Why are Salaries treated like state secrets?

It’s a golden rule in most Kenyan businesses that salaries must be kept secret. Except for a few heretics it is almost universally accepted that mayhem would ensue in the workplace if people knew what their co-workers, their managers or – gasp – the CEO was making.

Making salaries open inside a company instead seems like a wild idea sure, but it makes a lot of sense and
brings advantages for both the workplace and for its people. Read on to see why.

The case against secret salaries

There are three major reasons why secret salaries are silly:

• It frustrates employees because any unfairness (real or perceived) can’t be addressed directly.
• They’re not secret anyway. People talk, you know.
• It perpetuates unfair salaries which is bad for people and for the organization

Let’s look at each of these.

If Kimani over in Accounting is making twice a month than I am and the CEO is making 22 times what I’m making, then hopefully there’s a good reason for it – one that I as an employee am entitled to know and capable of understanding. So why are salaries treated as state secrets?

The main reason may precisely be that they’re not currently fair and therefore making them open seems dangerous to many workplaces. Maybe Kimani is making more than me, not because he does a better job, but because he drives a harder bargain when it comes time to negotiate salaries. Or sucks up to the boss. Or has some pictures from the last christmas office party showing the Director of Finance and an intern in… never mind. That doesn’t seem fair, does it? We can all agree, I think, that it makes much more sense to determine salaries based on people’s value to the company.

I have worked at two different companies where salaries were secret and guess what: They weren’t. Most people knew what most others were getting. In one company I consulted for, the IT department had even found the Excel spreadsheets HR kept the salaries in. They knew what everyone was getting.

And here’s the problem: If Kimani’s salary is (unfairly) higher than mine, and secret, I can’t complain to my manager about it because I can’t admit that I know about it. When a company sets up a situation where people can see the unfairness but can’t address it directly, or even discuss it openly, they’re rigging the system for maximum frustration.

Companies must attempt to pay their people as fairly as possible. You might think a company should try to pay people as little as possible, but companies who subscribe to that philosophy must be prepared to steadily lose all their good employees to competitors willing to pay people what they’re worth. A company must attempt to pay each employee a fair salary, ie. one that matches the employee’s skills, the market average and other employees inside the company. In other words, the company itself has a vested interest in keeping salaries fair, and keeping salaries secret makes that nearly impossible.

The case for open salaries

I believe on a very fundamental level that openness is better than secrecy, in life and in business. I’m not naïve enough to share all information all the time, but my chosen approach is “Let’s make everything open by default and only make those things secret that absolutely need to be”.