Why are Salary Ranges Secret?

Last Updated Nov 9, 2010 5:29 AM EST

Dear Evil HR Lady,
I am baffled by my HR manager's refusal to tell me the salary range of my current job. He also won't tell me the range of the two jobs that I am interested in pursuing. Is this strange to you, or is this normal practice? I cannot understand how to decide if a position is worth the effort of pursuing if without know the salary range. I also cannot determine if my current job is worth remaining in without knowing where I fall within the salary range. Is there something fishy going on here?
I'm baffled too. All right, not totally baffled. There is a school of thought that says "employees are too stupid to understand anything about salaries, so if we tell them where they stand or what someone else makes all they'll do is whine to us, so let's not tell them anything." It's a pretty poorly named school of thought, but that's appropriate because it's a pretty bad idea.

Here's my crazy theory--let's be more open about salaries. Yippee! Why would we want to do this? Because (theoretically) we are working with adults. Adults should be able to handle this type of information. In fact, adults understand that not everyone makes an identical salary. They also understand that bosses make more than their direct reports. Why do they understand this? Because we're no longer in second grade. If they don't understand this, it should be explained once or twice and if that doesn't work, they should be encouraged to seek employment elsewhere.

I totally agree with all your points. I think you should know what the salary range is for your job and all jobs at your company. And lest I make high ranking people shake in their boots, I'm okay with a general "executive" level pay range for those who are too special to be bound by common convention. Here's how it should be:

Every job has a range. This range should be determined by market data. If you go to someplace like salary.com, and put in your title and zip code they will give you a range and a graph. (Of course, this graph will only be as good as the data that goes into it. I haven't generally found it to be too accurate, but it's better than nothing.) It will look like this:

Most companies want you to be close to the middle. They don't want to pay you too much, because they could get someone cheaper, and they don't want to pay too little because you'll head out the door.

Your Compa-Ratio determines where you are in that curve. You would think you'd say you were at the 50th percentile if you were in the middle, but you'd actually say you're at the 100th percentile. We call that the midpoint. To figure out what your compa-ratio is, you take your salary and divide it by whatever the 100th percentile salary is. In this graph, the midpoint is $82,536. If your salary was $75,000 we would do $75.000/$82,536 and say that your compa-ratio is 90.8 percent. If your salary was $95,000 your compa-ratio 115 percent.

Your eligibility for raises is determined partially by that compa-ratio. As I said, companies want you near the middle. If you're significantly below that, you'll be eligible for a bigger raise. If you're too far above midpoint, you'll be eligible for a lower raise, or no raise at all.

If your company won't tell you what those midpoints are there is a problem. Or multiple problems. Here are a few of the things that may be going on:


  • They are substantially underpaying people--and they know it.
  • They haven't benchmarked their job descriptions to others in the same area/industry. There are many companies that will do that for you, but it's expensive.
  • They don't have actual salary ranges and are just flying by the seats of their pants.
  • Their salary ranges are so outdated as to be useless
  • They are just information controllers and don't want the "little" people to know.

Here's what I would do in your situation: Ask your boss. Theoretically, since your boss is in charge of determining your raise, the HR department should have given him some idea of what the rules were around it. If he can't tell you, then I'm guessing incompetence on the part of the Human Resources people. As for the jobs you wish to apply for, it's a little awkward to call up a potential boss and ask the salary range, when that should really be on the job posting. (And if not the actual range itself, then something like "This is a Grade 7 job." Then you know you're in a Grade 6 job, so it would be a promotion.)

You can gather some idea of what your compa-ratio should be by researching your salary. But, honestly, there's no good reason why HR shouldn't have open policies about how salaries are determined. If no one will reveal the relevant information, you either have to live with being in the dark, or look elsewhere for employment. Ask yourself if you're making what you feel is appropriate. If that answer is yes, then take a deep breath and go on. It's not ideal. In fact, it's yet another example of HR people who are trying to give the rest of us a bad name.


Photo by left-hand, Flickr cc 2.0


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