Why is discussing pay such a taboo? How can I get people to talk about concrete figures?

Question

I recently changed contracts from educational to full-time at my company and colleague from accounting asked me if I had negotiated my pay yet. I said yes and was about to tell him, when he interrupted me: "... you don't have to tell me... although I would probably see it eventually anyway when handling your team's finances."

Due to the change in contract I tried to talk to a lot of people about pay, but no one would give me any numbers. They seemed to guard the pay amount as a secret as important as the pin to their credit-card.

In the end I took what I was offered without much of a negotiation, except for more flexibility in work-times since I would like to do part-time studies in the near future. I was hoping to get a picture of how pay is connected too work expectations, but not a single person would tell me a number - not even from outside of my company.

Has anyone had success with talking to people about pay? How can I get local picture of the relation between pay, expected results and work environment flexibility?

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Thanks for all the feedback - I got some great insights. I also talked on this topic with people around me, and wanted to share an interesting view I heard, and see what you people think of this explanation:

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It is known that many people don't work for the pleasure of the activities at work. They go to work to get money, in order to be able to enjoy a level of comfort or finance some type of life-style outside of work-hours. Most don't personally identify with their jobs, it's just something they happen to be doing that isn't too bad, but nothing special either.

That being the case, salary is for most people such an important negotiating point, that all other job aspects sort of fade into non-existence. People see differences in jobs only by the difference in pay. If everyone's pay is known, people would focus more on how to get that higher pay rather than on doing "real work"(which companies actually run on). The taboo on pay is a practicality that evolved to avoid completely having employees focus on compensation.

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Maybe this is unhealthy social behavior (must suck to not identify with your job, since you spend most of your life there...), but perhaps most places in the world are not as socially developed as Scandinavia.

Answer 1

While knowing general salary ranges for position/location/etc can be helpful in negotiating your pay, knowing salaries for specific persons can only engender bad feelings and poor morale over time. You have to assume that once you start sharing info that it will go beyond the original person you shared it with.

I wish I had a good study to back this up, but from my 20 years in the professional world, whenever I've heard people talk about specific salaries it's almost always in a negative context.

For example, you rarely hear people say:

"I heard that Joe makes $xxx per year, and wow, he's really worth it. They should pay him more!"

Instead, you hear things like:

"You know that guy Joe who's completely incompetent? I heard he makes $xxx per year. and he doesn't contribute nearly as much to the company as I do!"

As others have mentioned, there are sites like Glassdoor which post salary averages. You should use that kind of general info instead. See also this question for more detail. There are a variety of reasons why salary disparities can exist even within the same job title or department. And if people are happy in their job there's no reason to stir up trouble by uncovering those differences.

In conclusion: a taboo for sharing compensation info has developed in many regions because of the human traits of a) jealousy and b) inability to keep secrets.

Answer 2

In addition to the other excellent answer:

You don't need to know the salary of everyone, just the average salary in the group.

This is easy to find out: given people A, B, ... Z:

1. A writes his secret random number on a piece of paper, passes the paper to B, who adds his secret random number to that, and passes the sum (and only the sum!) to C, ...., then Z adds his random number to the sum and passes that "random sum" back to A.

2. A subtracts his own secret random number from step 1 from this sum, then adds his salary to the sum, and passes the sum (and only the sum!) to B, who does the same, &c, until Z subtracts his random number and adds his salary.

3. Now the piece of paper contains the sum of the salaries of people A..Z, and all you need to do to get the average salary is to divide the sum by the number of people.

If there are more than 2 people in the group, there is no way for anyone to find out anyone's salary from this procedure (unless they conspire against one of the participants).

See also Secure Multiparty Computation.

Example:

1. Person A writes down a large random number: RA and passes it to B.
2. Person B adds another random number: RB and passes RA+RB to C.
3. Person C adds another random number: RC and passes RC+RB+RA to D.
4. Person D adds another random number: RD and passes RD+RC+RB+RA to A.
5. Person A adds his salary of A, subtracts his random number RA and passes RD+RC+RB+A to B.
6. Person B adds his salary of B, subtracts his random number RB and passes RD+RC+B+A to person C.
7. Person C adds his salary of C, subtracts his random number RC and passes RD+C+B+A to person D.
8. Person D adds his salary of D, subtracts his random number RD and passes D+C+B+A back to person A.
9. Person A divides the number he got from D by 4 and announces the mean salary.

Note: This protocol only works if people are honest.

Single person cheating

Imagine that a junior team member thinks:

I will exaggerate my salary so that the mean is inflated, people are unhappy and either demand a raise or leave and I will be promoted in their place.

Or a leader makes an opposite move, hoping to make his subordinates feel better.

Both think that they will be the only ones gaming the system, and if they are the only ones, they will be able to recover the actual mean. However, if more than one person cheats, the number will be useless for everyone.

Multi-person conspiracy

A group of people can conspire against one to find out their salary.

E.g., people can measure the mean with and without someone.

Or A and C can find B's salary if their save their notes (A can be similarly cheated by B & Z).

(thanks to commenters).

Answer 3

Usually people don't talk about their salaries, as they don't want other people to feel bad and being jealous. Sometimes the salary gap is too big to handle.

One of the example could be IT sector where a company has a bunch of permanent developers who are happily working for a few years in the same place and they're paid £30-40k/annum (take home ~£2500/month). They are happy, as they have benefits such as working holidays, life insurance, gym discount, etc. The employer is happy, because during these years they have invested company's money in training of their staff without doing much pay rise.

The company is expanding and desperately seeking new extra few developers, so they hire the contractors for couple of months. The location of the offices is not perfect, so the contractors negotiate for the higher rates (£300-450/day). In addition contractors are able to access the internal company website, where they can use the same company discounts as their permanent staff.

When the company organises a Christmas party, so people can socialise and talk in the bar. But how would a permanent developer feel after finding out that for over 2-3 years he was earning a good salary of £2,500/month during his two or three year of working period and in the middle of nowhere some people come (just like that) and are earning around £8,000-10,000/month for doing the same job (and getting similar discount benefits)? Where is the honesty here, what the heck)?

On the same day after a few beers there are no hard feelings. But on the another day they will feel bad for them-self and for the company. From now on, they are no longer happy employees and they can not stand working in their workplace any more. This one day ruined their stable life and made them think: "Why can't I do the same?", "My life does not end here. The company trained me and they took advantage of me, and now I have the necessary skills to go forward with my life." After a few months they resign and the company has to find and train new staff.

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Basically, these discussions could be bad for the employers and employees. In consequence our good colleagues cease to be our friends.

Btw. See the UK comparison salary website for IT (permanent vs. contracts).

Answer 4

Very good answers already. Too add

1. Many companies have a policies that explicitly forbid discussion salaries. Check carefully your own policies, just asking may be already get go you in trouble.
2. It's typically a lose/lose situation. In most case Susan thinks she's better than Peter, and Peter thinks he's better than Susan. When they find out they get the same, they are both unhappy, frustrated and demotivated.
3. Even if there is a blatantly payment disparity that management thinks is unfair, it's actually not that easy to fix it within typical compensation practices. Often these have grown over time with lots of history and you want to make adjustment without breaking too much glass. You can slow or even park down the overpaid guy, but an outright pay cut is very harsh and demotivating. You can accelerate the underpaid guy but you don't want to set too unrealistic expectations for the future.
4. People's perception on salary is often differential and relative to their current expectation: a guy making 80k with sizable increases every year is often happier than a guy who sits put at 100k and is not moving, even though he makes more in absolute terms.

Answer 5

I'm a recruiter so I deal with the comp thing on an almost daily basis. A few important things to keep in mind:

1. Many companies explicitly forbid employees from discussing compensation with each other. There are good and bad reasons for this and discussing them could fill a book. What you do need to understand is what your company policy is on this. I'd find that employee handbook HR gave you and dust it off and look up the answer (and do look it up - don't assume an employee, even one in HR, knows the answer for sure).

2. When companies get to a certain size they begin to incorporate pay scales or bands. You'll hear people talk about being a Level 63, a G Grade, etc. You need to familiarize yourself with these scales/levels/bands and also know which one you're in. You should be entitled to know what pay grade you're currently at, assuming you're at a large enough company.

3. Understand how companies use pay scales. In many mid to larger sized companies pay ranges can be pretty broad. I've worked for some very large companies where the difference between the entry point and cap for a given level could be well in excess of $30k. This is done for a few reasons. One is it gives people room to increase their pay without jumping to a new level (which should only happen when you move into a new role with greater responsibilities). Another is it allows for people in the same role to be paid at different rates, ideally to reflect the differences in experience and skill that they have. Generally speaking, when a company hires a new employee into a role that person can expect to be paid somewhere between the 1/3 to 1/2 point of the range. For example, if the range for a role is $70-100k and new employee can expect to receive a starting offer of $80-85k. Also keep in mind that the band/grade/level is determined by the role NOT by the person. To be coldly blunt about it, companies don't set ranges with regard for what a person wants to make or needs to live on. They set pay ranges based on the estimated market value of getting a certain set of tasks accomplished. Just because you're getting paid the equivalent of a Senior Llama Herder doesn't necessarily mean the company you're interviewing with needs a Senior Llama Herder. They're not trying to low ball you, it's just that they only need a mid-level llama herder.

So now what? If you have a good relationship with your manager I'd suggest starting with them. Let them know you're satisfied with your current pay and role but also let them know you want to advance your career and part of that includes increasing your comp. Let them know you'd like to know what goals/expectations need to be met to warrant a pay increase. Your company should have a review process in place and part of that includes a compensation review. In many companies there will be various ratings levels "meets expectations", "exceeds expectations", etc. and there will be compensation increase ranges tied to these. Don't expect complete transparency (and keep in mind your manager likely doesn't have the final say on compensation) but a good manager should be able to say something along the lines of "If you accomplish Goals XYZ you should be eligible for an increase in the range of ABC". (and keep in mind external factors - such as overall company performance - can impact this!) If the manager isn't able to have this conversation then I would try HR.

Disclaimer: nothing I've said reflects specific the policies or structures of any single company I've worked for in the present or past.

Answer 6

It is different in Scandinavia for instace. As far as I know, people publish their income tax returns. Please correct me if I am wrong on this. It would be helpful if you told us which country you live in. My experience is that it varies from country to country ...

Answer 7

Most companies strongly discourage talking about salary. If you are Steve both do the same job, would you be happy to find out that he makes 20K more than you do?

Pay is not fair, and will never be fair and is highly subject to what the market was like when you were hired, the financial postion of the company at the time of hire, and your personal negotiating skills. It can also be subject to political considerations outside your control such as John's boss may be more effective at getting payraises for him than your boss was in negotiating pay for his people, John may work in an area that is making more profit for the company than where you work and thus more money is available for him or John may be the CEO's nephew. So even if you knew John made more than you do, you still may not be able to leverage that into a higher salary for yourself as the same political considerations may or may not apply to you.

Even if people talked about salary, many people would lie and say they make more than they do to look better. So just because someone says he makes 100K, doesn't mean he actually does. So any anecdotal information you get from people may be false and you have no way to evaluate what is. It is unrealiable data. Using that info in a salary negotiation could also get someone else in trouble if your company has rules (formal or informal) about non-disclosure.

Answer 8

How can I get local picture of the relation between pay, expected results and work environment flexibility?

You can utilize sites like Salary.com and Glassdoor.com. Salary.com helps you estimate what you're worth by allowing you to include things like years of experience and education level. Glassdoor.com includes employee reviews of companies so you can get an idea of a specific company's work environment in addition to pay.

Another thing that hasn't been mentioned yet: Despite the taboo on discussing pay in the United States, the pay for government employees is a matter of public record. You can go online and look up what a specific person is paid if they're paid by the government.

Just search for federal employee salaries, state employee salaries, or "[specific state name] state employee salaries".

While government employees typically make less than people working in the private sector, it can be useful information.

Answer 9

As you seem to be from Germany, I wanted to add that forbidding your employees to discuss their salaries most likely won´t stand before court in Germany.

Here is a reference ruling

Note this was not tried before the supreme court, but the employer would have to have really strong arguments why wages would have to be a secret to get a ruling in his favor.

So while it may be a taboo where you work, it is also kind of a right to do that anyway!

Also, specifically in Germany there are a lot of workers which are organized in unions, and their pay is openly discussed and even objective of political debates and strikes. If you want that kind of fair-pay environment you could look for a employer which offers unionized tariffs and join the appropriate workers union.

Last, I would challenge, in part, your premise that pay has a overly strong relationship to expected results and work environment flexibility. This is, especially for the industries where discussing pay is kind of a taboo.

I would say, the biggest influencing factor is your ability to market yourself. An the best way to find your optimal market worth is stop comparing yourself to colleagues and start interviewing to get some alternative offers on the table.

Answer 10

One reason - companies do not encourage this because there is always someone who is paid more and someone less - exposure would mean a lot of chatter and discussions with Human Resources and demands - in some cases it could also lead to attrition.

Second, which I feel is more true is - how much I get decides my social pecking order. If I am paid too less - I do not want to expose it and reduce my self esteem.

Third, I myself feel I am overpaid and hence feel a compulsive need to hide ! :)

Answer 11

Shortly speaking: generally, it's not a taboo.

Adding some details: in some environments, it's a taboo.

So the actual short answer is: it depends..

In first line, it depends on the country culture. In Scandinavia, if you have something to hide about your wage, it's highly suspicious. You are expected not to hide such things, if you have something to hide, you are probably doing something illegal, otherwise, why on earth you would like to hide such things?

The opposite is in the countries with high criminality rate. In Latin America, I suppose, it's very unwise to tell anyone how much money you actually have. I suspect the same case is in the countries where taxes are highly avoided: Greece, Southern Italy...

Second, it strongly depends on the company culture. Some companies have payment classes, with very little place for negotiations. The wages are (almost) transparent. In the others, the wages are highly negotiable, but still they are transparent, because they are based on the competences. However, some companies have very obscure payment policies. In such companies, the workers with the same competence levels may have very different wages, and such companies tend to make wages secret to exploit the 'deers' which accept lower wage for the same job. That happens very often when hiring young, unexperience people who doesn't really know how much their job is worth.

Usually, if the people avoid talking about their salaries, it's a warning signal that the company is making some salary tricks, and you should be twice as carefull as usually when making negotiations. It doesn't mean the company is not worth working for her, in fact, you can still negotiate quite a nice sum of money. But you should do the carefull background check, because it's almost sure, such company will try to underpay you if they only get a chance (that is, they'll notice, you don't know how much people with your experience level get).

Answer 12

There are places where salaries are open and usually linked to some sort of objective criteria for advancement: level of education and years of experience. Some people like this and others don't. In an environment where there is some perception of merit pay, everybody will argue that they are the best. Surveys show most people believe they are above average, so now no one is happy and you end up with some sort of fixed pay scale.

I say, go look for another job and see what you can make. Yes, you'll find some places are more enjoyable than others. You won't know for sure how many hours a day will be expected or levels of stress induced, available resources or whether or not you'll end up liking your coworkers. In the US, things like cars, houses and health insurance are made so complicated that it is difficult to compare any two of them. Then throw in the range of negotiation and you have a mess.

Personally, it is none of your business what I make. That may put both of us at a disadvantage. Who knows? Search for what you want. Ask for what you think you're worth and willing to tolerate and hope you never find out someone with equal or lesser talent makes more than you because you'll end up making yourself miserable and will still feel slighted even if you do get a raise.

Answer 13

You need to understand the taboo. In the US, it's usually understood that a company will punish its employees who talk about their salaries.

In my state, it's illegal for a company to punish its employees who talk about salaries, but in practice, that doesn't really matter, the company can just lie about the reason they fired you, or lie about the reason they won't give you a raise. In "at will" States, it's extremely easy to fire people for legal reasons, or even for no reason at all.

Furthermore, if you think the new guy is making less than you, you don't need to discuss your salary with him. If you do, the new guy will just use that information to raise his own salary, not yours. In other words, sharing that information with someone who is making less than you is of no benefit to you, but it also opens you up to potential retaliation from your employer. So not sharing that info is just prudent self-preservation.

It's the same thing if you're the manager, or team accountant, who is going to be privy to that information anyway. Since you're going to know those numbers of your team anyway, you don't need to pay for that information by revealing your own information in return.