Yesterday, an article by Joel Gascoigne of Buffer set Hacker News alight with discussion. Arguments against transparent salaries abounded. People felt it could only lead to harm, and pointed to numerous hypothetical or even very tangible scenarios where having open salaries would cause serious problems. Some of the arguments opposed public disclosure, but most seemed to oppose any disclosure whatsoever.

Joel’s article was a great spark to light the powder keg, but it did not properly answer an important question: why?

GrantTree has been running with full (internal) transparency of salaries since day one, since we hired the first person. This happened first because I felt it made intuitive sense, but over time, I’ve had the chance to notice many reasons why this makes sense. Here’s what I believe is a fairly strong set of arguments supporting open salaries. I will not try to support public, external disclosure of salaries because I have no direct experience of that, but I have pretty well-formed opinions on the benefits of internally transparent salaries by now.

Transparency

Transparency is almost a buzzword by now. For startups, it seems like one of those key things that you have to do to be part of the crowd, a universally “good” value that everyone should adopt to some extent.

The killer is in the “to some extent” part, though. Being a little bit transparent is easy. Communicate more, be a bit more open, and there you go. Instant transparency in a friendly package that has almost no effect on your company culture.

But having transparency as a core company value (as we do) does not mean simply being a little bit more communicative with your staff about various things happening in the company. That’s not transparency, it’s just common sense. In a commercial environment where most work is knowledge work, where things change rapidly, keeping your staff informed is step one to be able to compete.

Real transparency takes a lot more effort, and it also has a much higher payback, that becomes evident as the company grows and matures and truly adopts transparency in its working practices.

Real transparency means deliberately and forcefully hunting down secrets and opening them. It means constantly asking yourself the question “am I doing this in secret? If so, why? How soon can I open it? Why not right now?” Whenever a new “thing” comes up, by default it will be discussed by only a few people and will be secret - that is a natural tendency for humans. A real commitment to transparency requires fighting that tendency all the time.

This needs to be done not just for things that don’t matter, but for everything - including, especially, salaries. Once you let secrets accumulate in one part of the business, they have an inexorable tendency to grow, accrue more parts, take over a larger part of the company’s mind-share. If salaries are secret, then how about the pay scale? If the pay scale is secret, then surely some of the factors that drive the pay scale might need to be confidential too, otherwise everyone can guess the pay scale. And so on…

Conversely, once you commit to the path of real transparency, you soon find that you can’t draw a line somewhere and just stop there. It feels almost insulting to do so - insulting to the intelligence of the people you work with, to imply to them that you can be transparent about all these things they need to understand to guess the things you’re not transparent about, but you’re not going to go any further.

The payback for going down this path, though, is enormous.

Trust vs control

Trust and transparency are intimately linked.

Most companies’ cultures are based on control rather than trust, because most people are scared of losing the illusion control. They want to feel in charge, like they have the power to command things to behave in a certain way. That power, that control, is an illusion, but by default, people cling to it like a loincloth covering their shame: the reality which is that they have no real power, just temporary and arbitrary authority.

Transparency removes that loincloth, in the business context. We’re all naked (in a business context, of course) and that’s ok, because we have nothing to be ashamed of. Importantly, it removes the illusion of control not just from employees, but also from the company’s management.

Full transparency means that everyone has the information required to question management’s decisions. It means all decisions are up for scrutiny. It means no one can just order another about without justification.

One of the most basic tricks for establishing a power imbalance between two people is for one of them to claim to know something that he can’t disclose to the other one. Transparency rips those kind of tricks away, and greatly evens out the power imbalance.

People can still have influence, of course, but that influence is earned through visible actions, not through access to secret information.

It is difficult to overstate the effect this has on company culture. A real commitment to complete transparency gets rid of a huge amount of bullshit in the company culture.

Mature discussions

People working for a company are not children, they are adults. And yet, with the typical levels of secrecy present in most companies, they are treated as children. “No, we can’t tell you about this thing, it’s not company policy to talk about this stuff.” “The contract says we’re not allowed to talk about salaries with each other”.

These kinds of behaviours treat people as children, instead of the self-aware, noble, mature individuals that they are. Keeping secrets is a way to push people down. Being transparent is a way to elevate them.

There is a lot to be said for the idea that people tend to behave in the way that they are expected to behave. If you treat them as children, they will behave as children. Most companies bemoan the fact that their organisational culture behaves as some kind of mass of children that do not take responsibility for what’s happening to the business as a whole, and yet they cut off those people from the information they need to do so and do not treat them as adults.

Full transparency is part of a number of company behaviours that change that. It’s a factor that communicates to people: we trust you to be responsible adults.

And, strangely enough, people react to that by behaving like adults.

What if this still sounds weird and alien

For some people, this probably still sounds like a weird and bizarre take on how to run a company. Others are excited by this and either recognise trends they’ve seen themselves or things that are happening in their own working environment.

If you’re in the first category, I encourage you to consider whether full transparency is scary simply because it’s unfamiliar. If that’s not the case, perhaps the reason for your dislike is even more simple: full transparency means giving up control in exchange for trust. It takes a lot more self-confidence in your ability to manage people than a secrets-based, command and control culture. That is genuinely scary, but I strongly encourage you to take the leap and see how you can function without command and control. You’ll be a better and more effective person for it.

If you’re in the second category, you may still be scared of going all the way. There are precious few examples of other companies doing this, so it certainly looks like a risky path. If you’re in charge, a founder of the company, I’ll merely remind you that no one ever builds something exceptional by doing it just like everyone else. Embrace the risk, plunge headlong into it, and you’ll be pleasantly surprised by the results. If you’re an employee, you can be more transparent and trust-based in any environment - even a secretive, control-based company. You may not be able to go all the way, but every little bit helps you and the people around you. Of course, I am happy to have a chat about this with anyone who wants to approach me. My contact details are easy to find.

Are there any downsides, though?

Of course there are, and for a good idea of potential downsides, check the Hacker News thread in question. However, my point is there are overwhelming upsides to committing to full transparency that outweigh the downsides by such a large factor that it becomes a no-brainer.

In summary

  • Full transparency is different from paying lip service to transparency
  • Full transparency requires a constant commitment to hunt down secrets and make the non-secret
  • Full transparency is hard work but the payoff in terms of trust and maturity is enormous
  • Full transparency does mean giving up some control, which is why most people are so scared of it
  • The net transfer of power is from the management to everyone else, so the only people who should be genuinely scared are petty managers whose power depends on holding secrets
  • There are potential downsides to full transparency, but the upsides described above outweigh those downsides massively
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