Tuesday, April 14, 2015

Why are salaries confidential?

Because no rating method can withstand the simplest test of justification.

And because they are confidential, salaries end up varying wildly for the same job and responsibilities. And because they vary wildly, all the more they must now be protected even more strongly than ever.

We often hear beautiful corporate motherhood statements about compensating everyone fairly. When it comes to the crunch, when a post has to be filled urgently, or a great negotiator comes along, such claims are thrown out of the window. So the disparities compound with time, and it's now a total jungle.

Would totally transparent salaries work in a free marketplace? No, unless there are objective ways to measure a job and performance. There are none now, not even for a factory line worker churning out iPhone parts.

Do not be surprised if one day you discover you are paid twice your colleague sitting next to you.

In the inequality fair? Try Matthew 20.

Not all businesses are created equal

There are easy businesses, and there are difficult businesses.

Google (ads) is easy. A local car dealership is tough. Selling insurance is even tougher.

Again, not all car dealerships are created equal. Some may be located in a rich town.

Easy businesses bring in easy money. Some employees get unlimited free meals, free gyms, free concierges to walk your dogs, generous health care plans, and so on. Others get nothing, and sometimes their wages are paid late.

You can tell how difficult a business is from the number of complaints about unscrupulous practices. Tough business are driven to use "creative" selling methods.

Of course, the greed of some shareholders or incompetent management distort my hypothesis, but in general some business are just easy and some simply tough.