I cannot disagree with any of the points D. Burkus’ makes. To elaborate on the effects of keep compensation secret (D. Burkus talks about salary, but that’s only one way of compensating people) are:
- It gives the company a negotiation advantage, the information asymmetry D. Burkus talks about. If people knew what everyone made, the company couldn’t pay some people less for doing the same work.
- It precludes management having to have difficult discussions with employees who are paid less than someone else, despite having similar responsibilities, because they aren’t as effectively meeting those responsibilities. This is really a win-win if you think long term, as the employees will know where they’re failing, and won’t be as likely to overvalue their contribution, but it’s not easy.
- It allows politics. I don’t see this as an advantage, but “business people” tend to be political animals, and working in a political environment gives them an advantage over people like me, who really don’t like politics. Convincing upper management to lose an advantage would be a hard sell.
I’ve worked with contract agencies in the past; they are less transparent with their contractors than companies are with employees. At least companies have a pay scale, with titles and requirements at each position. Agencies agree on a billing rate with the company, and then negotiate a contract rate with the contractor, which is obviously going to be lower to pay for the agencies overhead and profit. Often, the company doesn’t know what the contractor is getting paid.
The difference can between the billing and contract rates is based on what the agency is able to negotiate with the contractor. I’ve seen contractors who are getting very different rates while working on the same job, with similar roles and skills, through the same agency, which is billing the company the same rate. Companies shouldn’t hire agencies that work this way, because it incentivizes the agency to find the contractors that will work for a lower rate, rather than having the best fit for the role. Agency reputation and future work will incentivize the agency to find good, or at least adequate, candidates, but a known, fixed overhead would eliminate the desire to get the cheapest, workable contractor.
Another point D. Burkus makes is that you have the right to discuss your pay with anyone, despite what management tells you. This should be recognized as simply a freedom of speech issue, but that concept has become quite muddied in the US. If you sign a contract to the contrary, one could make the counterargument that it’s a contractual issue, which I agree with in concept except that these are typically adhesion contracts, where one party has much more negotiating power than the other. Courts tend not to support the “right to contract” when those contracts are deemed “unfair” (a very ambiguous term).
I will not say that you clearly have a legal right to ignore such terms, but you probably do, and morally, you should. But please, consult someone who’s paid to be accountable for their legal advice before making taking advice from me. In my experience, companies will put terms in contracts that they know to be legally unenforceable, hoping you don’t. In the interest of honesty and fair dealing (there’s that ambiguous word again), I’d like there to be some incentive for parties to stop doing that.
I’d like to work for a company that’s transparent in its pay, and see how it works. Would you?