Salary Confidentiality 13

[Medeski]

Hello ladies and gents,

We recently extended an offer to a new EE grad. We work in a small office (6 people not including sales staff who work at a kiosk). Though the new hire will initially be making less than most in the office, we are writing in a pay bump after one year that will have him making more than some people, including technicians who are 20+ years older (though have only worked here less than a year).

When he starts working, I was thinking of just sitting down with and asking him if he would please keep his salary information confidential in the office to avoid any issues. I don't know if I need to go any further than that, but as we haven't written his contract yet, is it prudent to put something in there as well? He doesn't seem like a blabber, but he hasn't started working yet and it's only our second engineering hire.

Just wondering if anyone has any input and experience in the issue. Thanks in advance!

 

[MacGyverS2000]

The best people to talk to about salary are the people getting ready to leave. If they're leaving because they're generally unhappy, it's possible their salary is too low for the trouble they get into. If they're generally happy and just found something a bit different to try, it's possible their salary is pretty good. If you're friendly with these people, you can "share" salary info either shortly before are somewhat after they leave. I do this whenever possible, and not only does it give me useful info on how I stack up, it also tends to prevent long-term hurt feelings because they're leaving anyway. I typically stay in touch with these people long-term.

Surprisingly enough, the ones you think are making a killing usually aren't. In some positions I learned I was way under budget (leading me to negotiate better the next time around), while at others I learned I was poking through the glass ceiling (which gave me good leverage with the next company).

Dan - Owner

http://www.Hi-TecDesigns.com

 

[moltenmetal]

I have a Dilbert hanging in my office- the one where the boss says, "It is our policy to hire only the very best technical professionals." Dilbert asks, "Is it not also our policy to pay the industry average?" The boss replies, "Right, we like them bright, but clueless.".

What we notice here is that the "professionals" tend to strictly adhere to the policy of holding salaries and other compensation confidential. The people in our shop absolutely do not, some going to the extent of showing one another not only their pay slips but also their bonus cheques. The professionals are very likely happier without knowing how much each of them makes relative to the other, but I'm not entirely sure they're smarter...

Negotiating salary with your employer is a sort of prisoner's dilemma, in that you usually have neither sufficient power nor sufficient information to negotiate effectively. A salary survey based on sufficient data to be reasonably accurate, combined with an intimate knowledge of exactly what you earn or save for your employer, is invaluable.

 

[GregLocock]

Yes, which is precisely why the union is rapidly gaining members among the engineers at my workplace, their first survey revealed discrepancies between what the company told us and what is actually happening (eg minimum wage for an engineer is X. Oh, what about these 3 people? The average pay for this grade is Y, no it isn't it is less than that by a statistically significant margin). I am looking forward with great interest to the pay negotiations in 5 years time when the vast majority of our non engineer payroll will have been made redundant, and unionised engineers will be the majority voice at the negotiations. If I were management I'd be a little nervous. I haven't joined...yet.

Cheers

Greg Locock


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[77JQX]

As a public employee, my salary is posted on the internet, as is every other public employee in the State. I don't see a problem with sharing salary information.

 

[loki3000]

their first survey revealed discrepancies between what the company told us and what is actually happening (eg minimum wage for an engineer is X. Oh, what about these 3 people?

yeah, or the new hire gets a significantly bigger starting salary and after first promotion (from junior) gets a higher pay then an engineer with x years in the office.

 

[TomDOT]

loki - If the new hire is notably more effective than the engineer with x years in the office (or is a high-demand specialty), she deserves the higher pay.

 

[GregLocock]

True, but if external factors make it necessary to offer higher salaries to new graduates then it takes a long time for that effect to trickle through the system, and that is one thing that's been happening.

In theory it all gets levelled out over time bt forced ranking. If you believe that then I have a bride to sell you.

...or a bridge.

Cheers

Greg Locock


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[zdas04]

The company that I used to work for had a "compression" process where they calculated the average offer for Engineers during the recruiting season and compared it to the previous year. If this year was higher than last year, the percent difference was applied to all in-place Engineers. So if you had been working for a while, a 10% compression raise could be serious money, we were all rooting for the new grads to get GREAT offers. The company stopped that practice in 1986 when the industry crashed and we laid off 1/3 of the Engineers immediately (and another 1/3 over the next few years) and stopped hiring for 14 years. At the end of the depression they didn't re-institute the compression raises.

David Simpson, PE
MuleShoe Engineering

"Belief" is the acceptance of an hypotheses in the absence of data.
"Prejudice" is having an opinion not supported by the preponderance of the data.
"Knowledge" is only found through the accumulation and analysis of data.
The plural of anecdote is not "data"

 

[JohnRBaker]

When I was a manager back, during my McDonnell Douglas days, what you would do is hire new people at the highest salary that you could get HR to agree to, however you'd let the new employees know that they probably wouldn't be getting much of a raise that first year, if at all. The reason for this was that when it came time to give out annual raises to your group you'd be given a 'pool' of money which was based on a set percentage (the same across the entire company) of the your department's combined salaries (the sum total of all your people's salaries). This way that first year after you'd hired someone, that person's portion of the 'pool' was now available to you as a manager to spread the wealth around the rest of your people, perhaps addressing some disparities where an actual promotion was not practical (promotion money was always above and beyond the raise 'pool').

Over time, following this process allowed you to increase your share of the company's annual raise 'pool' to the benefit of all your people. What was amazing was that some managers went out of their way to pay the absolute lowest salaries possible, even if it meant selecting lessor qualified people, claiming that this is what 'good' managers were expected to do. However, over time these same managers had to continuously struggle with trying to keep their more qualified people as their salaries would eventual lag the people who worked for managers who, like myself, had admittedly been 'gaming' the system. But as a manager I felt it was my obligation to get the most for my people even if it meant that I had to take advantage of a system that could be manipulated to my advantage but which other managers never seemed to catch on as to what was happening or realized how it was hurting them in the long run. BTW, when I was able to get someone a promotion, I would play the same game, getting them the absolute maximum increase that HR would approve and then use their contribution to the raise 'pool' the next time around to help someone else or to raise everyone a bit more than they would have gotten otherwise. If you kept this up, over time it really made a difference.

John R. Baker, P.E.
Product 'Evangelist'
Product Engineering Software
Siemens PLM Software Inc.
Industry Sector
Cypress, CA
Siemens PLM:
UG/NX Museum:

To an Engineer, the glass is twice as big as it needs to be.

 

[KM]

I find all this salary secrecy stuff odd. I'm with the government--my salary is posted on the internet for the whole world to see, as are all my co-workers'. What's the big deal?

 

[zdas04]

KM,
There is one additional component--your salary is fixed by law and to have your salary shift requires a change in classification. In a company, the boss generally has the latitude to apportion his raise budget, individuals getting more than the average raise results in others getting less than the average raise. The "less than" folks tend to feel less valued and can start demonstrating that feeling in bad ways. Confidential salaries minimizes that chaos.

David Simpson, PE
MuleShoe Engineering

Law is the common force organized to act as an obstacle of injustice Frédéric Bastiat

 

[GregLocock]

Yes, for instance where I work the band for a senior engineer varies from about $X to $1.9X, and the overlap between grades means that it is quite common to have someone in the same department in a lower grade who makes more than someone on the next grade up. Interestingly our competitors have a rigid array of grades with decimal points in them, and the pay for each subgrade is fixed and known, so if you talk to Bob who is a 4.3 then you can easily find out how much he's paid. I'm somewhat agnostic on whether that is a better system in practice, but the majority seem to think so I guess in a couple of years we'll be switching over.



Cheers

Greg Locock


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[saf12]

Link
This is worth looking at.

 

[tys90]

My employer uses a similar method as GregLocock explained. Everyone is assigned a category and grade. E.G. Engineer 2. They publish the salary ranges of all categories and grades so you can estimate what someone is getting paid if you really want to. I've never seen it be an issue. I think it's a good method, keeps everything in check without singling out people.

In a related note - there was a period of about 5 or 6 years where there were no new hires in my department (before I started). When they started hiring again, they offered hiring bonuses to new employees. Not huge but once it came out that the new guys got bonuses, there was some complaints from people who were there 10+ years. But that's how the industry changed over those years, I think hiring bonuses are a standard practice now.

 

[IRstuff]

My son told a story over Thanksgiving about a friend of his that interviewed at a company, and was about to receive a verbal offer, when he mentioned that he had an offer from another company F.

HR: "Oh, let's pause and let me ask you how much lower you might go" -- company F starting salaries are ~$100k this year
interviewee: "I suppose I could drop $15k"
HR: "Oh, I don't think we're going to be able to match that"

So, not every company in Silicon Valley has deep pockets...


TTFN
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[JohnRBaker]

The only 'signing bonus' I got 42 years ago when I took my first job out of college was that I was given credit for the 25 months for which I had co-oped for the company over the 6 years that I was working on my degree full time. At the time all that it meant was the I qualified for the 5 and 10 year automatic increases in your annual allotted vacation days a couple of years sooner than you would normally have. However, when I left the company back in 1980 to join the organization for whom I still work, that meant that my official time with the company was 11 years not something shy of 9 years. And since you had to be there for 10 years or more to lock-in any future payments from the company's defined-benefit pension plan, in end it made a significant difference although at the time I didn't think much of it since I was only 33 years old and you couldn't start drawing a pension until you were 65. And while the company has since been bought-out and basically dismantled for it's pieces and parts, the pension plan lived on in some sort of escrow account because when I turned 65 last year I got a notice that it was time for me to start taking my pension payments. Granted, I didn't earn a lot back then and it was technically for only 9 years but with those additional 25 months added on, I'm now collecting an extra $145 a month (which is taxable as regular income) that I wouldn't have been getting at all if they had not given me that 'bonus' 42+ years ago.

Note that I'm also getting a significantly larger (and also taxable) pension for my 11+ years with McDonnell Douglas, again which I had to start taking at age 65 since it too was a defined-benefit pension. Now my EDS pension was converted years ago into a 'cash account' which continues to draw interest even though no new contributions have been made since EDS sold our company. Now the advantage of this plan is that, like other tex-deferred pension plans such as 401k's and IRA's, you don't have to start taking payments until you reach 70 1/2 so I've got a few years to let that grow (without incurring any immediate tax liabilities) before I have to start making withdrawls.

I guess one thing this all proves is that someone, somewhere must have been doing their jobs since in the end, I'll be drawing pensions from THREE companies which no longer even exist.

John R. Baker, P.E.
Product 'Evangelist'
Product Engineering Software
Siemens PLM Software Inc.
Industry Sector
Cypress, CA
Siemens PLM:
UG/NX Museum:

To an Engineer, the glass is twice as big as it needs to be.

 

[MartinLe]

I'm thinking about how to approach my colluegues about wage. I want to have an accurate impression of how I rank within the company. I just missed a chanve to talk to a leaving colluegue and I don't think a new one will come up soon. Till now wage confidentiality was pretty tight around here, or maybe there's just a culture og beeing tight-lipped around this issue.
But how would I approach my mates in such an environment?

Btw, I recently talked to a guy who works blue-collar in a huge organization, he knew the wages of many of his mates and told me they discussed these things pretty freely and support each other in gaining better wages. When I worked public service, the wage of everyone was basically public - you just looked it up in a table, and again there's was a culture od supportingo ne another with the little bits and pieces that might add a little something. So I'm pretty sure that as an employee, a culture with little confidentiality is a good thing in the long run.

 

[IRstuff]

At a minimum, your HR should at least tell you where you sit in the salary range for your job classification. Hourly employees are generally a different animal; they used to sometimes jump ship for an extra couple of percent in pay.

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[MacGyverS2000]

If someone flat out asked me what I made, I wouldn't answer. I'd have to know them really well, consider their reason for asking, and expect reciprocation for their salary. I usually learn at least one person's salary at every job I've been at. Generally, you lead into it over a period of weeks/months discussing similar topics (it's starting to sound like dating and sex ).

Dan - Owner

http://www.Hi-TecDesigns.com