You Make More Money???!?!?!?!?

by Evil HR Lady on December 2, 2008

Two managers were socializing outside of work. Yes, alcohol was involved. Manager one said to Manager Two: Hey, I know what you make. Manager one then quoted – to the penny – what Manager Two’s salary was. Manager One said that he had seen the information in an offer letter on the HR Manager’s desk (that’s me). Manager two then said: OK, so now that you know my salary, I want to know your salary. Manager One then disclosed his salary amount.

There are obviously a couple issues here, but the plot thickens. It turns out that Manager One makes quite a bit more than Manager Two, even though their positions are somewhat equal. (There are major wage equity issues here that I am battling). Manager Two is devastated, and has done an amazing job of turning his department around and building his team. This really took the wind out of his sales.

My issue is with Manager One. While I am at fault for leaving something confidential on my desk, I have a huge issue with Manager One disclosing this. Managers are exposed to confidential, sensitive information all the time, so the expectation is that he keeps his mouth shut. This is also covered very clearly in our policies. If he disclosed this after a couple drinks, what else is he saying?

When Manager Two disclosed this to me, he stated that he was asking for advice and simply wanted to vent. As an HR professional, I am well aware that there are some topics that employees CAN NOT ask me to keep confidential, and I believe this is potentially one of them. However, since it took place outside of work, are we in a position to talk with and potentially discipline Manager One?

I’ll start my reprimanding with you–bad of you to keep confidential info in a place where others could see it. But, you know that.

Then I’ll reprimand the company for having pay inequities. Now, I’m somewhat of a radical when it comes to pay. Hold on to your horses, but I don’t think pay should be confidential.

Let the ranting begin. Let me state my case. I’ve been in HR a long time and in every HR position I’ve ever held–including when I was a temp admin–I’ve had access to everyone’s salary. And I mean everyone’s salary. CEOs and co-workers included. It’s always been part of my job. At first it’s fascinating. Now? Not so much.

And that’s part of why I’m opposed to secrecy. None of this would have mattered if your company was open about such things. (I know of no companies (government jobs excepted) that are open about such things–I am, as I said, an HR extremist. I wonder if that’s like extreme sports: Up Next, Evil HR Lady in the Extreme Compensation Policy competition!)

But the real reason I’m opposed to secrecy is because secrecy allows pay inequities like the one you are dealing with now. Just think–if everyone’s salaries were open managers would never hire people at unfair levels or offer big bumps to people they *like* but who hadn’t earned the increase.

I realize there are whining problems with this and it takes a lot of guts to have people know that their co-worker with the same title makes more money than they do, but that just means that the company truly needs to pay for performance. Rational people understand that. Irrational people, you don’t want working for you.

But, now to your situation (clearly, I just hijacked my own blog!). Can you “punish” manager one for something he did outside of work? Sure! Do you want to go there? No. I don’t. But, what I would recommend is this:

HR: So, Manager 1, I understand you had a talk with Manager 2 about salaries. Just couldn’t keep quiet about how yours is so much better, right?

Manager 1: So what? (If he’s defensive, that is. If he realizes he was a drunk idiot, he’ll hang his head and apologize.)

HR: Yeah, so it was a pretty stupid thing to do. I’m not sure this company can trust people who make stupid decisions, inside or outside of work.

And then I’d end the conversation. If you are respected and valued enough it will freak him out just a little bit.

As for confidentiality, you’re neither a priest nor a lawyer. Some things you are required by law to act on, but stupid managers who reveal salary information is not one of them. (In my non-lawyer, non-legal advice way. Entertainment, people, this blog is pure entertainment. In fact, did I tell you my favorite joke. It goes like this: There was a snake named Nate…)

I would also bust my buns to deal with the salary inequities, starting with Manager 2. You say he’s turned his group around. You better make sure he’s rewarded for it, or you are going to lose him. You may already lose him. I can guarantee if I was manager 2, I would have come home and started working on my resume. I’ve just been told that my company doesn’t value me. I’d expect the burden is on the company to prove otherwise.

{ 25 comments… read them below or add one }

VPpersonL December 2, 2008 at 3:05 am

Love the Blog. Just starting in the Blogosphere myself, and would love some input from an experienced HR professional

http://www.createacultureofservice.blogspot.com

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MFK (Open-Source Career) December 2, 2008 at 3:36 am

VERY interesting post. I really like your HR Extremist position re: open-source salaries.

Are you aware of the Results-Only Work Environment (ROWE) movement that started at Best Buy? Your open-source salary ideas seem really compatible with it. The founders have a blog at http://caliandjody.com/blog/

On a personal note, when I was negotiating compensation for my original position at my company, two other interns and I disclosed our offer details to each other in an effort to help all three of us negotiate better. One of us had been offered a radically larger signing bonus, only because his MBA was from Michigan and ours was from Minnesota. (We MN folks are women and I’ve wondered – but mostly doubtful – whether gender played into it. Probably it was due to a perception that Michigan is a better school and thus the company has to offer more to lure Michigan MBAs.) When we MN folks used this objective, factual information to negotiate for a comparable bonus we were reprimanded by the VP for being “inappropriate.” I’ve always felt this reprimand was more about catching the company behaving unfairly than about actual inappropriate behavior.

MFK (Open-Source Career)
http://mfkblog.wordpress.com/

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nectarines December 2, 2008 at 4:25 am

I like your extreme approach, EHRL.

I was a mere receptionist once upon a time. It was a slow day and, desperate to find busy work for me, a manager instructed our bookkeeping staff to give me checks to stuff into envelopes. (This was a very small office – our bookkeeping staff was one part-time woman named Sue.) Mixed in with the dull AP checks was a fat stack of payroll checks.

I was mildly surprised, but not shocked. And I really, honestly didn’t pay much attention to the payroll checks. I was the receptionist, I already knew I made less than everyone in the office, what did I care about their salaries?

But the manager was apoplectic! She reprimanded me (Sue took the brunt of the blame, but I got my share, too, for not realizing the mistake and proceeding to stuff the envelopes anyway. I was 19 and doing what my boss had told me to do, and I got reprimanded for it. An early lesson – harsh, but necessary.) In the process, she told me that one new hire made more than a longtime employee, even though the two women had the same job title, and she was *terrified* that word would get out. The longtime, lesser-paid employee was prone to emotional outbursts and would completely lose it if she knew.

I hadn’t even noticed their pay difference. But I sure did notice the dysfunction behind the manager’s reaction. It was obvious that the manager didn’t believe her own pay decisions were fair, but she still wanted to “get away” with them. Is it really worth that kind of paranoia and hysteria to save a few bucks? Wouldn’t it have been so much nicer for everyone if she just made a salary decision she could have stood behind?

In another job, later, I was asked by my manager to train a longtime employee on a particular software package. When the manager saw I was getting to a specific part of the process, she quickly interrupted us and told me to end the lesson. Later, she took me aside and admitted that she didn’t want her longtime employee to know that other people in the office made more than her – the manager had forgotten that mastering this software would give the longtime employee access to this “dangerous” information. So the lesson was abruptly ended, never to be revisited, and the longtime employee left to wonder what the heck just happened there. Again. Not worth it. Disclosure makes for a much more pleasant culture.

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Evil HR Lady December 2, 2008 at 12:07 pm

MFK–I am familiar with Best Buy’s ROWE. I didn’t know the founders had a blog. I may have to check it out.

And the VP who reprimanded you did so because her salary offers were inappropriate. If a Michigan MBA is more valuable than a MN one, then she just needed to say that. Or, she just needed to say, “Each offer is made based on the qualifications of the individual. All of your offers are fair.”

I believe in open information. I don’t believe that everyone should be paid the same amount. I, for instance, should make more money than everyone else.

Nectarines–your manager has ISSUES,

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Anonymous December 2, 2008 at 1:50 pm

I believe that Whole Foods and Costco both have open salary policies (as in they publish a list of everyone’s pay).. Whole foods also has a max:min salary ratio cap around 8-10

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jaded hr rep December 2, 2008 at 2:12 pm

I like more open standards around pay for performance and drilling that philosophy into managers so they execute on this during merit cycles, but I don’t think most employees like knowing they earn less than a colleague – and these are not irrational people. These are proud people – those average employees that every company needs to keep things chugging – but who can’t bring themselves to see that they are average (i.e., get their jobs done, but no more). Not everyone will get up and leave, but I don’t think you’ll get those employees endorsing you as an employer of choice. Rare is the breed of employees who are truly rational, and say “Yeah, I think I’m paid correctly” (even when he’s making less than his coworker).

As to blabber mouth manager – I would pull him aside, with his manager in the room, and let him know that his indiscretion was disappointing for someone at his level (particularly if he’s paid more) and seriously call into question his judgment. Maybe no formal discipline, but certainly a suggestion this could jeopardize his further growth in the company. A company would be remiss, IMO, if they didn’t do anything after this incident.

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Jenn December 2, 2008 at 2:31 pm

But, wait a minute here. If there was an offer letter to Manager #2 sitting on HR Manager’s desk, and Manager #1 saw it, wouldn’t it be fair to assume that Manager #1 makes more money because he or she has more seniority? It shouldn’t matter that they are both “Senior XYZ Manager,” or whatever, if Manager #1 has more seniority and more in-depth company knowledge, doesn’t he or she deserve to be paid more?

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Anonymous December 2, 2008 at 4:18 pm

DH & I have always worked for government organizations, both union and non, that publish their pay grids for all but the highest ranking personnel (i.e. CEO types negotiate their own salaries). As a result, it is quite easy to figure out what any of our friends make is based on their position and seniority. True, there are no individual pay negotiations, but there are also no issues about who makes what.

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The Office Newb December 2, 2008 at 4:51 pm

At the last company I worked for, an employee was searching the shared company computer drive for his job description (he didn’t have one–long story).

Instead he found a list of everyone in the company with their annual salary information. This was an unsecured document on an open drive that anyone in the company could access.

Yet our corporate hierarchy chart was unaccessible. Go figure.

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Nor Cal HR Gurl December 2, 2008 at 5:53 pm

For once I have to disagree with EHRL. I do agree that there is too much secrecy in pay issues. I also think that this manager has shown a serious lack of judgement and I question whether they can be trusted with other confidential information in the future.

Sometimes we come across info we shouldn’t have -how we handle that information says a lot about us as employees. The HR person was wrong for leaving confidential info out, the manager was even more wrong for disclosing the info.

Imagine had the situation gone differently. Manager A discloses this info to Manager B who gets angry, they confront HR and their superiors over sharing their compensation info with others and lose trust in the Company. They tell other employees that HR and the Company cannot be trusted, after all if they are disclosing this, what else are they disclosing, medical info, garnishment info, etc? While it’s questionable as to whether the info should be secret, the reality is that at that company it IS a secret. I can easily see a situation like this going very badly.

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Evil HR Lady December 2, 2008 at 6:08 pm

Nor Cal HR Gurl,

I agree that at THIS company it’s a secret. I also agree that manager 1 is an idiot. I just think it shouldn’t be an issue.

And let’s face it, this manager didn’t share salary information in order to be “open.” He did it in order to show off.

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Bohdan Rohbock December 2, 2008 at 6:33 pm

I agree, EHRL. Pay being open requires managers to make better decisions, or at least have a better line of justification.

A company should never be afraid of their employees finding out that kind of information. If it’s so wrong, fix it. At least have a plan to fix it so that in X years it will be balanced.

Seems to me that Manager 2 was hired on as an ‘unknown’ and given a tough position. Now he’s succeeded and proven his worth a pay adjustment makes sense.

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Anonymous December 2, 2008 at 6:36 pm

I agree with Jaded HR Rep that Manager 2 should be pulled aside with his manager present and reminded that he has access to sensitive documents and his recent lack of judgement causes concerns.

On the other hand…having worked in a union environment with open salaries (and top secret for the non-union people), I found a way to find out what my coworkers made: 40% more than I did. (all through innocently running a query…I figured out the HRIS system better than the HRIS guy. I was gone within two months. Now, I work at a place and am paid fairly for my experience and my judgement…but I am paid more than those my age in similar positions. Why? My phenomenal experience and negotiation. If they knew I made what I make, I would constantly be defending my abilities so it’s good to remember there are two sides to open salaries. Jealousy and competition can be a killer for an otherwise decent working environment.

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Jordan December 2, 2008 at 6:37 pm

The Problem is that your still making somebody else rich regardless of what the bonus or salary is. I just finally quit my job and Don’t have to work anymore for somebody if I don’t want to. check it out

http://www.jordankeyes.ws

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Anonymous December 2, 2008 at 8:38 pm

I think JadedHRRep makes a good point – in theory open salary information is a good idea. But generally employees are non-rational when it comes to salary and compensation.

They may think they are equiavelent to another employee and thus deserve the same or better pay, and if they find out they are paid less will totally disengage, all because of their mistaken impression of their own performance/worth.

I think there needs to be some balance between not being fully open, yet having a system to make salary decision makers accountable to salary equity within the company.

Further, having some flexibility in salary ranges to help compensate people for differnet skills/contributions can be useful, rather then a fully regimented published salary scales.

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Anonymous December 2, 2008 at 10:04 pm

The solution is an open “salary range”. The workers with more experience/education on the top.Of course base on performance too.
About salary leaks in a company….my boss (supervisor)found out from a friend HR person (outside the company), I make more money than him. Of course he is half my age/education/experience, so now how is he going to fairly review me and give a fair increase?
Of course I’m talking about a company where EVERYTHIG is a secret because of the double standards, and promotions by friends more than performance.
I would like to see some faces if we would have an open salary policy…hahaha

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clobbered December 2, 2008 at 10:57 pm

I also agree with Jaded HR rep from a different perspective: I am not in HR, and I do NOT want to know what everybody else gets paid. I think I do a good job and I think I am compensated well, and my salary has increased in line with my responsibilities. Why is anything else my business? Generally I have found when employees have told each other what they earned it has led to bad feeling. Moreover in some fields, the “average” employee that Jaded HR Rep describes can simply not become better – they are working conscientiously but to the limits of their intellect. Do you really want to rub their face in it?

I think an employer should make sure that employees are fairly and consistently compensated by having regular management reviews, perhaps as part of the staff evaluation process if there is one.

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lydiajane December 3, 2008 at 12:50 am

I’ve been in HR for over 20 years; at first, it surprised me that employees shared their salary information – wasn’t that supposed to be confidential? But, over the years, I’ve found that no matter how many keys there are to the HR files and databases – people find out how much their co-workers make. And if there is disparity, there is discontent. As there should be!

All employees should be paid in accordance with their skills and contributions to the organization. Of course, there will always be the disagreements about who worked harder or deserved more, but, working with the operational managers, there should generally be, if folks act with integrity and honesty, no issue about who is paid what and why.

I know, this is an ideal world I’m suggesting, but it is the way compensation is “supposed” to work – those who contribute more, by rational and measurable standards, get paid more.

In my view, if an employee feels he/she is being underpaid, the operational manager should be perfectly prepared to explain why, and offer suggestions for how the employee can improve their performance and gain the higher pay scale. Call me an idealist, but I think this is the role of HR management – to work hard to insure folks are compensated fairly, and managers know how to make this happen.

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Anonymous December 3, 2008 at 2:45 pm

Oh EHRL, how I love your blog! Amusing and informative! But what got me about this post was your reference to your favorite joke. If I’m thinking of the same one (punch line: …better Nate than lever! Hahaha!), my version takes about a half hour to tell. The punch line once earned me a hard slug in the gut for lameness. It’s been years since I’ve heard or told it. In the midst of my own HR madness (mass RIF’s), you brought a smile to my face! Cheers!

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The Engineer December 3, 2008 at 5:28 pm

In the government realm. All compensation information is public. One of our local newspapers even runs a website with a searchable database of every government employee’s pay (organized by City, County, agency, etc.).

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Anonymous December 3, 2008 at 7:20 pm

MFK (Open-Source Career), If you don’t like the offer go to another company. This isn’t communism, it’s capitalism. If the HR person wants to offer somebody else more, they are entitled to it. Life is not fair. No one owes you anything. If you don’t like the pay scale, then start your own company. Go cry on your mama’s shoulder, companies have been doing this since the inception of time. Look, Ideally, you should be offered the same pay, but we know life, is NOT fair, and to claim that it is means you’re in denial. Again, if you don’t like it, start your own company, and soon you will see that the inequities that you so hate, will be inevitable.
As a second note, how do we know the manager 1 wasn’t doing something extra that wasn’t being disclosed? Maybe neglected to be disclosed? The extra mile? Although the second manger turned his dept around, how do we know that the first didn’t as well and maybe even better? So much wasn’t disclosed in the blog…

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Anonymous December 3, 2008 at 7:21 pm

Maybe I’m out in left field, please correct me if I’m wrong.

Doesn’t the DOL protect the right to discuss this? Protected concerted activities?

I agree it damages his credibility for future jobs, but I don’t believe he can be disciplined for this.

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Anonymous December 3, 2008 at 7:25 pm
Dustin December 4, 2008 at 9:45 pm

My Daughter came home yesterday with a B that she had worked very very very hard for. She was so excited (as was I)- that is until she saw the A her GT brother got.

Now did the A her brother got change the her achievement – NO! It was still awesome, but now she did not think so and that is sad.

We need to teach people to be happy with the deal they made no matter what is going on around them. There will always be someone with a faster car, a bigger house, or something. None of that takes away from the house or car you own.

If he liked is salary before – he should still like it. I understand this is to the way Humans work – but it is a change for the better.

I think a couple of mission trips or time spent at the soup kitchen would help drive home the concept.

Be happy with your own deal – regardless…..

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Anonymous December 15, 2008 at 9:10 pm

This is an example of the reason why some HR people dislike salary.com’s SalaryWizard. Salary.com publishes a market pricing rate based on a simple formula for 1000s of jobs. You might not like the methodology they use, but it makes the information available to everyone. Then it’s not really a surprise that someone in California doing the same job as someone in Minnesota is making a load more cash.

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