Knowing what co-workers earn: some say office openness can be helpful

How much money does your neighbor at the office make? Do you wish you knew? Or are you a little afraid to find out? And are you ready, in the name of doing business in the sunshine, to let your neighbor know just what you make?

Times have changed since those uptight days when most people called their boss ''Mister'' and adults were not seen in public in shorts. The right to keep one's salary to oneself may be one of the last strongholds of privacy today.

Edward Lawler, a professor of management at the University of Southern California, who recently completed a study of wage secrecy, maintains that businesses would do better to open up on the subject of who earns what, or at least what job category earns what.

Some experts already see a modest trend toward more openness on pay; another sees the reverse. Either way, many businesses feel that close confidentiality on salaries prevents jealousies and misunderstandings among co-workers.

How much people earn is an emotionally charged issue, Professor Lawler agrees. ''Salary tends to be tied up with the worth or value of a person. I may be afraid to know what you make because if it's more than I do, that means you're a better person than I am.''

And it's sort of, well, rude to ask about these things, like talking about religion and politics; many people prefer not to let colleagues know what they earn.

But pay secrecy tends to make people overestimate the earnings of their co-workers, Lawler reasons.

''In the absence of factual data, people go on rumors and innuendoes,'' he says. ''Even with pay secrecy, employees are inclined to tell others that they got a raise following positive evaluations of their performance.

''If a job review is negative and results in no increase, they are more inclined to keep quiet. So it's easy for an individual to get the impression that others are moving up faster.''

Graef (Bud) Crystal, vice-president of the New York consulting firm Towers, Perrin, Forster & Crosby Inc., says openness in pay ''is a very good idea. It's like the biblical adage, Don't hide your candle under a bushel. If you've gone to the trouble to design an intelligent compensation system - and an awful lot of companies have - you should take credit for it. Nature abhors a vacuum, and if you don't give information, rumors will develop in the vacuum and your employees will think you're [cheating] them anyway.''

Employees who feel they are being discriminated against on grounds of race, sex, or age want clear salary information.

''We've fought what we call 'secret salaries' for years,'' says Janice Blood, the Boston-based public-information director for 9 to 5, the National Association for Working Women. ''People need to be told that if they're underpaid, it shouldn't be an embarrassment to anyone but their employer.'' The organization has encouraged members to discuss salaries with colleagues to get an idea whether they are being paid fairly. Company policies forbidding such discussions are ''an infringement of our constitutional right to free speech,'' Ms. Blood says.

''We checked with the [Massachusetts] attorney general's office, and they said if we found a bona fide policy [forbidding employees to discuss their salaries], they thought they could make a test case on this. But employers in the Boston area must have got wind of this, because we find it's no longer explicitly stated in those little books [personnel handbooks] they give you.''

Professor Lawler says that in companies where he has worked as a consultant, ''There is a flurry of interest at first when salaries are revealed, particularly if the company has had a history of secrecy, but then everything settles down.'' There has been no stampede toward openness on pay, he says, but rather, ''a gradual movement toward making more information public.''

Some companies have gone so far as to post names and salaries on the bulletin board behind the office water cooler, says Lawler, but that is going to extremes. Other companies have posted charts on which each employee is a dot, and each dot is marked with an indication of salary. Each employee, knowing his or her own salary, can then find out where they are in relation to other employees.

''At a minimum, a company should post a schedule of salary grades and indicate ranges and averages for each grade and average salary raises. That should be possible without infringement on any individual's right to privacy,'' Lawler says.

Ms. Blood argues that even with a posted salary schedule, some employees will still be in the dark. They may eventually find out that Grade G5 or Z17 or whatever doesn't mean what that nice fellow in the personnel department said it meant. Ideally, job descriptions, with grades, would be available to all employees, but, she says,accurate job descriptions are hard to come by.

Lawler estimates that half of US workers operate under open-pay policies - government workers, union members, top management of major companies, and employees of businesses that have adopted open pay scales.

Thus, the employees under pay secrecy tend to be white-collar managerial and technical workers - whose professional evaluations tend to be based on subjective rather than objective criteria. Hence the argument for secrecy: If Employee A is to get a 6 percent raise while Employee B gets 4 percent, because of the supervisor's definite but unquantified judgment that A gets more done than B, it's probably just as well to tell neither one.

But Lawler turns that around: ''I've found openness on pay forces the supervisor to be more accountable. If there are no objective performance data, then people should be treated similarly.''

In cases where it is clear to people within a department that A is more productive than B, ''My experience is that you don't get screams and complaints if one gets a bigger raise than the other. In fact, you get screams and complaints if that one isn't rewarded. We have a strong ethic in this country about rewards for performance.''