Pay transparency is an important issue.

Pay transparency is an important issue.

This post is from my friends at

Disclosed company revenue and monthly progress reports; shared self-improvements; internal emails between two employees sent with the team cc’ed. Buffer, a social media sharing solutions company, functions with this level of radical transparency. Buffer finds power in the vulnerability, openness and accessibility of transparent ideas and workflows. Transparency empowers and inspires. It establishes trust, the foundation of efficacious teamwork.

Buffer shares that it even applies its philosophy of “default to transparency” to compensation. CEO and co-founder of Buffer Joel Gascoigne tells that being open and public about salaries feels like an emerging movement with great rewards. For Buffer, the sharing salaries methodology elicited an influx of talented applicants who were also a good cultural fit — thus successfully growing the company.

Secrecy of Salaries

Salaries have always been private matters. Open salaries, especially if shared among coworkers, can create employer-to-employee and employee-to-employee contention. It can replace gratitude and empathy with jealousy and entitlement. Co-workers can talk about personal travails during water cooler chatter and over-share feelings on Facebook, but discussing salaries and raises is considered taboo and poor etiquette.

Employer & Employee Benefits

Exposing salaries may be uncomfortable, but it can actually improve a company’s productivity and employee decision making. For a company, as in Buffer’s case, salary transparency generates trust and investment. It breaks down barriers, which encourages the agility of new ideas and directions. For an employee, salary transparency can drive someone to achieve better pay or get paid more fairly, internally or externally. Closeted salary information can worsen pay inequalities, explains Daniel Indiviglio, a contributor for The Atlantic. For example, employees can be underpaid compared to their colleagues without even knowing it.

Economic researchers from Princeton also exclaim that wage transparency can improve the labor market’s efficiency and identify worker satisfaction. Employees who can see that they’re lower wage earners within their peer group are more likely to experience work dissatisfaction. Sure, it makes sense that employees who earn below average feel unsatisfied, but it also motivates them to look for a different job. Indiviglio explains that theoretically, employees paid less than their peers are more likely to under-perform comparatively. Following this theory, these employees can boost personal work performance by more suitably applying their talents and skills to a new job that subsequently offers better pay.

Open Salary Setbacks

Although transparency can help foster team trust, break workplace barriers or alleviate wage inequalities, it can disrupt the ebb and flow of a company. Making top-level information company-wide and public information can trigger resentment over a sense of accountability. Adopting salary transparency could create a more competitive environment, but a high-tension one as well. Loss of control costs, employee privacy, the strategy of trade secrets, and threats of a lawsuits are also concerns.

Open Salary 101

To adopt an open salary structure, your company may need to modify your current salary scale and payroll process. Buffer uses a complex transparency formula to calculate open salaries — salary = job type X seniority X experience + location (+ 10K is salary choice). The formula is broken down in detail on Buffer’s post blog about open salaries.

After you draft individual salaries based on job type, seniority and experience, for example, your company can then just rely on a payroll software system like Intuit to handle issuing payments, thus simplifying the compensation process. Buffer reiterates that its formula is a “living document.” For example, Buffer added career progression and expresses that updates will continually be made. As a benefit, an open salary model also invites companies to share feedback to help improve one another’s compensation structure.

Gascoigne adds that companies curious about salary transparency should experiment with transparency in small ways. Rather than post everyone’s salaries on the company website, test a transparent email policy or practice with visible progress reports. Measure the success of those transparency tactics and build from there, recommends Gascoigne.


Wellness and Gamification: A Podcast

by Michael Haberman on July 21, 2014 · 0 comments


At our Naked HR Radio site we interviewed Mike Tinney, President of FIX and Utilifit. His goal is to fight the epidemic of obesity in the US, and increasingly in the world, by getting people up and moving. Even if this movement is for a short period it can have a major effect on someone’s well-being.

FIX’s objective is to put preventative medicine and corporate wellness into a format that is fun, accessible and socially motivated for people of all fitness levels. Right now, more than one-third of U.S. adults (35.7%) are obese, and a majority of the US economy is dependent upon service industries, which are predominantly comprised of sedentary desk jobs (75%). They do this primarily right now with Utilifit. It is a gamification program that gets you up out of your chair once an hour to do some light exercise, though you control the intensity of the exercise.

I use the program and have found it to be a great reminder. Because of a knee injury if I sit too long my knee gets stiff. Utilifit has been great to make me move. It also ties into my Fitbit and FitnessPal applications to give me a more rounded picture of my wellness. Utilifit can be used as single user, but the power of it comes from the entire company having access to it and getting some “healthy” competition going.

In our podcast, which you can listen to HERE Mike talks about Utilifit, his path to creating this program and his background in games.


Future Friday: Quick lessons from Quotes

by Michael Haberman on July 18, 2014 · 0 comments

MP900387785[1]I am waxing philosophical today. There are lessons we can learn about how to deal with the future from others who have addressed the subject.

Moving beyond the past

A favorite author of mine, Denis Waitley, says:

Losers live in the past. Winners learn from the past and enjoy working in the present toward the future.

Human Resources professionals are too often accused of living in the past and paying attention only to it. Perhaps that leads to the opinion often expressed by others about HR.

The importance of the human component

I have written many times about the importance of keeping “the human” in our jobs. No reason can be better than the sentiment expressed by General Omar Bradley:

If we continue to develop our technology without wisdom or prudence, our servant may prove to be our executioner.


I give a presentation on Seven Steps to becoming a practical HR futurist. In that presentation I teach how HR professionals can do just what Antoine De Saint-Exupery, a French aristocrat, writer, poet, and pioneering aviator, said:

As for the future, your task is not to foresee it, but to enable it.

I will be presenting this at the Illinois SHRM conference the first week of August if you are interested.


Violating the FLSA may send you to jail

by Michael Haberman on July 17, 2014 · 0 comments

Purposely and knowingly violating the Fair Labor Standards Act may get you a jail sentence.

Purposely and knowingly violating the Fair Labor Standards Act may get you a jail sentence.

In case you haven’t heard the USDOL is getting tougher and tougher. Ask any attorney. The ones that defend companies will tell you how tough it is getting and the ones that sue you will just get a big grin. In Fair Labor Standards Act cases there is generally no intent that has to be proven, just you are doing it right or you are doing it wrong. Until now that is.

Employers are thieves

Former Secretary of Labor Hilda Solis once stated in a speech that employers were thieves and were stealing up to a million dollars a week from their employees. She said she was going to stop it and her successor has continued her work. Attorney Doug Hass, of Franczek Radelet P.C., says a recent case out of Texas has shown us that the USDOL has no problem in bringing criminal charges in wage and hour lawsuits. According to Hass “Last fall, the U.S. Labor Department’s Dallas office issued a press release about criminal charges it had levied against a Texas-based rope manufacturer. Not only did the company face criminal charges, but ultimately the “owner, plant manager and office manager were also convicted on separate felony counts” as well.”

Section 216 (a)

Section 216 (a) of the FLSA says “Any person who willfully violates any of the provisions of section 215 of this title shall upon conviction thereof be subject to a fine of not more than $10,000, or to imprisonment for not more than six months, or both. No person shall be imprisoned under this subsection except for an offense committed after the conviction of such person for a prior offense under this subsection.” Hass reinforces this by saying “…the FLSA authorizes criminal sanctions against any person who is shown to have violated the FLSA intentionally, deliberately, and voluntarily, or with reckless indifference to or disregard for the law’s requirements.”

Where generally mistakes in wage and hour situations will get you fines and require you to pay back pay, this section allows individuals who know they are making errors to be put in jail in addition to everything else. By the way, in case you didn’t notice it, the company is not the only party to get in trouble. Individual supervisors and HUMAN RESOURCES people can also go to jail.

States want in on the act too

Fines and taxes are all revenue for the government. So if the Federal government is suing for errors in wage and hour laws it is very likely the state in which the company is located may also sue. Hey, revenue is revenue, and every agency wants its piece of the pie. You may also get some IRS action if you are not careful.

With the changes that will be coming with the FLSA revisions being worked on by the USDOL it will serve you well to be paying attention to the FLSA and make sure you are doing things as cleanly as possible. If you don’t and they can prove you knew you were doing it wrong you may have an opportunity to have a stay at the “gray bar hotel”.


The positive power of a contract

by Michael Haberman July 16, 2014

Tweet In my HR class we discuss that in HR you need to be careful not to create a contract with documents such as your handbook or by the actions of your managers. In past situations those “contracts” have offset other positive language that defended the company. If you promise something that goes counter to […]

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Proposed changes to the FMLA redefine “spouse”

by Michael Haberman July 15, 2014

Tweet On June 27 the U.S. Department of Labor published a Notice of Proposed Rulemaking that will alter the Family and Medical Leave Act. This is something that everyone who has over 50 employees must pay attention to and be prepared to make the appropriate changes. Major features of the notice According to the USDOL […]

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One Supreme Court Decision that helps Employers

by Michael Haberman July 14, 2014

Tweet In late June the U.S. Supreme Court issued many decisions. One of those dealt with a question that had been open for several years. In January of 2010 President Obama made some recess appointments to the National Labor Relations Board. There was a hue and cry that the President exceeded his authority in making […]

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Future Friday: Being Human in a Machine Age

by Michael Haberman July 11, 2014

Tweet I have written a number of times about the importance of figuring out what is human about your job. Of course that means you have also figured out what it is about your job that can be replaced by a robot or some other technology. A recent article by Andrew McAfee points out the […]

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Why calling the boss a “f**king a**hole” may be protected activity

by Michael Haberman July 10, 2014

Tweet Most bosses would probably react negatively to being told he is a “f**cking a**hole” to his face. In my book that would probably be a good reason to terminate the employee’s employment. It is obvious he is not going to be a team player, he may not be trustworthy, and he is certainly not […]

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Understanding how and when to praise determines how well it works

by Michael Haberman July 9, 2014

Tweet I came across an article written by Leigh Steere on 8 tips for effective employee praise. I found it to be a good set of tips for helping managers (and others) understand how to get the behavior they want to see. Steere’s tips Her tips for effective employee praise include: Stay in character. This […]

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