When Salaries Aren’t Secret (John Case)

Paper Case: When Salaries Aren’t Secret Source: John Case. May, 2001

By : Ahmad Fahmi Mubarok, Meichelani Pangaribuan Magister of Management, UGM. International Class – 1 !"ecuti#e $ %ecturer: &rof. '(amalu)in *nco+, &h.'

CAS S!MMA"#  *fter fter the the eml emloy oyee ee sent sent an emai emaill -hic -hich h )eta )etail ile) e) the the sala salarie ries s of (ust (ust aou aoutt e#eryone in the comany, the entire comany -as au//. Some emloyees -ere furious, others -ere shoc+e). he C! )i) not ta+e the act too seriously until later in the )ay -hen his reorting e"ecuti#es tol) him of the imact it ha) ta+en on e#ery emloyee. o heighten the rolem, ne-er emloyees -ere gi#en more money than there e"isting counterarts )ue to the tightness of the (o mar+et.  he core e"ecuti#es in the comany )iscusse) the issue i ssue in an eort to 3gure out ho- to )efuse )efuse the situat situation ion.. Se#era Se#erall sugges suggestio tions ns -ere -ere ma)e, ma)e, inclu) inclu)ing ing the osting of salaries for all to see going for-ar).

MA$% $SS! Ma+ing salaries transarency a#ailale -hile many other comany are not )oing so, ho-e#er has a)#antages an) )isa)#antages, as follo-:  he *)#antages: *)#antages:

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 ight (o mar+et mar+et – 4igher 4igher salary for emloyee emloyee -ho erform erform etter Salary information asically is alrea)y on cyersace. 5or starters, it

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-oul) )i6cult to +ee salaries secret  o  o treat emloyees emloyees li+e the usiness usiness eole

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 he 'isa)#antages: 'isa)#antages: •

Many eole -ill uset since they -ill +no- that they earn too little comare) to -hat others ma+e

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$a) 7eaction from many emloyess 8resign, salary increase

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re9uisite, etc 5airness is till su(ecti#e -ithin each eole

P"&B'M S(A(M%( 1. Shoul) ma+e the salary information secret to ecome a#ailale e ta+en;

A%A'#S$S &F S&'!($&% A'("%A($)S &rgani*ation as an open system rgani/ation rocess inut -ill )irectly imact the organi/ation outut y rocesse) through organi/ation system. $y consi)ering this concet, it -oul) e no longer -orry if salary information is )isclose) since an organi/ation coul) really imlement the concet that the outut has strong linear correlation -ith inut an) e#ery emloyees ossile to ha#e )ierence erformance that -ill imact the )ierences of their salaries .

%e+ payroll system

Comany shoul) starting using ay
"C&MM%.A($&%

 he comany shou+) change the system regar)ing salary calculation an) ma+e erformance as the most imortant in)ication to )etermine emloyee salaries.