How can a workplace rally after everyone's salary got leaked?

Question

A friend of mine told me an incredible story. 40 people work at his company and, the other day, someone leaked a spreadsheet that listed everyone's salary. A few hours later, the IT department figured out who leaked the spreadsheet. She confessed. And she was immediately terminated.

But now they're suffering some massive fallout. A day later, a software developer marched into his office and shouted, "Billy! I've worked my ass off for you! I missed my son's championship MMA match to troubleshoot that production crisis, and the next weekend I missed my daughter's cheerleading competition to meet that deadline for you! And yet you're paying Marty more money! He's coasting and he sucks!"

In parallel, a member of the IT staff levied a formal complaint with HR. She felt that her salary had been artificially depressed because of sexual discrimination. And now she has numbers to back up her claims.

As a result, my friend's company may be facing a mass exodus. Software developers are in demand, and many will likely walk if the company doesn't meet their new numbers.

So what can my friend's company do to pick up the pieces and patch its culture which was badly bruised by the salary disclosures?

EDIT: My friend is not a manager and did not terminate the woman who leaked the salaries.

I believe there are other questions on the site about the pros and cons of an upfront policy to share salaries, if anyone's interested. I've seen considered for example certain government employers that are required to publish some or all salaries as a matter of public accountability. But I'm pretty sure "sharing salaries" in general is a different scenario from this, which is concealing salaries to begin with and then sharing them all at once with no plan! — Steve Jessop, Jan 07 '15 at 15:45
FYI - NPR did a podcast where everyone's salary was public (http://www.npr.org/blogs/money/2014/07/02/327289264/episode-550-when-salaries-arent-secret). Might be worth trying in the wake of the leak. — sevensevens, Jan 07 '15 at 18:32
Note to all commenters and posters below: please do not operate on the assumption that there is actual wage discrimination going on here. Employees found out everyone's salaries and some are now unhappy about their pay. This reaction is normal but by itself not an indicator of illegal or arbitrary wage discrepancies. — Lilienthal, Jan 08 '15 at 09:18
Let's say that there are pros and cons to salary opacity, and let's say that we don't know whether there was really sex-based discrimination at this particular company. Nevertheless, sex-based discrimination is widespread, and salary opacity is an extremely convenient way for employers to keep their female employees from finding out when it exists. — , Jan 09 '15 at 18:16
I'm all for the presumption of innocence, as far as legal matters go. However, this isn't a legal forum. The question seems to presume the employer's guilt with talk of "picking up the pieces", a "badly bruised" culture, and a potential "mass exodus" where "many will likely walk". Those things don't happen if the leak shows equitable compensation. So it's reasonable to answer in that context. We're here to answer the question being asked, not to arbitrate the case; if the question presumes guilt, answers will also. Besides, if we instead presume innocence there's not much to answer here. — aroth, Jan 10 '15 at 04:46
Would you be willing to provide an update on this to let us know how it turned out? — 404usernotfound, Jul 01 '15 at 17:57
@Lilienthal but that (various forms of discrimination) is very likely to be the case — Pepone, Mar 10 '16 at 20:50
I think there's a piece missing about WHY the employee felt the need to leak salaries. From what I've seen, people don't tend to leak things unless they have a reason to, especially not when they get terminated for it. Ask your friend if there's some other aspect of their business they're not addressing, and determine not only how to fix your current issue, but to prevent it from happening in the future. — Anoplexian, Mar 14 '16 at 15:52

Joe Strazzere · Answer 1 · 2016-03-10T11:16:08.780

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So what can my friend's company do to pick up the pieces and patch its culture which was badly bruised by the salary disclosures?

Whenever something dramatically bad happens in a small company, I find that the best way forward is to meet it head on.

A full company meeting should be held to talk about what happened, and what the company plans to do now. People should be free to ask any questions they like, and the questions should be answered publicly.

I would expect senior management to get together before the meeting and decide specifically if they have a problem with salary structures or not. And if they do, what they will do in general, and what they will do about the acute cases specifically.

In general, a review of everyone's salary seems appropriate. For every single employee, their salary should be checked and measured against both the market and the other employees in similar positions. Competent HR people know how to do this. If the company doesn't have sufficiently qualified HR folks, then an outside group should be consulted or retained.

Special attention needs to be paid to all formal complaints and those threatening discrimination lawsuits. The facts of the case need to be determined, and action planned based on those facts. Again, good HR knows how to deal with this. And if necessary, there are groups that specialize in defending discrimination lawsuits.

Going forward, senior management needs to decide if keeping salaries secret is worthwhile or not (some companies and many public sector employers make everyone's salary public knowledge). Doing so would likely be a huge culture change at this company and is not to be undertaken lightly.

And going forward, the company needs to decide if the current salary structure is equitable or not. And if not, they need to figure out how to make it equitable, and keep it that way.

I would expect individual follow-up one-on-one with every employee and their manager. I would expect them to talk about their salary, and why it is appropriate or why it isn't, as well as what will happen going forward.

edited Mar 10 '16 at 11:16

answered Jan 07 '15 at 12:05

Joe Strazzere

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"NPR Money" podcast had a recent episode on making salary public. That appears to be a majorly rare thing and not always leads to positive results. – user13655 Jan 07 '15 at 15:38
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Most public sector jobs have open salaries. It's not good nor bad. Just different. – DA. Jan 07 '15 at 20:27
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I actually liked the public nature of govenrment salaries, but then I am in one of the groups that has historically been discriminated against as a far as salary level. People who make more than they should in comparison to others would hate it being publicly known however. – HLGEM Jan 07 '15 at 20:56
And if this is the USA salary disclosure and discussion amongst employees is protected - the employer could be laying its self open to a retaliation lawsuit – Pepone Jan 07 '15 at 21:05
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I would add that alot of the time, supervisors don't know what their employees make. Now that they do, I would expect those making the highest salaries in a particular area would be held to a higher performance standard (they might get a title of senior for instance and the associated senior duties). So they might also announcing new performance standards for differing compensation levels. In any event they might want to see if there are people who are currently overpaid who should not be getting pay raises until the rest catch up. At least that way you might be driving out the right people. – HLGEM Jan 07 '15 at 21:10
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@Pepone it also depends on how the spreadsheet was leaked. Just leaking the spreadsheet would be illegal, however; walking up to a coworker and telling them everything on the sheet is not. Now if it was leaked beyond the scope of the company (to media, internet, etc) now we're talking something that could get you in ALOT of trouble. – Eric J Fisher Jan 08 '15 at 14:39
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the best thing they can do is start compensating people equitably – amphibient Jan 08 '15 at 16:45
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I'd put money on this company going under within 6-12 months. – FlavorScape Jan 08 '15 at 21:12
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@amphibient - I work on average 30 more minutes than you. Is it equitable for you to demand that you get paid same salary as me? You write 15% more code than me. Is it now equitable? My 15% less code has 30% less post release issues. Now? I spend 10% of my day answering technical questions from junior employees that aren't part of my direct responsibilities. Now? "equitable" is extremely difficult to determine and not as simplistic as you make it sound. – user13655 Jan 09 '15 at 16:59
@DVK, no, it's not. "equitable" doesn't mean "equal". means more like fair based on output – amphibient Jan 09 '15 at 17:18
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@amphibient - As my comment notes, measuring output and fair attribution isn't as easy as it seems. There are tons of intangibles and tons of complicated variables. – user13655 Jan 09 '15 at 17:23
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@DVK and of course any metrics officially used to guide salaries will be gamed. – Jan 12 '15 at 05:27
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@amphibient "means more like fair based on output" - that can not be measured, not even estimated objectively. It's asking for explaining unknown ("fair") using unknown principle ("based on output"), see phresnel's comment about calories and books below. The fact is most companies (and employees) exploit so called information asymmetry to maximize their profits or wages. That asymmetry has been broken now. That's all there is to it. – LetMeSOThat4U Jan 12 '15 at 21:04
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There's at least one tech. company here in Melbourne where all the financials - including remuneration - are shared with all members of staff. I've known several people who've worked there, and they report that not only does it cut down on politics, it also feels fairer. So openness works in at least some cases ... – Duncan Bayne Jan 20 '15 at 10:21
@HLGEM I don't necessarily agree with where you're coming from. Its entirely likely two people hold the same role but one provides more value and thus deserves higher pay. They may be faster, more consistently provide higher quality work, etc. Its also possible that same person isn't yet qualified for the next level up. The more valued employee's pay raises should not be impacted because another in the same role makes less. – Andy Feb 21 '15 at 02:39
@DuncanBayne Joel Spolsky of Frog Creek Software has salary transparency there as well. – Andy Feb 21 '15 at 02:46
@Andy,your assumtion that the highest paid deserve it is often not true. (I once found out by accident that the person whose work I had to correct because the quality was so bad was making 40% more than I was, and, if you are female, this is not an uncommon occurance.) And if current employees are upset about what they found the current salaries to be, it is because there are people who are perceived as being overpaid. The company has to address that. – HLGEM Feb 23 '15 at 14:34

score 54 · Answer 2 · answered Jan 07 '15 at 10:57

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This is of course a common situations in companies -- salaries do not always perfectly correlate to performance. Instead, they're negotiated when someone is hired, and usually rise slowly over time. Be honest about this to your employees, most of them will already realize this and now you will spell it out. This isn't something you are going to fix entirely, differences will continue to exist because some people negotiated very well when they arrived, and paying everybody at that level is not affordable.

Some people will have really strong arguments for a pay raise based on the leaked information. You'll have to give them one. You should probably have given them one before the leak, otherwise they wouldn't have such strong arguments now, right?

Take the sexism accusation extremely seriously, of course. Is she actually right? Then you have a lot of fixing to do. If she's not and there are good explanations, make them extremely good and public.

But other than that, employment isn't necessarily fair. It's not fun for people to be reminded of that, but it'll fade over time.

answered Jan 07 '15 at 10:57

RemcoGerlich

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Concerning sexism, other employees may need good reasons for reconsideration but the process should be launched immediately in this case. Do not cave in and hand out a raise out of fear of legal action. – Gusdor Jan 07 '15 at 11:53
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I would correct "salaries do not always perfectly correlate to performance" to "salaries do never correlate". There is simply no way to define what "performance" is. Is it the number of calories burned? Number of books read to be able to solve a problem? Effects on sales (but then, how to measure that?)? If it's calories, I am well overpaid, compared to someone giving out meals at the canteen. If it's books, I am well underpaid to most bosses around. If it's "business effect", I should be paid nothing sometimes, other times I should get everything. And so on. – phresnel Jan 07 '15 at 13:24
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It's one thing to logically know how salaries are determined, it's quite another to be sitting next to someone and thinking "but I'm worth more..." I don't think trying to explain this will do any good. – NotMe Jan 07 '15 at 15:35
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"If she's not and there are good explanations, make them extremely good and public." Those good explanations might not be things that should be public either, though. – Joshua Taylor Jan 08 '15 at 18:01
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Do not make anything public about a discrimination case without talking to legal counsel (who will probably just put the period in this sentence after 'case'). – msouth Jan 10 '15 at 03:37
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@JoshuaTaylor If the explanation can't be public, it's not very good. If you're not paying her as much because she's not worth as much, then going "we know why but we can't tell you" is hardly best available option. – deworde Jan 12 '15 at 09:12
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@deworde In some places, salary (and raises) are tied to performance reviews, and performance reviews are typically confidential, at least between peer employees. If someone isn't paid as much because they tend to produce less satisfactory work, it may not be a great idea to say to the company "hey everyone, X is paid less than you because her work isn't as good as yours". That may be an accurate reason, but it's not necessarily one for entire-company consumption. – Joshua Taylor Jan 12 '15 at 14:11
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@JoshuaTaylor Except that that's the obvious assumption when it becomes known that they're paid less. If you rephrase it to "here's the discrepancy between what he does and what you do", that's at least actionable. If it's just "we feel he works harder", that's so open to abuse entire doctoral theses have been written on the subject. – deworde Jan 12 '15 at 14:37
@deworde Right; there should certainly be some concrete metrics to support the claim; it shouldn't be a subjective judgement. But even if it's based on concrete metrics, it doesn't mean that it's a great idea, or in some circumstances, I imagine, even legal, to disclose all of that kind of information to everyone in the company. Granted, the scenario presumes that something that shouldn't have happened already has, which complicates things, but even if decisions are completely proper, it doesn't mean that the input they're based on always is, can be, or should be public. – Joshua Taylor Jan 12 '15 at 15:45

score 47 · Answer 3 · answered Jan 07 '15 at 13:45

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Your friend's company has bigger problems than damage control, and its bruises were not caused by the salary disclosures. The situation that you've described implies some deep operational issues, and the path towards picking up the pieces involves addressing them. For instance:

Why were there such large discrepancies in the salaries that employees were drawing for performing similar roles?
Why did management consider it necessary to declare salary details confidential in the first place, and is the company even in a locale where salary details can be declared confidential in a legally enforceable way?
Why did management consider it wise or appropriate to immediately terminate the person who leaked the spreadsheet?

If there's damage that's been done to the company's culture, it sounds like it's because the employees want a greater level of transparency and fairness than management is prepared to give them, and that they (rightly or wrongly) don't trust management to do the right thing if left to their own devices. You don't rebuild that trust by shooting the messenger, blaming the problem on the fact that "confidential" information was leaked, or trying to reinstate the shattered culture of secrecy.

The best way forward is to tackle the issue head-on, and change. Employees seem to want transparency and openness, and through their own actions have created an environment where they have it. The spats between individuals are not productive, so why not move things a step back?

Take an inventory of all the position titles that are in use in the company, and for each one note the key prerequisites and responsibilities and provide an indicative base-salary (which will probably have to be the salary of the highest-compensated employee who has a given title). Make that information accessible to everyone in the company, and then conduct employee reviews to ensure that everyone is 1) properly classified based upon the tasks they perform, and 2) receiving compensation in line with the indicated salary for their role. Use bonuses tied to performance to ensure that high-performing employees are rewarded for their high performance, rather than simply giving them a larger salary than their peers.

That will help resolve the operational issues going forward, and should go a long way towards ensuring that the incident is not repeated. It also helps show employees that management is taking the problem (as in, the real problem, not the "problem" of the leaked salary data) seriously and is taking significant and visible steps to fix it, and retains a significant amount of transparency while removing arguments along the lines of 'person X gets a larger salary than me for doing the same stuff'.

As for rebuilding trust, that's a bit harder. Management has already harshly disciplined an employee for piercing their veil of secrecy. That usually doesn't go over well. Doubly so if what the employee did could be construed as whistleblowing due to the allegations of wage inequity, which it sounds like the leaked data confirmed. But that part's done, and there's no going back on it now.

So my suggestion would be for management to acknowledge that they screwed up, both in terms of how they handled compensation and ongoing employee reviews and in terms of how they responded to the disclosure of the salary details. They should apologize profusely while doing so, and give assurances that the same problems will not be allowed to continue. If they take steps like the ones suggested above to help move the culture to one with more transparency and fairness at the same time, that will help with their credibility as well.

That said, I think some damage/fallout is unavoidable. The company that you describe sounds like it has issues far deeper than a leaked spreadsheet that made a few employees angry. A culture of secrecy is a difficult thing to maintain in this day and age, and there can be consequences to using a culture of secrecy to cover up things like wage inequity. This is what your friend's company is facing now.

answered Jan 07 '15 at 13:45

aroth

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Salary varies wildly even among people performing the same role. The software developer flying off the handle for a perceived slight is a problem, salary discrepancy isn't. 2) You're confusing the leak with the right to discuss wages amongst employees. Payroll info is considered private information in pretty much any company. Speaking of private: 3) anyone in a position to access payroll info is expected to handle it responsibly and keep it private. The employee could never be trusted with sensitive info ever again, it's only natural she'd be fired on the spot.

Lilienthal

Jan 07 '15 at 15:13

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Performing "similar roles" is not the same as performing the "same roles" or at the same level of performance. So salary differences for "similar roles" are frequently, if not almost always justified. – Dunk Jan 07 '15 at 16:38

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Bonuses don't account for the latent value of each employee. You could have a project requiring a specific skill set that employees A and B have and do well, so they'll get their bonus. However, employee B might have a dozen other desired skills that employee A doesn't have which can be used at a later time by the company. Employee A shouldn't be getting the same pay as B even though they are currently doing the same job. The company needs to pay for employee B's skill set even if the company isn't currently using them, or employee B will leave or likely would not even take the job. – Dunk Jan 07 '15 at 16:43

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@Lilienthal - 1) Depends on how broad the context is; within a single company however it's reasonable for employees to expect equal pay for equal work. In some locales this may be required by law. 2) It doesn't matter if the info is considered private, more important is if there's a legitimate reason for it to be private (generally no) and if the employer managed it properly (in this case sounds like no) 3) This employer forfeited their right to employee trust, and has no right to feel betrayed or to terminate employees for breaking a trust that they were exploiting for their own gain. – aroth Jan 07 '15 at 23:24

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Totally totally right. Anyone that things general salary levels stay secret is mistaken. This company was an accident waiting to happen. – GreenAsJade Jan 08 '15 at 02:30

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@aroth Equalising pay levels is generally only possible for much larger companies than the one the OP describes with very basic skill set requirements (think call centres) and where additional skills or performance are not a metric. As Dunk says, different skill sets will justify different pay (increases). Collectivisation of wages may seem like a nice idea but falls flat in practice for much the same reasons that communism did. I think most if not all companies strive to operate as meritocracies when it comes to pay increases. – Lilienthal Jan 08 '15 at 09:07

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As for the information leak, there is some merit to publishing general salary ranges for the different levels in a company, but this is not the same as publishing individual salaries. In most of the Western world, such information is considered private to the individual and employees will generally not like to have this information passed around. HR personnel is trained to keep such matters confidential, just as they're expected to keep silent about employee health concerns, personal problems and others. This employee showed that they can't be trusted with that kind of information. – Lilienthal Jan 08 '15 at 09:11

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Finally, @GreenAsJade, please don't assume that the company owner or its management should be crucified for wage discrimination. There is nothing in the OP's post to determine that. Two employees out of 30 have protested that they should be earning more or equal pay compared to their colleagues. These reactions are normal when payroll info is made public but are not indicative of actual malicious intent on part of management. – Lilienthal Jan 08 '15 at 09:15

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@Lilienthal - There are certainly legitimate cases for secrecy/confidentiality in business. But I've yet to hear one made in relation to employee salaries. I can only speak from my own experience, which says that all too often employers will abuse confidentiality to try and cover up unethical and/or illegal conduct. Using secrecy to gain bargaining leverage over employees is unethical in any locale, and I think it's safe to say that if only two employees were upset there'd be no talk about an impending "mass exodus" in the OP. – aroth Jan 08 '15 at 11:52

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@aroth OP, the friend of one of the employees conjectured that there "may be an exodus" but it wouldn't be about the secrecy. All employees suddenly have insight into their colleagues' salaries which is a powerful information when negotiating raises. It will also have prompted several to negotiate for raises when they might otherwise be less inclined to do so. There might well be an exodus if the employer doesn't grant these raises simply because the employees will realise their market worth has appreciated. – Lilienthal Jan 08 '15 at 12:34

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The point I'm trying to make is that an employee has a reasonable expectation that his salary information will be kept private in cultures where it's not common for it to be publicly available (most Western companies as far as I know) but can choose to share it freely (legally protected). In that view the leak was a breach of confidence and trust and justifiably grounds for termination. Whistleblowing might make the leak ethically justified but would, as far as I know, provide no legal protection in this case. Regardless, we can only speculate whether this qualifies so that is a moot point. – Lilienthal Jan 08 '15 at 12:41

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I disagree. It could be that Marty really is "coasting and he sucks". But it might also be that Marty plans his projects properly (which looks a lot like coasting to the outsider) and thus doesn't have as many production crises. (We don't know that.) In that case, Marty's higher salary would be totally justified. But telling that to the enraged developer in the question would probably not make him much happier. – nikie Jan 09 '15 at 14:08

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The only way this comment could make sense is in some country other than the US. I've never been at a company where salaries were published, and it's culturally understood here that this is the norm, and even among fairly close friends who work at different companies, salaries are often a taboo subject. There is no violation of a cultural expectation of openness here, if this is a US company. – msouth Jan 10 '15 at 03:44

@msouth - I don't think anyone has said anything about a 'cultural expectation of openness'? I do think there's an expectation of equitable compensation, and I think the rest is fairly moot. The question asks how the company can "pick up the pieces" and repair a "badly bruised" culture. That presupposes something untoward being discovered in the salary data (had the data shown equitable compensation, it follows that the leak would have been a non-issue). And if we assume the opposite, there's really not a question to answer. – aroth Jan 10 '15 at 04:24

What I was responding to was the numbered points--maybe I'm giving people too much credit. If you don't realize that when salaries are privately negotiated, you get wide disparities, I just consider that naïve. (Unless there is a published range, which does happen sometimes, maybe often.)

For point 2, salary information is almost always considered highly sensitive and confidential information, for the cultural reasons I mentioned above. They can't legally prevent you from telling anyone your salary, but telling everyone everyone's salary is a huge policy violation.

And 3 is obviously...

– msouth Jan 11 '15 at 05:58

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...what you would do when someone had made a huge policy violation.

Everyone knows we have sex in our homes. It's not something we generally talk about openly. If you found out a bunch of details about all your neighbors' sex lives and sent them around to your neighbors, they would not be happy with you.

This does not imply that they're ashamed of what they're doing--just don't want it disclosed without their permission. Many formerly natural interactions become awkward because of what you now know. This situation is similar, and the anger of the neighbors is analogous to the company's.

– msouth Jan 11 '15 at 06:05

@msouth - That's an interesting analogy. But the situation described in the OP would be more like if someone alleged that the neighbors were having threesomes with 16 year olds (assuming an age of consent of 17 or over) and then you find proof that the allegations are true. Do the neighbors want that exposed? Of course not. But that concern becomes irrelevant the moment they break the law. And how I'd deal with someone violating policy depends entirely upon why they did it. If they did it to end wrongdoing on my part or to support their colleagues, I would not retaliate with a dismissal. – aroth Jan 11 '15 at 08:30

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"had the data shown equitable compensation, it follows that the leak would have been a non-issue." Not really. The fact that two people are getting "equitable" could be just as much a point of contention as different pay, if the employees disagree about what is equitable. – barbecue Jan 11 '15 at 20:52

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@Lilienthal The problem is not the developer flying off the handle. He's the easy one. The problem is the developer going "Well, if they're going to knowingly undervalue me compared to Marty, I'll just quit." If you're saying "it's fine for the company to pay two people in the same role a different amount of money", the corollary is that "it's fine for the lesser developer to leave for a better job if the other developer is considered substantially more valuable", because you've effectively also revealed how likely they are to be promoted/given the good projects. – deworde Jan 12 '15 at 09:17

@deworde Well, yes. That's a normal part of staffing. If the employer valued the employee more he'd likely be paid better. It's normal for employees to move on and normal for employers not to put much effort into retaining employees they do not value. If the employer is not bothering to provide incentives to their high-performers that is his own (likely detrimental) choice as those are very likely to leave when better opportunities come along. Last I checked we weren't talking about sweat shops here. – Lilienthal Jan 12 '15 at 09:50

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@Lilienthal To be fair, until something like this happens, the general semi-ethical attitude is "how little can we get away with paying this guy". Which is fine, but it sort of biases the payment scale to the good negotiatiors. If you're trading on the fact that developers aren't, then you're vulnerable to this kind of nonsense. Wouldn't it be easier if you didn't have to scramble after the fact. – deworde Jan 12 '15 at 09:55

@deworde I'd need to see a study before I accepted that most companies do business this way. It's probably typical for low-skilled labour, especially where supply exceeds demand, but especially in the IT sector most high-performing employees know full well how much they're worth. Companies generally get what they pay for and some are fine with getting medium achievers by paying below market rate or using other sleazy tactics that as a consequence generate high turn-over. None of this is really relevant to this question though. – Lilienthal Jan 12 '15 at 10:01

@aroth You're seeing grand conspiracies and noble whistle blowers where there are none. Furthermore, I strongly disagree with your "two wrongs make a right" approach. If I happen to stumble upon a murder while breaking into a building reporting it won't stop me from being prosecuted for a B&E. – Lilienthal Jan 12 '15 at 10:15

@Lilienthal I'm seeing what the OP wrote. If you want to believe that there's only two disgruntled employees, that's fine. I don't believe this question would be here if that's all it was. But that's something to take up with the OP if you want to clarify the extent of the discontent, not with me personally. I'm responding to the situation that I feel the OP is describing. And your analogy is inappropriate; B&E is illegal. Leaking salary data isn't, even if an employer frowns upon it. It's not a case of offsetting one crime with another. Or even a crime with an immoral act. – aroth Jan 12 '15 at 10:41

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Admins, this conv should definitively be in chat at this point. – deworde Jan 12 '15 at 10:53

@deworde please, not all the posts, only the chatty/OT ones. – o0'. Jan 12 '15 at 11:19

@aroth You provided excellent advice for a company that wants to mends its ways, I just disagree with your analysis that the company described by the OP has such structural problems. Regardless, I've established my point so the rest of the discussion can be moved to chat. I'd have done so myself but I didn't expect anything useful to result from a live discussion as we seem to fundamentally disagree on this. – Lilienthal Jan 12 '15 at 11:52

@Lilienthal Fair enough. We've both read the same text and come to different conclusions. Speaking of chat, what happened to the little box that used to pop up asking if you want to move to chat? I've been expecting to see that for...awhile now. But it's nowhere to be found? – aroth Jan 12 '15 at 12:19

maxspan · Answer 4 · 2015-01-08T02:27:18.997

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As the cover has been blown. The best solution is to be very polite and humble with all employees as there are lots of grudges against you.It would be good to do an appraisal for any employee who demands for an increment. If he truly deserves it than it fine, but if not you need to give him a valid reason based on his performance. If you cannot increase pay for someone tell them to give some time to the company and not to take a decision in anger and haste.

edited Jan 08 '15 at 02:27

answered Jan 07 '15 at 06:06

maxspan

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This is the only way forward I can see. Talk to people about it. And most importantly, accept that you've treated people unfairly. Does it happen in most companies? Yes, of course... but your friend still chose to do it. – Jon Story Jan 07 '15 at 10:16
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I object to this idea that fluctuating salaries constitute "unfair treatment". The reasons for varying salaries across employees varies greatly, from market rates at time of hire to very grey-area age-is-paid-more that you see in almost every industry. Both ignore performance. And then there are performance factors both measured and political that influence raises. – Gusdor Jan 07 '15 at 11:50
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Of course they are unfair. Whether it's normal and related to market rates is entirely unrelated to fairness. Alas, without quantifiable ways to measure the value of a person, we cannot quantify the level of unfairness either. – Jon Story Jan 08 '15 at 13:03

Paul Draper · Answer 5 · 2015-01-07T19:02:23.277

Hopefully, the company has "legitimate" reasons to justify salaries that allow it to answer the difficult questions. "Legitimate" reasons are performance, market value, and value to the company.

"Differences in negotiating" aren't really going to hold water anymore, as everyone is now a great negotiator. (Saying "Bob negotiated better" invites the response "Well, now I'm negotiating better...for the same amount.")

If the company does have good reasons, have a meeting of the whole company.

"It's unfortunate that salaries were leaked, as that is your private information, and it should be up to you whether or not to share that information.

"Here or elsewhere, compensation is complex and based on many internal and external factors: performance, market value, value to the company. Proportions of base salary and bonuses also vary. Comparisons of salary are almost always oversimplified.

"Know that we very carefully review compensation every year during performance reviews, and always make adjustments when appropriate.

"In light of the current situation, we are going to review everyone's compensation early. Since we do this regularly and carefully, we don't necessarily expect a lot to change. But we would like to be open with you and give you the opportunity to ask questions and receive honest answers."

If the company doesn't have "fair" reasons, it's played a dangerous game and gotten caught. There's no way around it; it's going to hurt at least a little, possibly a lot.

I'm not saying that companies are terrible if they have given preference to aggressive negotiators; most of the time that's a smart strategy and can save a lot of money. But there's a risk, and it didn't pan out for them.

Also have a meeting, and say the same things, but be more fully prepared to make adjustments, as salaries are currently out of balance.

Last, know that it's not the end of the world. Some companies, like Buffer, openly share all salaries. It's not the usual business culture, but it's possible (and, according to some, superior).

score 8 · Answer 6 · answered Jan 07 '15 at 08:09

So now some people are unhappy about their payment, while some feel better due they are "high" payed (compared to others in the company).

The unhappe employees now want to get the same money, this will be really expensive. In most cases, it's possible to give them a good explanation why they earn less so that they calm down, but still they wont be happy, which affects their moral and thus the quality of their work, latter is the real problem.

One solution could be a collective contract.

Offer a collective contract to everyone in the company (maybe different ones for different jobs), which is a little above the median payment of the specific field of work. This could be a little more expensive, or a little cheaper than negotiateing every salary again, also takes off a LOT of work. Maybe some people expected to get more than the collective contract offers, but at least they know that the payment is fair then, which gives a better feeling, even if they think they could earn a view bucks more.

You cannot force people to join the collective contract, but you can offer it. Everyone who refuses, just stays in his current contract and has no right to complain.

I don't know how common collective contracts are in your area, here in germany they're ordinary. Collective contract doesn't mean everyone gets the same money, but the payment can be staggered by age, time in the company and other conditions. But every employee who knows all the conditions of a coworker, can derive his/her salary if he wants to know.

This concept has many pros and cons, it must be well considered if it fit's the company but in this scenario this could be a good solution.

The fact that everyone knows about others payment is both, a pro and a con within a Collective contract. In your case it's already state, so the con is already there and no argument against CC anymore.

score 5 · Answer 7 · answered Jan 07 '15 at 07:16

The thing is, a lot of companies has this bubble. They pay whatever they think they need to pay to keep individuals they invested in (and perhaps make them stay happy). It's also common if companies needs to recruit new people during a temporary shortage of skilled labour. These new employees might require more pay than loyal, senior employees already on board. That difference will likely stay around for years.

However, during the salary review - a lot of other reasons for certain pay increment usually comes up, like "you did not complete this and that goal". I guess this particular company may have indirectly implied that the salaries are fair and justified during reviews.

The game is a risk because of what you mentioned.

In theory, it's not relevant for an employee to compare with coworkers salary wise since (s)he accepted the current salary. In practice - it's the human nature to react like these employees did.

To recover, there is no going back to the cat and mouse game. Management needs to be honest - the world is not fair. Maybe the most underpaid key employees might need a decent increment, but I guess open cards is a key factor. Some will leave and some will be unhappy. That's unavoidable.

I think all organisations should have a plan what to do if the salaries leaks out or deal with the consequenses afterwards. At least in Sweden, annual income declaration is public information so in theory anyone can look it up.

"In practice - it's the human nature to react like these employees did" -- even in theory, the employee has gained new information about what the employer is willing to pay for roles comparable to theirs. Armed with this information they can negotiate differently from how they have in the past. For example, the worst-paid "fettler" can guess that if they leave, the employer will likely end up paying more for a replacement fettler, which they didn't suspect before. So it's more than just an emotional reaction to unfairness, concealing the salaries before did strengthen the employer's position. — Steve Jessop, Jan 07 '15 at 13:29
... or to put it another way, the most the employer will pay is typically greater than the least the employee will accept. The salary is somewhere in between, endpoints included. But if the employee knows or strongly suspects what the employer's number is, they can make a threat to leave unless paid that much. If the employer believes the threat (and it's more credible now the employee knows more about the employer's BATNA), they'll pay by definition of "most they will pay". Of course there's more to negotiation than just that, but it's a factor :-) — Steve Jessop, Jan 07 '15 at 13:32

score 5 · Answer 8 · answered Jan 07 '15 at 17:45

Although this does raise issues internally it must certainly affect hiring as well.

During good times, and there are rarely bad times for Software Professionals, companies sometimes offer new hires a greater salary then the existing employees earn at the same grade due to "market conditions".

My old (Huge) company accidentally leaked new hire salaries and we all found we were earning less than new hires at the same grade, this caused a massive fuss with some people simply resigning unless the salaries were matched, after all some had been with the company 5+ years.

The point here is often companies are very duplicitous about salaries and if the **** hits the fan they simply cannot retrieve that trust loss, never, ever with existing arguably disgruntled employees.

They just have to grin and bear it and placate.. which is what they will do.

As for the terminated employee, it might have been best to keep her on with a reprimand, and be open at the same time, it is a small company and that might go some way to rebuilding an element of trust.

How can a workplace rally after everyone's salary got leaked?

8 Answers8

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