No Salary Secrets At One Vermont Manufacturer
Most of us who work for a business appreciate some openness about how the company is doing and how decisions are made.
But how would you feel if everything in the workplace was out in the open – including your salary and those of your co-workers?
One Vermont business says that approach leads to a more engaged and productive workforce.
There’s nothing particularly remarkable about the manufacturing area at Logic Supply in South Burlington, although their product is unusual.
The company designs and makes computer systems for rugged environments. Many are used in manufacturing, but some find their way into very remote places; for example, a computer that operates inside a mining drill three miles down.
What is most unusual about Logic Supply may be the policy of complete transparency.
The most obvious indication is the workplace itself: No offices or cubicles for anyone, including the executives. Just open spaces with desks arranged to minimize distractions from nearby conversations. The layout creates a more collaborative working environment.
But there’s a more striking example of the company’s policy of openness: What each employee makes is known to everyone who works there.
Roland Groeneveld, who co-founded Logic Supply with his wife, Lisa, says it’s true that sometimes employees complain about a co-worker's pay.
"People come here and we pay them a substantial salary because of their background and the role they have. If those people don’t perform at the salary they're being paid, I get people coming to me immediately and saying, 'Hey, what's going on here?'" - Roland Groeneveld, co-founder of Logic Supply
“This happens! People come here and we pay them a substantial salary because of their background and the role they have. If those people don’t perform at the salary they’re being paid, I get people coming to me immediately and saying, ‘Hey, what’s going on here?” Groeneveld explains.
Groeneveld says there may be complaints, but the overall effect of sharing salaries is positive.
Human Resources Director Mark Heyman says employees understand how their salaries are determined and are less concerned about what others are paid.
"Everybody assumes because we're open salary, that leads to people talking at the water cooler and gossiping and what not. My answer is, 'No, it's the other way around. That's what happens at your company because people don't know.'" - Mark Heyman, human resources director at Logic Supply
"Everybody assumes because we’re open salary, that leads to people talking at the water cooler and gossiping and what not. My answer is, ‘No, it’s the other way around. That’s what happens at your company because people don’t know,'” he says.
The pay transparency policy at Logic Supply doesn’t exist in a vacuum.
It’s part of the overall culture of openness that runs the gamut from the no-cubicles work space to sharing all of the company’s financial information. Above all, communication is encouraged about everything that happens within the company.
“We want to have the conversations that the rest of the world considers sticky or uncomfortable,” Heyman says. “We don’t run the company by committee or consensus, but people can disagree. There are plenty of times when we can have a lot of good, constructive conflict and we like that.”
The company’s policy of transparency does not run on auto pilot. Heyman says keeping salaries fair company-wide involves a lot of discussions and meetings.
Logic Supply’s work environment isn’t for everyone. The company takes pains to vet candidates to make sure they fit the culture. And the vetting works both ways.
Whitney Leighton, who joined the company’s sales team late last year, says she spent a day at Logic Supply before she was hired, to see how the open workplace felt.
As far as checking on her co-workers salaries, she hasn’t bothered to do that yet. “I feel like because it’s so open, it becomes a non-issue. I have the opportunity to find out what my co-workers are making but I’ve never felt the need to,” she says.
"I feel like because it's so open, it becomes a non-issue. I have the opportunity to find out what my co-workers are making but I've never felt the need to." - Whitney Leighton, employee at Logic Supply
In Leighton’s case, Logic Supply’s transparency extended to the application process. She says the company’s job interviewers debriefed right in front of her.
Logic Supply feels its approach leads to greater employee engagement, productivity and support for the company.
Not everyone is sold on the idea, including Aine Donovan, who teaches at the Dartmouth College Tuck School of Business and directs the school’s Ethics Institute.
She says salaries shouldn’t be a forbidden topic: It’s a red flag when a boss asks an employee not to discuss salaries with other employees. Donovan also feels it’s important that employees know what a company’s top executives are making. But she questions whether it’s good policy to share the salaries of all employees.
“I think in some ways it can be a huge disincentive to the workforce,” says Donovan. “Even here at Dartmouth; we’re not a business but in a way we’re a business. People negotiate for salaries. I think most of us as professors at Dartmouth would not like that to be transparent.”
"I think in some ways it can be a huge disincentive to the workforce ... I think most of us as professors at Dartmouth would not like that to be transparent." - Aine Donovan, professor at Dartmouth College Tuck School of Business
Logic Supply’s transparency policy has been part of the company’s DNA since the beginning. And it was partly a result of past experience.
“I worked at a company where I realized I was being paid tens of thousands of dollars less than people who were doing the exact same job, and it was demoralizing,” says co-founder Lisa Groeneveld.
Bettina Deynes, vice president of human resources and diversity at the national organization The Society for Human Resource Management, says it would be very difficult for an established company to adopt a policy of salary transparency, but it is an option for some start-ups.
“I think in some industries, especially in high-tech industries, this is something that is becoming more of a common practice. Also, when you have low numbers of employees, less than 50, it is very doable,” she says.
Logic Supply currently has 70 employees, but it is expanding, and the company is aware that growth will present challenges to maintaining transparency.
Openness comes in many shades and many other businesses strive to share information and to create a collaborative workplace where managers aren’t cloistered behind office walls.
Gardener’s Supply in Burlington has 230 employees. As a worker owned company, it shares financial information with them, but salaries remain confidential.
Chief Operating Officer Cindy Turcot says salaries are based on a complex calculation that weighs an individual’s experience and skills, along with the market value of the position.
The complexity of salary decisions is why the company’s transparency doesn’t extend to individual earnings. “That’s hard for employees to grasp or understand, and because it's personal, everybody thinks they are worth more. We just feel like it’s not something we’re comfortable sharing,” says Turcot.
According to a survey conducted last year by the online jobs site CareerBuilders, 53 percent of businesses polled viewed pay transparency as a bad idea, largely out of concern for jealousy and morale issues.
But there was even greater disapproval among workers themselves, two-thirds of whom said they didn’t approve of the idea.