"Please Don't Share About Your Pay with Coworkers"

Surfing across the plethora of reading materials available online, I came across this article When the Boss Says, 'Don't Tell Your Coworkers How Much You Get Paid' on The Atlantic. 

This article talks about the gag rule at companies and how the employees are discouraged to talk about their salaries or perks/tips with their colleagues. According to the article, though it is illegal in USA to tell your employees that they can't share about their salaries with co-workers but it is a prevalent practice. 

There were two interesting observations in it. The first was: 

"Even the most confident among us can melt into awkward, self-conscious messes when we have to negotiate our salaries, and asking a coworker about pay seems akin to asking about their sex life." 

Don't think the above  requires any further explanation. The second observation was: 

"Private companies are showing that opening up the books completely can work, while the public sector has done that for decades, yet many still fear that talking about pay would destroy our workplace collegiality."

This was quite correct, in public sector the pay scale is very transparent, even in India. Therefore the question is why such secrecy? How does it make a difference? 

While the usual argument that I managed to read is that employees may not put in the same amount of effort if they are not motivated. But let's face it, every work can be quantified and  some amount of quality check can also be introduced. I think the simple solution would be to give performance based bonus with some component of quantification, and some amount in terms of quality. Its also not necessary that all of this has to be paid in full. I agree setting up that process would take some time and cross-disciplinary understanding but its definitely possible! 

Well since I have managed to retain your attention so far, let's turn talk a bit on the focus area of this blog. When you are planning to invest in any company, always look into the amount of payment made to a CEO and boar of directors (given in the annual report). Also read any note on this subject and compare this over the years. It is most of the time a vital clue if you can trust the company on transparency level or not. A company which is giving undue among of money to its CEO, just because they are also founders, then it is definitely a red flag.

Similarly when you see the list of the members of the board of directors, check how people are related to the business or the founders or the CEO, and also how much are they paid and how often are the meetings held and their views sought after. If the members of the board of directors can bring industry or cross-disciplinary insight to the business and their fees is in line with the industry (check companies of similar size and in similar domain) then it is acceptable or keep an eye on the company with periodic review.

p.s. if you are reading this and can point out to some company which has implemented some unique and perhaps open structure of salary and also makes sure that performing employees are given due encouragement then do share with me.