What’s fair in compensation?

2009 June 25

A friend recently brought up issues of compensation and fairness, and it reminded me of Fog Creek Software and their much-discussed compensation policy:

In the interest of fairness, Fog Creek’s compensation policy is open, public, simple, and accountable. Many companies try to obfuscate the rules they use for determining compensation in hopes that they won’t get caught paying some people too much and others too little. Some companies actually consider it a firing offense to reveal your salary!

We feel that in the long run, this can only hurt us through negative morale, high turnover, and destructive office politics. Therefore, the policy in this document is publicly available. People have a right to know what the levels are and what they mean. Everybody has a right to know what their colleagues’ levels are.

It made me wonder what the Corporate Idealist crowd has to say about that approach. Your thoughts? Please share in the comments.

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One Response leave one →
  1. 2009 June 30

    Wow! It’s hard to imagine how different the work world would be if all employers took this approach. I see definite healthy benefits. Transparency is a good thing. I wonder too if it might hurt employers’ flexibility in employee retention due to disagreements about the policy and how it is applied. Would there be disputes that might drag on the organization? Then again, if so, it might be best for the company if those employees went elsewhere. Kudos to Fog Creek for stepping out. I’ll be interested to follow the results.

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