Background

Integrity is for me the consistency between my words yesterday and my actions today, so consistency in both the time dimension and the action dimension. Entering a different culture can expose oneself to phenomena one does not understand. Then I am not talking about corruption in a Third World country, I am talking about something totally acceptable in another Western culture in the realm of secrecy and openness.

Title inflation

When talking to a couple of German friends of mine I recently found out that in the German labor market it is totally acceptable to have one job title in your contract and another on your business card. Often it is an agreement between employers and young, upwardly mobile employees that they may already call themselves a title where they are expected to grow towards. The new title is agreed in the HR system, which makes it formal enough for some. This phenomenon is applied worldwide in politics as well, think of the Undersecretary of Trade that may call herself `Minister` of Trade abroad. This ´vanity´ phenomenon usually is in vain since everybody uses it, but for formal purposes it works. That in the labor market employers would use it to ´reward´ employees with prestige that does not cost money is only a cynical thought, of course. To what extent it is just plain lying to represent oneself with a different job title than one formally has, is again a different topic. I wonder if an employee that has used such a technique in the past elsewhere would fail the integrity background test for job applicants to these companies?

Even more, I think that it is counterproductive. If these usually bright employees accept that practice, shouldn’t that disqualify them for the fast track? Some computer companies in the end of the last century rewarded their middle management with different color waste baskets.  Today, most people do not recognize the names of these companies any more. Or how Western explorers could buy land from the native Americans for some trinkets. Is that really a history a company wants to be remembered by?

Wage secrecy

Another German labor market phenomenon is apparently a clause that one needs to keep one´s salary secret. A thinly veiled threat that in another country not long ago somebody has been fired because of violation of that particular clause is apparently a common accompanying utterance. Reasoning behind such a clause is that wage information is supposed to be competitive information. How a single salary could be such except for that employee applying with a competitor I fail to see, but that must be a cultural deficiency in my case.

There are some additional questions one could ask these employers:

*does it make us hypocrites if we then ask that question ourselves when people apply for a job with us? So do they refrain from that?
*will we try to stop an employee for answering the question `What is your current salary` when applying for a bank loan?
*from multiple Germans I understand that this clause can not be upheld in German court, does that mean we consciously make ourselves look incredible? For what reason?
*this clause, one might say, also goes counter to many corporate values. In most of them I have recognized variations on ‘openness’, ‘transparency’, ‘credibility’,  ‘integrity’, ‘trust’ etc.

Finally, there is such a trivial thing as the UN’s Universal Declaration of Human Rights (Paris, 1948).  In it´s preamble it clearly supports the right of free speech, and in Article 19 even guarantees the right to express opinions and impart (`vermitteln`) information.  In Germany, there are already 121,368 employees disclosing their salary (anonymously) on Glassdoor.de today. Even though that is only 0.28% of the total workforce of 43 mn that is a significant number proving that ‘society in general’ does not share this viewpoint.

Interestingly enough, for DAX-listed companies this number is proveably almost 20% higher, to which one should add the employees of these firms that did so without indicating their employer. (See table below this blog. Whether the peak of 5% at Deutsche Bank is an indication of the recent turbulences there I will lead to others to comment on.)

The privacy-argument does not fly – even in Germany. There is a difference between the employer publishing salaries or an employee publishing her own. And even that argument has had it’s use but also it’s longest time. Where first the salaries of top management of listed-companies became public, soon followed by those of most American presidential candidates, transparency on this subject seems unstoppable. I am afraid that the current proponents of this policy against self-disclosure will be ashamed of it 30 years down the road.

Alternative

Let me offer a different way of approaching the subject of salary secrecy. The major danger I see in salary transparency is in a salary explosion. It would expose all of our mistakes in the past in allotting excessive pay – especially for underperformers.  And it would impose upon us the professionality of being able to tell an employee that she is less valuable to us than a colleague. And how much. Therefore, we already should prepare ourselves for this inevitable occurrence and act as if that transparency were already there. So properly evaluate all employees (e.g. like Salesforce did) because otherwise this will bite us in the tail in the long run.

Furthermore, as a leader I am not afraid of transparency on salaries. I would have no difficulty in hiring people with a statement along the lines of “We standard pay x% less than market salaries because of the value we offer to you working for a company with the reputation of ours”. The discount to market is the true reflection of our brand in the labor market and in my humble opinion a great way of measuring the added value of HR. Whole Foods Supermarkets has been publishing salaries internally since 1986. Some companies like Buffer now openly publish their full list of salaries worldwide, I predict more will follow. This transparency is only possible if you have nothing to hide. Which would fit nicely with the values of most of us, wouldn’t it?