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Is it a standard practice for a manager to know their direct reports' salaries? Additionally, what are the pros and cons of a manager knowing this information?

I realise this may be different according to where you work (and in which industry of course). But I think it will make the answers more interesting.

I work for a private company in Beijing for the last 10 years, manage a team around 10 employees and I have always thought that is the case. But recently I read the book "The Manager's Path" by Fournier Camille and it got me thinking it may not be the case all over the world. Hence the question.

--- update ---

Even though the question was closed I think I better list the reason why "The Manager's Path" made me think it is probably not a universal case. The book actually doesn't talk about this particular issue, just I got that feeling, but of course I may be wrong, e.g. in chapter 5 "managing a team", she wrote:

In this new role, I found myself managing a few people who were far more senior, tech-wise than I was...

So if the manager managed some team member far more senior (the manager's own words) and knew their salary, which was probably far more higher than his/her, can he/she do a good job as a manager then?

I know being a good manager isn’t about having the most technical knowledge but when a junior manager manages a senior engineer, if he/she also know the salary, isn't there another psychological difficulty to deal with ?

BTW, this is just one example from the book and I may have interpreted the author's intention all wrong.

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    Please add a location tag, this varies wildly in different parts of the world. – Polygnome Jan 14 at 18:50
  • @Polygnome I have updated my question. – Qiulang Jan 15 at 1:40
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    Could you explain how the book "The Manager's Path" got you thinking about this? Does it recommend that a manager should not know salaries? – sleske Jan 15 at 17:57
  • Are you assuming that "manager" and "supervisor" are the same roles for this question? – fectin Jan 15 at 22:25
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    @sleske the question was closed, which I don't really understand, so I don't bother to do that either. – Qiulang Jan 16 at 9:39
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Typically your manager decides your raise and announces your raise and new salary so, yes it's standard that they know your salary.

Edit: using @Thomas Matthew comment: In many companies, a manager has a budget, which includes salaries of direct reports. The budget can determine who gets a raise in salary and how much the increase will be.

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    I don't think my manager has any say in the matter. They may hand me the letter with my pay rise on it, but the letter came from someone else higher up. – Simon B Jan 14 at 9:04
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    @Simon B keep in mind that some managers pretend not to have any input in your pay so that they can play the role of the "good cop" and make it seem like they're completely in your corner when they aren't. – HenryM Jan 14 at 12:34
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    In large companies there is often a raise budget which the manager applies to the team based on perf, previous raises, any other info they know. My manager has one on one meetings with team members to announce and discuss each time; seems normal practice – Chris Jan 14 at 13:30
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    @SimonB: "Typically" does not mean "applies to literally everyone, especially Simon". – Flater Jan 14 at 17:56
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    In many companies, a manager has a budget, which includes salaries of direct reports. The budget can determine who gets a raise in salary and how much the increase will be. – Thomas Matthews Jan 14 at 21:00
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Yes, in North American workplaces, your direct boss usually knows your salary, whether they are Manager or Director or any other title, and usually are wholly or partly responsible for the budget from which your salary is paid. Whether they have any control or influence on your salary is another question, and that will vary by workplace. In smaller private-sector employers, they probably have at least the ability to propose a raise. In the public sector, or in union environments, or enterprises with strongly centralized HR departments, they may have little or no influence, apart from submitting performance appraisals.

If you have a reporting relationship to someone who does not know your salary, or has no budget responsibility, they they may be in a role that would better be called Project Manager, or Supervisor, or Foreman, or Team Lead, or something like that. They may be responsible for assigning you tasks, balancing your priorities, and watching your output, but there may be another person who is your actual Manager as far as the employer is concerned. Some places call this a "dotted-line relationship" vs a "solid-line relationship" because of how it's often drawn on organizational charts.

If you are a contractor, or if you have been placed by a contracting agency or consulting firm, then the contract details may have been worked out by a Procurement department or HR and your direct Manager might not know the details. Ditto if you've been "seconded" from another department. But these are special cases.

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Yes. The ability to know your contract details, call upon you to fulfill them and if push comes to shove terminate your contract is a key point of being a manager.

Contrast that with all the people that you might be influenced, even directed by in your daily work, that do not know your contract: Team Leaders, Architects, Scrum Masters, Product Owners, Project Managers, Business Analysts, all of them can ask something of you, but only you and your manager know if that's in your contract.

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    I am bit confused, I was talking about the salary but your answers seem not. – Qiulang Jan 14 at 9:08
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    Just one part of it. – Qiulang Jan 14 at 9:09
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    Well, there is people who know your contract (including salary) and people who don't. If you find one who knows your salary, but not your contract, I'd be surprised, after all salary without context is a meaningless number. – nvoigt Jan 14 at 9:11
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    @nvoigt Yet, you might be surprised to know the amount of people (yes, they exist) know your salary and does not have slightest idea about rest of your contract. I'm talking about India and they are (not considering your direct manager), you manager's manager, HR, Finance team, PR team, the dev team that works for company's internal portals, so on and so forth. :) – Sourav Ghosh Jan 14 at 14:05
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    I think it's obvious that payroll would know my financial details. HR has probably seen (and maybe even co-signed) my contract, so no surprise there. The others are people that could technically, though most likely illegally or at least against policy, gain access to that information. If the company is shady or incompetent enough, you'd have to take that into account, that's true. But I think the OP meant "under normal, legal circumstances". – nvoigt Jan 14 at 14:40
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Is it a standard practice that a manager knows its direct reports' salary ?

Depends on where you are. In government agencies (including military), pay transparency is the norm - positions are standardised and pay is set by publicly available rules. If you know somebody's employment level and a few other not-very-secret details (e.g. how long they've been at that level, and what percentage full-time-equivalent they're working) you can figure out their pay.

What are the pros and cons of let manager know his/her direct reports' salary ?

When I'm managing a new starter, quite often one of the first things that happens is that they ask me to vouch for them on a rental application, which will involve me confirming their income.

More broadly, salary transparency tends to encourage fair pay within an organisation, because it becomes very obvious if you're paying your female staff less than your male staff (or, in some cases, paying them less than their male reports...)

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Yes, although to a differing degree depending on the company.

When you hire a new person you always know. You need to know the budget for the position and the salary rules in your company/ team in order to position the person within the salary band correctly (e.g. if we pay junior developers between 50 and 70 k with yearly salary increases and I decide to hire someone relatively inexperienced even for a junior developer I can't offer them 65 k).

It's a bit more complex with team members you "inherit" in the team you're taking over. I've already worked with HR who didn't want to disclose such info (I'm in the EU - GDPR scares people here). But I guess they would have to as soon as the team member requests a salary increase or similar.

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  • Baffling to think HR might not want a manager to know their direct report's salary. Genuinely weird. Of course they need to know it. (Not saying you're making it up, just saying it's a baffling position for HR to take). Also note that if a manager is any good, if one of their reports is underpaid, they will already be pushing for a rise before the employee makes a request... because many employees won't request it. They'll just leave for better money elsewhere. Good managers get ahead of that. Competent HR know that. – BittermanAndy Jan 14 at 23:34
  • @BittermanAndy I agree that it's reasonable for a manager to know their reports' salaries, but GDPR has motivated organisations to be cautious about how they share anything that might be considered private/personal data. – Geoffrey Brent Jan 14 at 23:49
  • I think we're coming back to the implied question mark over "competent HR" if they think GDPR prevents a manager knowing their direct report's salary. – BittermanAndy Jan 14 at 23:53
  • I'd say that this is the test of whether you are a manager, or just someone who can give orders (and run to a manager if they are not followed). A manager knows their budget and who takes up how much of that. Over time, positions have been inflated with titles, so there's "facility managers" now, that you call when you need a light bulb changed. to me, knowing and being able to change your reports contracts is the red line where I decide whether someone is a manager, or just giving orders on behalf of a manager. – nvoigt Jan 15 at 8:10
  • @nvoigt, I describe what I've witnessed empirically. I agree that it shouldn't be like that. I describe what is as distinct from what should be. – BigMadAndy Jan 15 at 13:19
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An attempt at a general answer that will not be specific to a given country:

Salaries are generally considered confidential information, and only shared on a need-to-know basis. So your manager will know your salary if they need to know it. It might happen, if raises, bonuses and hiring are all handled by other personnel (HR or senior management) that the direct manager never needs to know their reports' salary. However, the following are some common reasons a manager will need to know:

  • they are making a decision in a negotiated recruitment (e.g. they offer salary $A, the applicant asks for $B and it is the manager's decision whether to accept the offer)
  • they manage their team's salary budget (or they manage the bonus budget, but bonus is treated as a % of salary)
  • they are responsible for benchmarking wages against competencies and/or market rates (HR often does this, but not always)
  • they are involved in a wage negotiation (other than recruitment)
  • in smaller companies that don't have dedicated HR personnel, if the manager (often the founder/CEO in very small companies) is processing the paychecks, or making tax arrangements and doing other activities normally done by HR.
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