Hack:
Open the processes and the "books"

The systems are frequently indefensible.  
Although we have a desire for salary administration to be a meritocracy, base salaries are not performance based reflecting instead a number of factors including market conditions at time of hire, longevity, ability to negotiate and cost of living increases.   Systems grow and are “patched” over time, what may have once made sense no longer does.  In a command and control culture, information is secretive.   Managers feel a need to defend decisions and appear rational even when they know the systems are imperfect.  It becomes easy for employees to blame this lack of rationality on managers and deflect the difficulty of the situation and the need to manage their own fate.  Lines are drawn. Everyone has someone to blame and no one can discuss the broken system.  The emperor is, in fact, standing buck naked in front of us shrouded only in a veil of secrecy.  It is exactly this situation that prompted Susan, one of the authors, to suggest that a CEO open up his salary information.  His response was, “That’s a great idea and once I figure it out I’ll do just that.”  He never did.

Salaries and money are emotionally charged.
There is an old adage in the survey research field, never ask someone their salary until the end of the survey else you risk losing a respondent.  One of us has personally asked folks about some pretty intimate topics and got rather descriptive responses (yes, it was about sex).  Those same people when asked their salary hesitated, or said “that information is private”.

Why is openness about money so difficult?
Is it that we measure our self worth based on what someone else pays us? Or is it that money is such an unambiguous measure it reduces us to a single number, utterly betraying the “valuing of diversity and individual strengths” highlighted in many of our community of passion hacks.

In Your Brain at Work, David Rock describes how the human brain is attuned to status at a primal level: "A perceived threat to status feels as if it could come with terrible consequences. The response can be visceral, including a flood of cortisol to the blood and a rush of resources to the limbic system that inhibits clear thinking."  Along with status, the perception of fairness/unfairness also evokes strong responses from the brain's limbic system.

In most corporate environments, the strongest symbols of status often involve money -- who earns the most, and who controls the most. Just believing someone earns more money than we do can trigger a status response. Compounding this by a sense of unfairness - “hey, they don't deserve to make more” results in a double-whammy significantly impairing our interaction with both the high earner and anyone we perceive has contributed to this grave injustice.  

That's why opening the books needs to go hand in hand with a culture that supports open information, empowerment and common fate. Feeling part of something larger than ourselves feeds our souls, which in turn calms our limbic systems.  Research shows that in the absence of actual data, people judge the discrepancy between their salary and others to be larger than it actually is.  If everyone believes they share in part of the business’s success and failure their sense of status is increased (e.g. feeling empowered to do more than they could before). Along with that, if everyone's sense of fairness is increased (e.g. feeling that the allocation of scarce resources is based on shared principles and values), then passion is unleashed, and the company can build far higher levels of trust and transparency.

Why don’t we open up the financial systems?

Information is power.
By controlling information the old command and control leaders maintained power. Unfortunately they also made decisions without critical data and zapped employees of any sense of ownership for either the problem or the solution.  This hack addresses the power structure and the bureaucracy of organizations, both of which attack passion.

Those in power often assume employees will not understand financial systems.
Susan once worked with the largest employer in a small mid-western town, the kind of town where everyone knows everyone else. She begged her client to open up the “books” to the janitorial staff so they could manage their own costs.   Her pleas were met by a sincere belief that the janitorial staff would not understand and could not be trained to manage funds.  This was particularly ironic since, one of the “janitorial” employees, Jim, was the community’s best soccer coach.  Everyone wanted their kids to be on his team.   When asked if they thought Jim was capable of managing his household finances and team funds, they retorted “of course”.  When they saw Jim as a valued coach they had no trouble conjuring up images of competence.  Why then did they assume the same man could not understand the finances of janitorial supplies?  When the managers in this small mid-western town viewed Jim as the valued soccer coach they assumed he could manage his own budget, but when Jim was viewed as a janitor, all bets were off.