Could salary disclosure lead to higher levels of engagement?

By James Bennett, Managing Online Editor, Melcrum

In my previous position working for a newspaper in the Middle East I remember walking into the newsroom, sitting down at my desk, switching my computer on and checking my emails. It was a day like any other. What I didn’t expect was complete silence. The usual buzz of mobiles, sound of scurrying feet and crashing of keyboards had been replaced with the low hum of staff whispering to one another. Something was wrong. I’d heard it all before. It was the sound of sackings, budgets being slashed, staff being asked to take voluntary redundancy and the imminent arrival of the editor in chief employee list in hand ready to wield the axe of doom. But it wasn’t. I was wrong. It was worse.

A disgruntled employee had managed to not only abscond the country (the UAE) with hundreds of thousands of dirhams worth of debts and leave his car running at the airport, he had also managed to hack into the company’s system, copy and paste everyone’s salaries and post them on a site called Wikileaks, famous for its ability to destroy reputations in one email. His plan to get back at his superiors had worked perfectly.

Two things happened, one that affected all the employees and caused huge unrest for months afterwards, and another that affected the relationship between employees and senior leaders. Firstly, several members of staff were found to be earning far larger sums than their so-called equals and rumours rapidly circulated this was because of either their gender or their nationality, not because of their superior work experience or qualifications. Then, we all discovered how much our line managers and some of the senior staff earned, a small number of which were being fed more annual income into their bank accounts than Barack Obama or Gordon Brown. One even earned more than the GDP of small third world nation - not the best morale boosting news for a company that had only been running for less than a year.

Today’s news, however, that UK banks will be forced to disclose the number of employees who earn more than £1 million a year will bring a smile to many consumers who have watched from the sidelines as government and essentially taxpayers money has been used to prop up several large failing financial institutions. Oh, and don’t forget the bonuses, billions of pounds of which has been given to those who landed us in this mess in the first place.

As Sir David Walker, who led the report, says: “We're going to have to fund the problems generated by the banks not only this year but it's our children and grandchildren who are going to have to pay these costs."

But what about those poor old bankers who will, like me, wander onto the trading floor one day soon to discover that everyone knows exactly how much they earn? In their case it’s arguably needed. The financial services industry should be more transparent and risk averse in order to avoid another collapse. We need to know how much is being spent on salaries, especially when the money being spent is effectively ours.

I have nothing against the banking and finance industry but change here is clearly needed. The question is, should this apply to other industries and what effect would it have on the overall communication policies of thousands of organisations? The experience I went through was wrong, out of control and hit the employees hard and without warning. Done within a controlled manner and for good reason - transparency and a “nothing to hide here” culture being just two - disclosing everyone's salary from CEO to the cleaning staff, could well have a positive effect on morale, engagement and employee confidence during the toughest of times.

Let me know what you think either by emailing me at james.bennett@melcrum.com or on Twitter either at Melcrum's Twitter feed or my own.

Comments

[Bay Jordan]

Salary disclosure can definitely lead to higher levels of engagement, but - as you say - it needs to be properly managed. There is no better example of this than Semco, where salaries are not only known, but are self-determined within a democratic process.

Semco is such a wonderful success story that it is apparently used as a case study in over 76 business schools. Yet no other organisation has adopted this approach. This certainly begs the question, "why not?" One can only assume that it is due to a combination of greed and/or self-interest on the part of those running companies.

Command-and-control management is said to have passed its sell-by date and indeed has ultimately to be unworkable in a democratic society, yet no effective replacement has been found. Semco provides a shining example of how it can be done, yet....nothing!

Government is chasing its tail looking for solutions to the bonus culture in banks, when the solution is quite simple. Legislate a maximum differential between highest paid and lowest paid in any organisation and you will end that problem and:
* Facilitate greater democracy in the workplace
* Overcome the engagement problem
* Improve all-round productivity levels
* Create greater social stability.

The old saying has it "Where there is a will, there is a way." The corollary to that is that is "if there is no way, there is no will!" That begs the question, "How serious is government?" Having seen how little respect they gave the Lloyds shareholders in the HBOS take-over, one can only conclude the conclusion is obvious - it is all political posturing.