Four Ways Companies Can Reduce the Resentment Cost of Salary Secrets
Companies today are all about the lean, mean profit machine. They answer to shareholders. Pay their CEOs a lot of money: $350 per every average dollar earned per employee. Hire expensive consultants to indicate the cutting of resources. And yet, they erode a lot of profit by making one critical mistake during the hiring process: they keep salaries a secret.
Recruiters, hiring managers and HR spend hours upon hours sorting through applications and interviewing potential talent. After that they internally compare and discuss the various individuals, administer all kinds of tests and vet with the ones they believe in, directing them to senior executives who then spend their very expensive time with them. Eventually, after many people, multiple rounds and several months, firms decide on exactly the person they want and they write an offer.
The excited candidate hears the news and is then almost immediately deflated. She has wasted their time applying for and jumping through hoops to be marketable for a position that is well below what she can afford to live on or what she’s previously earned. The title said ‘director.” The salary? A whopping $35K. That’s entry-level pricing 10 years ago, at best.
Imagine if the company, when posting the job, upfront said salary range: $32-$37K. The candidate would have skipped this position, the right candidate would have showed up and the company would have saved at least 20-30 hours of combined internal resources.
Government jobs are pretty good at their salary transparency, often including either the hourly rate or the salary. From the first glance of the description, everyone is crystal clear. For-profit organizations can learn a lot from this level of transparency.
Imagine how much gossip, negative thinking and playground level behavior would go away if orgs posted exactly how much each position was worth. Sure, many firms list position levels and then pay-scales within those levels. But often those salaries can range up to $20 or $30K. I had one client who was offered a promotion in her organization — because she’s excellent at what she does. She then discovered that her pay would go down. While at the higher level and with additional responsibilities, her new salary would be lower than her existing salary at the lower pay-grade. How does that make any sense?
Yes, there’s lots of arguments about how any job is better than no job, how sometimes you have take a step back to move forward and that no one owes employees anything. These are all 100% true. At the same time, to quote The Postman Always Rings Twice, “Guaranteed poverty is not job security.”
Money is important. Money means the difference between surviving and thriving. Money means access. And no one should feel any level of shame or guilt for wanting their money in exchange for doing their job.
Companies can actually increase their profits by lowering the “resentment cost” of internal salary speculation. They can do so 4 ways:
1. Include a narrow salary range (5% variant, at most) in the public and internal job post. Make sure job grades have a tight overlap, avoiding punishing of promotions.
2. Align the right talent to the right position, bypassing favoritism, sexism, racism, ageism, etc., and instead asking two simple questions, “Can this person do this job well?” and “Will he culturally fit within the organization?”
3. Communicate succession planning: Publish promotion steps at each department and level.
4. Set objective, clear and measurable goals with your employees (that obviously align with the annual company goals) so that job reviews reflect performance. If each candidate has eight subjective, long-winded and jargon-filled goals to achieve, you are setting them up for failure, from Day 1. They will have zero incentive to do anything well or to stay.
In the past few years millennials have outpaced baby boomers in the active workforce. This now 30-something generation is a huge driver of information transparency and is far more egalitarian than hierarchy-driven. They will decide just how profitable a company is and they will not sit around and wait to get promoted. They will simply hop into the next position that gives them the decision rights and salary they feel they deserve and can live on.
I bet your shareholders know that.
Jerry McGuire image: IMDb.com
Alexsandra (Alex) Sukhoy. I’m a writer, marketer and career coach at Creative Cadence LLC, and teach business students at CSU. You can find my first business book, Date Your Career: The Longest Relationship of Your Life, on Amazon. I’m currently writing a film noir screenplay called Cleveland City.
Twitter: @creativecadence. #letstalk