For as long as talking salaries has been an office taboo, people have wanted to do it. At Vanity Fair in the 1930s, Dorothy Parker, Robert Benchley and Robert Sherwood famously responded to a request from management that employees not disclose their salaries by painting their wages onto signs and wearing them around their necks.
If Alex Douzet, TheLadders’ chief executive officer, called the shots, we wouldn’t have to wear our salaries; we’d already know one another’s – and how hard we’d need to work and which skills we’d need to strengthen in order to earn what our better-paid coworkers did.
Douzet thinks salary transparency should be only natural, and will seem even more so as millennials shape the workplace in the coming years, bringing with them, generally speaking, their inclinations for open-sourcing information, for innovative resource-sharing (like Uber, or Airbnb), and for living publicly on social media. The idea of transparency à la social media essentially argues that if you can look at someone’s Instagram and see how often she goes out and what she orders, if her Facebook shows off the trips she can afford to take, if you can review her job history on
Douzet’s argument, though, is also rooted in the basics of supply and demand. “No one sets a job salary,” he said. “The market does.” The job market, that is. Douzet’s view is that your salary is a reflection of the skills you bring to the market and how in demand those skills are, relative to how many people have them. He gives a by-now classic example: a niche tech-related skill set can earn you $100,000 a year, versus being a journalist and making closer to $30,000. It’s not that one career is inherently more valuable or more demanding or requires more skills, it’s that there are fewer professionals who have the skills needed for that tech job, so the people who do fit the bill are more expensive to get and hang onto.
In fact, the challenge of employee retention may support salary transparency. According to Douzet, “There are 90 million professionals in the United States. Around 20% change jobs every year. That’s nearly 20 million professionals changing every year.” In the past, when people tended to stay in their jobs longer, a company could get away with incremental, negligible raises and scrappy compensation because often their workers had nothing to compare their experiences to. Today, with professionals switching jobs much more frequently, you can compare offers, do research to determine the market worth of your skill set, years of experience, and employment history, and negotiate a salary. That means that if a company wants to retain its best employees, the company will need to keep up with how the market values those employees. Raises could become less about performance and more about the current value of the job.
“People are not motivated by money,” Douzet explained, mentioning recent studies that have shown that money is not always the best incentive or the biggest deal breaker, “but less money can remove motivation.”
It can also poison a professional relationship, if an employee perceives a salary discrepancy. For instance, when Jill Abramson left The New York Times in May, The New Yorker’s Ken Auletta reported that her firing was due in part to a conflict with the paper’s management was over her getting paid less than her predecessor, Bill Keller. The New York Times has since argued that Abramson’s termination was not at all related to her inquiry about her salary, and that, moreover, her salary was comparable to Keller’s. The salary story went viral; it was repeated and commented on by dozens of other journalists. Whether it actually happened the way Auletta reported it does matter, but it’s also revealing that the media jumped on the story. Fact or fiction, it rang true to many readers and reporters.
It’s not surprising that people instinctively bought it. Since the White House announced that women were making 77 cents to every dollar that men made in April, the witch hunt for companies with salary discrepancies has been on. Is it possible, though, that many of us are overreacting?
Douzet thinks so, based on how frequently professionals now change jobs, and also on how the job market is becoming more transparent and more democratic (for instance, job posting sites have added to the ways that people hear about available positions). According to Douzet, we’re getting to a point where most employers can’t get away with shortchanging their staff.
Salary transparency and the job application process also relate in another important way, which Douzet’s company, TheLadders, explored in a study, “Shedding Light on the Job Search.” TheLadders redesigned job postings to put applicants in context with their competition. Participants in the study were shown a conventional job posting, which they tended to skim most of and spent an average of 73.8 seconds on to determine whether or it not would be a good fit for them. They were also shown a redesign that not only presented the most salient job posting information more prominently but also showed them where they fit in with their competition for the job in terms of salary, experience, and time in the field. Applicants who experienced the redesign from TheLadders spent an average of 59.8 seconds on each posting to determine if it was a good fit, and they indentified jobs they were suited for with 35% higher accuracy.
Much as salary transparency could foster healthy competition, self-awareness, and self improvement in the office, Douzet thinks a more transparent job application process, one that illuminates who is applying for which jobs, how qualified each applicant is, and how much he could or should be making, could help potential employees strengthen weaknesses or seek out certain career experiences to become the best candidates for desired positions.
Could job competition transparency incite responses similar to the reactions that many fear salary transparency would provoke – ranging from jealousy and shame to sheepishness and gloating? Could competition transparency harm a job applicant’s confidence going into an interview and affect their application outcome? Short answer: yes, but Douzet answered, “This doesn’t affect your chances. It just makes you realize them.” He also pointed out that anticipating how you fall short of your competition could help you tailor your application to demonstrate why you’re still the best candidate for a position, despite having spent less time in the field, for instance.
Similarly, salary transparency might not effect change around an office immediately. It may just give employees a more realistic view of where they fit into the pecking order, how they can move up, what they can ask for if their salary doesn’t keep up with the market, and, of course, the uncomfortable knowledge of exactly what everyone else’s paychecks look like.
