Business Unusual

What would happen if all salaries were public?

We know what the President earns (R2.75 million) and we know what the minimum wage is (about R10 per hour depending on the industry). We know what CEOs earn but, for most private sector jobs, salaries are not only not public they are confidential. Disclosure could result in you being fired.

This week, two companies have tried something unusual.

Gravity Payments $70k minimum wage

In April Dan Price became a hero and villain when he announced his company would raise the minimum wage at his company to $70 000 over the next three years, affecting 70 of their 120 staff.

To workers, it may be the start of better wages for everyone. Bor bosses, it was potentially new costs that would kill their business.

Paul Keegan's comprehensive piece for Inc. tracks how Price came to make the decision and how it has turned out after six months.

Despite some saying it would be a failure, indications are that it is working so far.

Price wanted to get his staff as happy as he could to get them focused on their work. A study on what made staff happy found that money increases happiness up to $75K a year or, rather, it reduced unhappiness. After that money would no longer have as great an impact.

He noted that his low paid staff were not happy and thought he would try to apply the finding of the research. It meant him reducing his own salary from $1.1 million to $70K too and significantly increasing the salaries of over half his staff.

FOX and other conservative media outlets are not fans of Price, although they found it hard to not see that the idea would be great if it worked.

Is $70K a lot of money in the US?

America has a federal minimum wage of about $14 600 per year. The median wage is $26K while 66% earn less than $41K.

So, a $70K minimum for all staff at a company is a significant increase.

However, the salaries for top earners can be massive mostly from stock options but cash salaries can be upwards of $5 million. To be considered part of the top 1% of earners in the US you would be earning $250K.

The salary of every staff member at Buffer is public

This is the spreadsheet for the salaries for all the staff at Buffer, a social media posting company with 2 million users. They explain what the salaries are and how they determine it to show commitment to their values.

They have 10 with positivity and and hapiness ranked 1st and transparency ranked 2nd.

The principal of openness and transparency is a big element of the online world so it might not be so surprising that this is being implemented at tech companies.

An NPR podcast offers another insight about public salaries.

They interviewed the CEO of social analytics company SumAll who previously would negotiate the lowest rate with staff and said that the biggest reason for the big differences in salaries was in large part down to their ability to negotiate. That is in effect a power relationship and in South Africa, given our past, it goes some way to explain how typically white male bosses would get black and female staff to accept salaries that would perpetuate the significant discrepancies in SA salaries.

SumAll listed four benefits of public salaries; equality, motivation, reduced turnover and trust.

While business has relied on a variety of factors to succeed in the past, it would appear that in future the most significant asset a business will manage is trust and hopefully that will no longer make a business unusual.

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