From JPETTIT@coe.eduSat Mar 16 12:43:29 1996 Date: Mon, 04 Mar 1996 10:19:37 -0600 From: Jeff Pettit To: Human Resources Net Subject: Employee Contracts I have just been shown a new employee contract in which it states something to the effect that this contract shall be confidential and the terms cannot be disclosed. It appears that one employee cannot talk to another about their compensation. Two questions: 1. Is this the norm for businesses now? Employees are prohibited from discussing compensation? 2. Do companies with this type of clause enforce the contract to the point of discharging employees that discuss compensation? I have never seen a contract with this verbage and thought this network could enlighten me. Jeff Pettit Coe College Cedar Rapids, IA 52402 319-399-8862 JPETTIT@Coe.edu From KONSTAN@findsvp.comSat Mar 16 12:43:39 1996 Date: Mon, 04 Mar 1996 12:35 EST From: KONSTAN@findsvp.com To: Human Resources Net Subject: Re: Employee Contracts Jeff- I've never seen a contract like that. I think it's unrealistic to expect employees to not speak about comp. If anything, a contract like that might make employees feel like the company has something to hide - such as treating employees unfairly regarding their comp. Linda Konstan From PWHfNY@aol.comSat Mar 16 12:44:16 1996 Date: Tue, 5 Mar 1996 20:19:27 -0500 From: PWHfNY@aol.com To: Human Resources Net an employee of a payroll service company, confidentiality is key. Along that line, I would no sooner discuss my own compensation with a co-worker than discuss a client's employees' compensation with a peer, their co-workers, the competition, a client in the same industry or any other person. Payroll is an extremely personal and emotional issue, one that cannot be taken lightly. If an employee wants to disclose payroll (or any other personal HR info) that may be up to that person. >From a managerial standpoint, I would personally like to limit conversations re: compensation. It is no-one else's business what I'm paying any particular employee. Who determine's what an emlployee's worth is - other than the employer? There are too many factors to consider when determining the employer's return on investment (which employees are, an investment!). Think about the debate re: "death of the HR function." As HR pros we need to increase the value of our input to other business units. One way to do this is to foster an atmosphere of confidentiality and trust by not violating an employee's right to privacy. Believe it or not, a lot of employees don't want to take advantage of direct deposit because they have joint accounts with their spouses. Even though most service providers can tailor the direct deposit service to preserve confidentiality, many people prefere to have a paper check in hand so that their spouse doesn't know how much he or she makes. Pretty scary thought in this age of information exchange, but it is a reality... In short, the disclosure of payroll data simply doesn't make sense (and quite frankly the disclosure of pro athletes' compensation only creates hype, commissions and advertising $ - same goes for highly compensated executives). I would appreciate your collective input on the subject. Thanks, Paul From JEF46@aol.comSat Mar 16 12:44:29 1996 Date: Tue, 5 Mar 1996 20:10:07 -0500 From: JEF46@aol.com To: Human Resources Net Subject: Re: Pay Secrecy Where have I been? I have worked for a Fortune 50 company, a $7 billion multinational, a $350 million privately-held company, a $12 million OOP family business, and consulted for numerous others. I have never worked in, nor come in contact with, a manufacturing firm where pay was not secret. By secret I mean that I was assured as an employee that no one would know my salary unless I told them what it was. In each case, the salary ranges were public, and in some cases so was the 'grade' for each person's position, but only those with a need to know had access to broad data. Salary reviews included one's position in range versus an assessment of performance. I have seen occasions where audits of pay practices identified biases or inequities, but the companies involved audited pay specifically to find and eliminate such issues. One lesson I learned early on is that if two people have a conversation about pay, one is likely to be disappointed. We still encourage people to keep their individual pay to themselves, even where we use pay for skill and each skill point addition is posted for review by all employees. Yes, those with 'enquiring minds' can sometimes do the math, but most people have better things to do. Am I the only one out there who leans toward keeping one's nose out of one's coworker's paystub? Joan Farrell From erwilson@teleport.comSat Mar 16 12:44:48 1996 Date: Tue, 5 Mar 1996 14:00:02 -0800 From: erwilson@teleport.com To: Human Resources Net Subject: Reply: to "Pay Secrecy" and "right to disclose" input Fellow HRNETers, PWHfNY@aol.com noted that California Labor Code does not allow for an individual to discuss their own pay but my understanding is that this code does not limit the organization's ability to police employee discussions of the pay of others in the organization. Although a minor loophole it does allow for fairly broad policy to be implemented since it is unusual to find a discussion of wages limited to solely the wage of the individual [eg "your pay seems appropriate relative to my own...]. Virtually yours, Eric <---- Begin Forwarded Message ----> Date: Tue, 5 Mar 1996 15:24:44 -0500 From: PWHfNY@aol.com To: Human Resources Net Neters: According to California Labor Code section 232 it is illegal to demand that employees keep the amount of their pay secret. You may not discharge, discipline, or discriminate against employees who disclose their wages. <---- End Forwarded Message ----> ******************************************************************************** Eric R. Wilson, SPHR E-Mail me at: erwilson@teleport.com PO Box 80337 Portland, Oregon 97280-1337 (USA) ******************************************************************************** **********My Homepage is found at http://www.teleport.com/~erwilson/************ **********The Human Resource Professional's Gateway to the Internet ************ ******************************************************************************** From HRHuber2@aol.comSat Mar 30 11:28:12 1996 Date: Fri, 29 Mar 1996 07:12:56 -0500 From: HRHuber2@aol.com To: rlhannah@frank.mtsu.edu Cc: hrnet@cornell.edu Subject: Re: Pay Secrecy This is a fascinating topic, which begs several questions. First, I hope we are talking about PAY SCALES and not an individual's specific pay? Secrecy surrounding an Individual's pay is almost sacred in this country, and I think it will/should stay that way. Those who suggest broad or universal disclosure of INDIVIDUAL pay (if that has been suggested in this thread) would be hard-pressed to convince me of any value in doing so (fairness and honesty are not convincing arguments). Such disclosure is a recipe for disaster and inevitably will lead to WORSE morale problems. Second, what business is it of mine what somebody else makes, even if that person is in the same job? I suppose I tend to be somewhat of a Biblical purist in this area, but a person signs on for a wage they agree to be paid. Short of some illegal activity on the employer's part (gender or race discrimination), my belief is that the contract is between the individual and the one paying him/her, not between the individual and the rest of the organization. Employers tend to pay people different amounts for different reasons, even within the same job title. I think the employer should make full disclosure of the factors that affect pay, but disclosing individual pay is not desirable. To keep this posting short, I won't go into all the reasons. Third, I wonder if the reason for the concern over others' pay primarily is one of preventing illegal discrimination? If so, I don't know that broadbased disclosure within the organization itself will help. There are other avenues for insuring legal equity. Without meaning to be facetious or to trivialize this topic, if pay disclosure is good in the workplace, why would it not be good in other social or organizational settings, such as within our own extended families, churches, and clubs? Just to play devil's advocate, I'll bet I can forcefully for such disclosure, if anyone is interested. From rlhannah@frank.mtsu.eduSat Mar 30 11:28:39 1996 Date: Sat, 30 Mar 1996 11:25:28 -0600 (CST) From: "Richard L. Hannah" To: HRHuber2@aol.com Subject: Re: Pay Secrecy--reply Since this thread is somewhat dated, I won't post to the list but will argue with the "devil's advocate." If in a socio-economic system we accept the premise that markets work, then I think we must accept the assumption that information must be freely flowing within the markets. How can labor efficiently allocate itself in labor markets, or be efficiently allocated in internal markets without freely flowing compensation information? I don't think the criteria of a system can be credible, even if made public, if the outcomes are not known. This has been done in the public sector, for CEO's and other top managers in the private sector, in union environments, in non-profits, etc.... and the sky hasn't fallen. Richard L. Hannah, Assoc. Prof. INTERNET: RLHANNAH@FRANK.MTSU.EDU Economics and Finance Dept., Box 27 Off. Tel: 615-898-2228 Dir., Center for Economic Education Fax: 615-895-7580 Middle Tennessee State University Murfreesboro, Tennessee USA 37132 Homepage: http://www.mtsu.edu/~rlhannah/homepage.html On Fri, 29 Mar 1996 HRHuber2@aol.com wrote: > This is a fascinating topic, which begs several questions. > > First, I hope we are talking about PAY SCALES and not an individual's > specific pay? Secrecy surrounding an Individual's pay is almost sacred in > this country, and I think it will/should stay that way. Those who suggest > broad or universal disclosure of INDIVIDUAL pay (if that has been suggested > in this thread) would be hard-pressed to convince me of any value in doing so > (fairness and honesty are not convincing arguments). Such disclosure is a > recipe for disaster and inevitably will lead to WORSE morale problems. > > Second, what business is it of mine what somebody else makes, even if that > person is in the same job? I suppose I tend to be somewhat of a Biblical > purist in this area, but a person signs on for a wage they agree to be paid. > Short of some illegal activity on the employer's part (gender or race > discrimination), my belief is that the contract is between the individual and > the one paying him/her, not between the individual and the rest of the > organization. Employers tend to pay people different amounts for different > reasons, even within the same job title. I think the employer should make > full disclosure of the factors that affect pay, but disclosing individual pay > is not desirable. To keep this posting short, I won't go into all the > reasons. > > Third, I wonder if the reason for the concern over others' pay primarily is > one of preventing illegal discrimination? If so, I don't know that > broadbased disclosure within the organization itself will help. There are > other avenues for insuring legal equity. > > Without meaning to be facetious or to trivialize this topic, if pay > disclosure is good in the workplace, why would it not be good in other social > or organizational settings, such as within our own extended families, > churches, and clubs? Just to play devil's advocate, I'll bet I can forcefully > for such disclosure, if anyone is interested. > From nda1@cornell.eduSat Mar 30 13:37:37 1996 Date: Mon, 18 Mar 1996 03:20:51 -0500 From: "Nathan D. Ainspan" To: Human Resources Net Subject: Pay Secrecy I read the discussion about pay secrecy on this list with great interest since I have just completed my Masters thesis which explores that very topic. I can offer a brief, cursory overview of the state of the research on pay secrecy, but if anyone has any specific questions or concerns, feel free to write to me for details. I think "Dilbert" cartoonist Scott Adams does a great (and humorous) job summarizing pay secrecy in America today. In the book _Build a Better Life by Stealing Office Supplies_, he writes "It is considered impolite to ask co-workers their salaries, however, it is perfectly acceptable to deduce it by grilling them relentlessly on their spending habits." The next panel has one character asking a co-woke about their mortgage interest rates while Dilbert is looking through high-power binoculars to see the mileage on another co-workers BMW. Pay secrecy appears to be the last taboo in the American workforce, and it is kept as a taboo either by the employer (as the examples illustrated, sometimes even going so far as using termination to insure compliance) or employees ("we don't talk about that here") You could ask employees about their personal life, and most all will probably respond. But if you ask them about the numbers on their pay checks, they suddenly get defensive. For an issue that is so critical to the workplace, there is a surprisingly little research. The dearth of research is especially problematic if you consider the number of new compensation programs that draw upon greater employee involvement and hence some employee knowledge of co-worker pay (e.g. gainsharing, TQM, etc.) Most of the pay secrecy research has looked at how and to whom individuals compare their pay checks (e.g. looking at peers in other organizations, subordinates, or superiors). In sum, what this area of research has found is that individuals have a need to know (to quote former New York mayor Ed Koch ) "How am I doing?" and employees will try to gather information from whatever sources they can to answer these questions. Edward Lawler III has found that in conditions of pay secrecy, employees will use indirect information, and this information will usually lead to a perception that their pay is comparatively worse than it actually is and this in turn will create greater dissatisfaction with the pay program. Lawler found, for example, that the managers he studied under- estimated the pay of peers and those below them and over-estimated the pay of those above them. Lawler concluded that pay secrecy could actually sabotage any benefits achieved by compensation programs. Others have tried to replicate these findings with mixed results. (i.e. "The jury is still out" with final conclusions on this matter.) As some of the letters to HRNET have suggested, another line of the pay secrecy research has seen pay secrecy as perceived (or actual) manifestations of mistrust or a cover-up of unjust pay policies. Some privacy researchers (namely Alan Westin) have postulated that individuals will define privacy invasions as mistrust - if the employee does not trust the organization and the employer, then they are more likely to feel invaded and will protect their personal information. My own research has looked at the organizational variables that can contribute to employee perceptions and attitudes about pay secrecy. I postulated that giving employees control or some say over the procedures and collecting the information in a "fair" way could help establish trust in the firm and will therefore create a situation where employees who will be more willing to discuss their pay. If anyone would like citations to the above (or other areas of pay secrecy or the privacy research), suggestions for policies, or if you want a more detailed description of the above, please feel free to contact me. If your company has had experience with pay secrecy policies (either good or bad) I would certainly be interested in communicating with you. I can be reached at nda1@cornell.edu or at the address below. Cheers, Nathan D. Ainspan Graduate Student Human Resource Studies School of Industrial and Labor Relations 393 Ives Hall Cornell University Ithaca, New York, 14850 USA (607) 273 - 3419 ______________________________________________________________________________ From THE WALL STREET JOURNAL, 4/11/96, special section on annual survey, "Executive Pay,"--"Something to talk about," by Alex Markels and Lee Berton, p. R10. Discouraging employees from exchanging salary information is more than a privacy issue. Public disclosure risks exposing unfair pay practices, giving relatively low paid employees incentive to argue for higher pay, and making explicit the problems of hiring at the market rate over the heads of existing employees. One argument, given by Gloria Steinem, is that employees have the power (of knowledge) in sharing this kind of information, and should. The article also mentions nefarious ways to snoop the information: smoozing with payroll clerks, checking predecessor's personnel files, and even blatant violations of company policies by accessing payroll records.