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The Transparency of Compensation

October 19, 2016

Response to David Burkus' TED Talk:
"Why you should know how much your coworkers get paid"

 

In this information age, is privacy or the right to privacy on pay such a bad thing? As a compensation professional, I’ve had the opportunity to see the good, the bad and the ugly in compensation. For most of my career, I’ve had access to the pay of every company employee.   I will admit that my views are anecdotal at best, but no good has ever come of pay transparency.  Let’s look at  executive pay which is now public proxy fodder – the only thing that has happened in the decades since the initial regulations is that the pay keeps ratcheting up to astronomical levels – as different CEOs (a competitive bunch) battle each other with the score being who can achieve the highest package.  Top sports athlete pay has taken a similar turn.  And who pays for this?  Is society or the sport better off with a few individuals earning crazy high pay packages? The only time when pay transparency seemingly works is when everyone is paid the same and then managers can’t use “rewards” to recognize top performers, so performance may revert to the lowest common denominator, tenure, with only internal motivation driving a person to do the best job they can.  We’ve all been the recipient of poor service from that pay model.  So if you really knew how much someone was earning – who would you select?  A sibling? A parent? A public figure such as a news anchor or talk show host?  A college professor?  You should ask yourself why that matters to you and what would change as a result of knowing that other than your expectations or perceptions? Burkus makes an argument that pay discrimination would disappear. I don’t think so; after all, female CEOs aren’t earning as much as their male counterparts and that is readily available public data.       

 

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Diane Lirio, MS & SPHR is an adjunct faculty member in the Graduate HRD program at Villanova University & the VP of Compensation at the Bancorp. Learn more about her here!

 

 

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