job means that they’re looking for the wrong job – so what’s their trade-off?”
Cooper argues: “It’s secrecy that allows these things to happen, and sparks ill feeling when discrepancies do come to light. This columnist’s case is particularly bad, as she doesn’t even seem to be able to talk about what she has learned. It all ties into Adams’ Equity Theory, [2] which holds that you’re only satisfied with what you are earning if you feel that you are being rewarded for your efforts in comparison to those of your colleagues. And in this case, there’s the additional problem of seniority to consider.”
She adds: “Solutions here would include i) transparency, so there’s far more openness about pay; ii) a greater inclination to grade jobs, and link specific salaries to those grades, so you’re not starting from the point of what a new hire earned in their last job, and iii) far less toing and froing with salary negotiations. If you are not setting your salary at the correct level, the market will tell you. But if you surround your salaries with secrecy, the market is unlikely to help you.”
For further insights on the themes raised in this blog, check out the Institute’s resources on building trust