When a former Google employee compiled a spreadsheet that contained salary and bonus information contributed by Google

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Question:

When a former Google employee compiled a spreadsheet that contained salary and bonus information contributed by Google employees, it got a lot of attention. Her intent was to highlight any pay disparities for women or minorities and help former colleagues gain fair compensation. Did she achieve her goals? Did she have the right to share the salary information? It depends upon whom you ask.

The document shows salary information for six of Google's pay levels but did not include executive salaries. Analysis of the information shows that for entry‐level technical positions, women earn an average of 4 percent less than their male counterparts. At mid‐career, the gap widens to 6 percent.

Google representatives claim that the information is distorted for a number of reasons. Based on their own analysis, female employees earn 99.7 cents for every dollar that male employees earn if important factors are considered such as where the employee is based, tenure at the position, and job performance. They get support from HR professionals that claim that unless everyone is asked to "share their resumes and performance evaluations along with their salary, you can't possibly know all the factors that may have impacted a co‐worker's compensation compared to your own."40

Google is a federal contractor because it sells advertising to the federal government and the Department of Labor was already conducting a routine audit. They had found systemic pay discrepancies against women and have asked Google to produce more pay data. Google claims the DOL already has plenty of data and doesn't want to share any more.

Although American culture considers it impolite and inappropriate to disclose one's own salary, we still speculate about what our coworkers earn, especially if the employer has a pay secrecy policy that forbids employees from discussing salaries. These are not uncommon, although they are mostly unenforceable. The National Labor Relations Act has protected the rights of most nonsupervisory employees and employees engaged in collective bargaining to discuss wages since 1965. Employees in government, public education (including universities), and many nonprofits have salaries posted publicly. So why do companies still have policies prohibiting discussing salaries? Some, like Google, are concerned that it might be misinterpreted, lead to morale problems or jealousy over the higher salary of a coworker. It could also cause problems if a competitor found out and was able to mount a "hiring attack" to lure away the top producers.

Another problem with pay secrecy is that most of us are really bad guessers at our own value and the salary of others. Although the top reason most employees give for leaving is "seeking higher pay elsewhere," a survey by PayScale found that most of us don't really know how our pay stacks up relative to the market or our own coworkers. For example, 35 percent of people who are paid above market value and 64 percent of those paid at market guess that they are underpaid and earn less than market pay. As a result, employees may start looking for another job based on a wrong impression of the fairness of his or her salary.

The flip side of pay secrecy policies is pay transparency. Recent evidence shows that it may offer benefits such as improvement in employee productivity and effort. Whole Foods has embraced transparency and shares both pay and performance information on their employee intranet. When asked why another employee earns more money, CEO John Mackey replies, "That person is more valuable. If you accomplish what this person has accomplished, I'll pay you that too."

Those fighting pay transparency may be fighting the tide. Websites like Glassdoor allow employees to share information about their employer, jobs, and salaries, anonymously skirting the pay secrecy policies for coworkers and job seekers.

Questions

Discuss how compensation laws apply to federal contractors like Google.

Which external factors would affect Google employee compensation?

How does job evaluation influence the six pay levels in the case?

In addition to base pay, explain how premium pay and variable pay might influence individual compensation at Google.

Google has employees located worldwide. What factors need to be considered in determining their compensation?

Research: Find information online about pay secrecy or pay transparency. What trends do you find toward or away from either policy? Which do you feel is most appropriate? What are the advantages and disadvantages?