Friday, May 22, 2015

The Pay Gap

I saw this posted by a friend and decided to write a few notes.

Some Companies Fight Pay Gap by Eliminating Negotiations

I think the negotiation has encouraged a dog eat dog world where we have people that earn more, not because they know more, do a better job, but because they can argue better. I think I'd struggle to see where negotiation (outside of sales or someone that closes deals) is a measure of merit in most positions.

I also think that having flexible ranges encourages hiring managers, consciously or unconsciously, to favor certain candidates over others. Could be men over women (or vice versa). could be one white over black, or Chinese over Latino, or even the person I know over the person I don't.

Personally, I think setting a series of titles and salaries makes sense. You pay people for the job they do. If they're a doctor or a programmer or a retail clerk, pay them for the work. Certainly some people are more productive and do better work, so have a Doctor I, Doctor II, Programmer III, Clerk II/III/IV/V and give them incentive to work better and earn a promotion of sorts.

We want to incent people to move forward and drive their career. However we also want to remove some of the friction and bias that slows our companies down. I think negotiation is one of those areas that creates problems. We try to hide salaries to avoid hurting feelings. We don't want to justify how little or much we pay anyone.

I say make it transparent and move on. Focus on what you do well, which is run the business, and let salary and reviews be less of a distraction or focus. Plenty of managers and people making decisions in this area aren't competent at it. They decide on pay, bonuses, etc. without any real data or decision making. Ultimately many people go on gut, which I would say is a poor way of running a business. Whether you're a first line manager or VP.

I'll also say that it's easy to look at the flip side, that the better people are held back. Perhaps, but I've rarely seen the successful and highly sought after employees worried about a little money in their position. They are usually productive because they enjoy what they do.

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