Why is Communication Around (Work) Promotions / Salaries So Bad?

I was having two separate conversations with my friends this week, and both were complaining about recent challenges around promotions, In both cases, their managers had assured them that a promotion was in the offing, and that it was merely “paperwork” that remained before it would be processed. In both cases, promotions were delayed for these employees, engendering cynicism in an otherwise productive relationship.

Another friend of mine recently discovered that he was being paid significantly lower than other people at the same firm with the same experience and job title. Not a small pay difference, but something on the order of 40-50% of salary. When he checked around with colleagues, it seemed that others had worked harder to negotiate better bonus structures over the years, since their base salary rate was roughly the same. Since he hadn’t re-negotiated in three years, his salary had fallen massively behind.

In all three of these cases, people were good workers, but terrible communication from their respective companies has massively diminished their enthusiasm for continuing their careers. In fact, all three emphasized the need to move on to other firms, since it seemed that the best way to move forward in their careers would be to negotiate their salary with a new company. What a loss for their current employers, who will see valuable talent walk right out the door.

There is a bit of a zero-sum conversation that happens around promotions and salaries — companies can promote this person or this person, or raise one salary and keep the other level (to maintain the same budget). We rarely get out of this box to ask why we are having this conversation in the first place.

Two thoughts come to mind here. The first is that there needs to be better processes, probably baked into software, that would enforce best practices around setting expectations as well as ensuring that company executives follow through on promises they make to their employees. When a salesperson is told that they will get promoted if they hit $1m in earned revenue, then they earn that revenue only to find that the new bar is $1.5m, companies shouldn’t be surprised that they walk right out the door. Software could hold everyone accountable — what was said, when, and what are the benchmarks?

The deeper question is around transparency. Should salary information within a company be public? This has sparked very interesting conversations among friends of mine, with very polarized opinions (although no real discernible pattern from what I can tell on who wants to disclose and who doesn’t).

The biggest argument in favor of transparency is that your employer already has the salary data for everyone in the organization, and so they hold a disproportionate information advantage that benefits them in any salary negotiation. Providing even anonymized figures would vastly help individual employees understand more about their salary environment and how their pay compares with others. This might also help with the persistent male/female wage gap.

The most consistent challenge to transparency comes from a certain type of employee who believes they are getting a “good deal” — they usually argue that they worked harder than others, have a higher salary, and therefore worry that transparency would force them to disclose their success and cut their salaries to match everyone else. You might call this the “Lake Wobegon” argument.

The issue is that no one knows — without data of course — how they are stacking up against other employees. Even the person who thinks they have the highest salary might be surprised to learn that the quiet worker by the window is actually doing significantly better.

I would put my weight behind some sort of meaningful level of transparency that also broadly protects the privacy of individuals. This could be done through internal salary bands, anonymized disclosure of salary package details, and market comp data to ensure that everyone has good information on where they stand. This has to be well-thought out, but ultimately, will reduce challenges around salaries.

Beyond that, I think there has to be some better thinking around building network organizations versus hierarchical organizations. Titles are important … because titles are important. We have built organizations where we have these weird reviews every few months to years that determine whether you add the word senior to your title. Isn’t this weird? Why can’t someone move up, down, and sideways across the org over time as needs, interests, and time commitments permit? In other words, how can you separate title and pay more dramatically? Is there a way to mitigate the Peter Principle?

I don’t necessarily have answers to these questions, but I do know that my very much millennial friends are chafing from bad communication from their managers and corporate leaders. Let’s get more creative around these processes, and maybe in the process build a better organization to boot.

Photo by Richard used under Creative Commons