HR Myth #2 - "Divide and Conquer" or "You Get What You Negotiate". Many HR managers see it as their job to squeeze new hires on their pay and package. They see this as reducing costs and directly helping the bottom line of business. In some cases, they are incentivized to get good deals from new hires. This can be counter-productive. Once again, it is a cost accounting driven focus on cost.
In almost all companies it is directly against company rules to discuss what you - the knowledge worker - are paid with your colleagues. Why? Simply put, it is a divide and conquer strategy by Human Resources. They believe that by enforcing silence with a threat of summary dismissal, they will save the company money and reduce complaints from disgruntled employees. In a few companies, it is also illegal to discuss your pay scale grade with other employees. This is the ultimate in Big Brother style control because it theoretically prevents employees from learning that someone doing the same work is on a higher grade than them. HR believes that this enforced silence reduces complaints, saves the business money and makes employees happier.
Both Steve McConnell and Paul Glen (and I) would disgree with this. HR is thinking about a purely local optima - reduced complaints to HR. They aren't seeing the system as a whole.
Steve McConnell believes in total transparency in pay scales. We've heard a lot about transparency on this site recently. Well this is how Steve's company, Construx of Bellevue, WA, provides transparency in their pay process.
Salary Structure. We've found that an organization's traditional reward system must be structured to support [personal] professional development goals; otherwise, project goals will supercede [personal] development goals. ...
Our ladder levels have exactly one salary level at each level. The salary for each level and each employee's ladder level is public information within Construx. Employees have a tangible incentive to reach the next ladder level because they know the salary adjustment that will occur with that promotion. [McConnell, Steve, Professional Software Development, Addison Wesley, 2003, page 158]
Note that there is only one pay amount per level - no sliding scale. There is total transparency in the system, and as Steve describes elsewhere in the book, there is a publicly defined definition of qualifications for each level on their pay ladder. Every employee is able to judge whether another employee is fairly graded because they know them, they work with them and they will know their skills.
Paul Glen explains in Leading Geeks why Steve's approach is best. In the chapter, "The Essential Geek", Paul explains the elements of what he refers to as the geek psyche. One of those elements is "a sense of fairness". Geeks love and expect meritocracy.
Geeks are generally not captivated by money. ....
Their attitudes to money are much more tied up in their strong sense of fairness and justice. No one wants to be taken advantage of; everyone wants to feel fairly compensated for their value. The passion for reason combines with a strong belief in meritocracy to create an atmosphere where money is a primary measure of the value that one delivers to the organization. [Glen, Paul, Leading Geeks - How to Manage and Lead People Who Deliver Technology, Jossey-Bass, 2003, pages 40-41]
As a manager, I spend a lot of time balancing equity amongst team members. I make adjustments in pay to recognize contribution and to reflect the merit of the individuals. I often get into heated arguments with HR people. Why? Because I'm often trying to clean up the mess they make.
Software development IS a people business. The best way to exploit the people constraint is to keep them happy and well motivated. That is best achieved through a transparent, merit based pay scale.
