This paper perfectly demonstrates two HR axioms I have observed in a 20 year tech journey from IC system engineer to retired unicorn CTO:

1. Total compensation varies obscenely within the organization. It correlates moderately with intelligence and in no way with effort. Some of the most useless articles you work with make the most money.

2. Leadership really, really, really does not want peers sharing compensation info. I have been offered seven figure equity boosters on the condition of absolute confidentiality. This is the “efficiency” metric of the linked paper. If it is hard for leadership to distribute compensation in ways that would be seen as non-meritocratic, they lose an enormous amount of power over the management team.

Sunshine is the best disinfectant.

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Aurornis 6 hours ago | parent | next [-]

A lot of big companies outside of tech already do have semi-transparent pay structures, plus or minus some wiggle room within pay bands.

My wife works for a very large company that you've heard of. Everyone is assigned a pay band that corresponds to their title. Everyone can go on to the portal and see approximately how much someone else earns (within a narrow range) based on their level and geographical location.

It hasn't brought compensation up. If anything, it has kept it down. My wife was objectively underpaid for a while and on the verge of leaving, but HR wouldn't allow higher pay because it didn't fit the band. They pointed to her peers and showed that they were earning the same amount. Eventually she did an end-run around it by transferring divisions and getting promoted to another level, but it would have been so much easier for everyone if her boss could have just given her a raise even though it violated the pay band.

I have friends who work for the local government including the state run university. There is a website where anyone can go search for their name and see exactly how much they were paid per year, down to the penny. Having browsed the website I can say it has not resulted in higher compensation, as they're all paid surprisingly little.

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jandrewrogers 6 hours ago | parent | next [-]

> everyone is assigned a pay band that corresponds to their title

Hilariously, some big companies work around this by having several entries in the HR systems for a single official title, each with independent pay bands, since the title was not required to be unique within the database. I remember one company had around a thousand different independent entries for a much smaller number of technical titles accumulated from making individual exceptions.

Even if someone had the same title as you on the same team, there would be no correlation with pay bands. They liked to use this to hide the fact that new hires were being paid significantly more than people that had been hired a few years prior.

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crmd 6 hours ago | parent | prev | next [-]

Yes but in the large companies I’ve worked for (IBM, for example), equity grants exist outside the band structure and are negotiated on a case by case basis.

You can get life changing amounts of money by being offered a strategic project and asking for a huge option grant as a bonus if you deliver.

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awesome_dude 5 hours ago | parent | prev [-]

> Everyone is assigned a pay band that corresponds to their title. Everyone can go on to the portal and see approximately how much someone else earns (within a narrow range) based on their level and geographical location.

> It hasn't brought compensation up. If anything, it has kept it down. My wife was objectively underpaid for a while and on the verge of leaving,

Can you expand on this because it's not making any logical sense.

Is the company underpaying everyone with that title, is her work not in line with her title (as compared to other employers), or is there something else (I'm hesitant to call BS, but there is a tendency within these types of conversations for people to invent scenarios to try and portray some sort of political narrative - for the left and right)

	▲	surgical_fire 4 hours ago \| parent [-]
		> I'm hesitant to call BS I'm not - it is bullshit. If she earned the top of the band, she was by definition not underpaid. She in fact earned more than every other employee that was not top of the band. She might have wanted more money for what she was doing (and it has my sympathy, I too like more money). But the solution was to either be promoted - which she may not have wanted, and I am sympathetic to that, I also don't enjoy promotions - or to move to a company that paid more for that role.

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jandrewrogers 6 hours ago | parent | prev | next [-]

I don't have a ready link but the economics literature pretty consistently finds that compensation transparency compresses wage ranges but also reduces the median wage. This would seem to indicate that it makes the majority of people worse off.

The other issue is that the majority of people think they generate more value than they actually do. This is the "almost everyone believes they are above average" phenomenon that consistently shows up across a diverse range of domains. People are usually happier when such beliefs are not publicly challenged on a regular basis.

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supriyo-biswas 6 hours ago | parent | prev | next [-]

There's a now deleted comment that touched upon some of the issues on making compensation information public; I have very similar views as above so I'll write my own:

1. There are skillsets/capabilities that the organization finds difficult to get on the market, as well as brings disproportionate profits to the organization. For example, a database company may need to hire two software engineers, one writing CRUD apps or infrastructure automation, and the other one for distributed systems implementation. In such a setting, while both people's titles may say "software engineer", the reality is that one is paid much higher than the other, both because the database is the bread and butter for that company, while the CRUD/infrastructure thing may be a very small part used by an internal team or by a few customers.

2. People usually like to believe that they're at least better than average and bring the same level of contributions to the team. This is most definitely not the case, and an engineering manager, VP, sales manager who simply appears to talk to people all day long may actually have important contributions such as overseeing key projects, talking to customers etc. which may be the thing that the company needs to lock that large sale or prevent customer attrition, or whatever the case may be.

People will often jump to favoritism or bias or another explanation, and in some cases, they absolutely do happen. But that is not the only explanation, and without data to distinguish between the two, people will gravitate towards the uncharitable interpretation, which allows them to paint themselves in the most positive light.

	▲	crmd 6 hours ago \| parent \| next [-]
		That’s a very good point you make. In that spirit, I’ll also restate my original comment in a way more charitable to CEOs: When you factor in trust and leadership/persuasion skills, which are typically misunderstood and undervalued by orders of magnitude by junior staff, compensation structures are highly meritocratic. It’s the perception part that creates the headaches.
	▲	awesome_dude 5 hours ago \| parent \| prev [-]
		> People usually like to believe that they're at least better than average and bring the same level of contributions to the team. This is most definitely not the case, and an engineering manager, VP, sales manager who simply appears to talk to people all day long may actually have important contributions such as overseeing key projects, talking to customers etc. which may be the thing that the company needs to lock that large sale or prevent customer attrition, or whatever the case may be. As an engineer I have constantly heard throughout my career complaints that "We make the product, without us the sales wouldn't have a job, so we deserve better compensation" To which I have always replied - speaking as an engineer, I struggle to sell a product, and I have seen multiple products that were technically superior to their competitors fail (Beta vs VHS!) - sales and management are vastly more important than engineering.