Both are reasons to keep salaries secret. The information advantage helps in negotiations with employees. Also, the secrecy prevents anger over comparisons. It seems unneccessary to me. Why not just pay people the same for each position, with merit bonuses for those who exceed/excel.
I'd like to agree with 'Why not just pay people the same for each position' but to play devil's advocate, off the top of my head:
* not all people in the same position are equally qualified
* reducing the difference to bonuses might mean a lot more overhead
* salary might cover for things other than just competence, i.e. Alice and Bob are equally qualified, but you hire Alice out of college while Bob already had a well paying job
I wish there was enforce transparency about salaries but I'm not sure all of them can be just leveled to position+bonus.
Joel Spolsky had an interesting approach to this, a more complex formula but still public and consistent for all employees:
True, you may want to adjust for say, years of experience. Although if that was transparent.
For instance, Dev level 2 makes 100k with 10k additional per every 3 years professional experience - you have differences amongst the staff but less room for people to complain about the variances.
The point is, salaries are not arbitrary, which is the basis of the anger when staff compares against their peers.
> Why not just pay people the same for each position, with merit bonuses for those who exceed/excel.
Because people aren't cogs and they all function at different levels of productivity.
I've literally never worked with anyone who I would consider to be of precisely equal value to me. Everyone else has been either more valuable or less valuable, by a tune of at least a few thousand dollars annually.
Fixed salaries prevent paying people by their value and instead mandate a rigid adherence to "years spent" and "grades." I would literally never work for a company with fixed salaries.
How do you measure that? In most teams I've been involved in, the entirety of the team suffered with the weakest link. My 'merit' was tied to the efficiency of poor team members. A colleague of mine (different company) was on a team with about 15 others in his dept - 60+ folks in all. The daily incompetence he described was rather high, but not surprising when you have non-tech folks making tech decisions. I said "hrm... perhaps people would be motivated to care/do more and improve if they got some sort of profit sharing bonus". He said "WE DO! My bonus continually gets eroded because we've got incompetent do-nothings who continually shoot down progress" (paraphrasing).
I don't particularly want a large/variable portion of my income to be that tied to situations that I have that little control over.
