E-mail marketing firm iContact is open about its financials--except for salaries.
Co-founder and CEO Ryan Allis, 24, thinks disclosing salaries would be a huge distraction for the Durham, North Carolina, company's 140 employees and would eliminate management's advantage in the salary negotiation process. "Certainly for us, it would not be a good thing," he says. "It's fraught with the potential for difficulty."
He's not alone: Most U.S. companies remain secretive about salaries. But the secrets are leaking out via websites like Glassdoor.com, PayScale.com and SalaryScout.com, which let people post their salaries and learn what co-workers and competitors earn.
Betsy Ribera, vice president of marketing for PayScale, says bringing salaries into the light of day is good for everyone involved. "Having salary information is very empowering for employees, and it actually engages them more in their career," she says. "It helps them to start conversations with their employers about their career and where they want to go."
But total compensation is about more than a paycheck, and workers have different strengths, weaknesses and needs. "If you have two identical cars, they really are identical," says Bill Coleman, senior vice president and chief compensation officer at salary data site Salary.com.
"If you have two people doing the same job with identical resumes, they're not identical. People are not the same."
Employees--if they haven't already--will eventually show you numbers they found on Glassdoor.com and other sites. You'll have to make the case for what you already offer. Like most entrepreneurs who can't pay full market rate, Allis sells raise-seekers on the company's potential and the work environment. "It's the culture, the growth, the opportunity, the stock options," Allis says. "If you can sell them on that vision and dream, that's the kind of person you want." Sales at iContact hit $18 million in 2008.
Some companies are going a step further: The 11 contractors at Austin, Texas, organizational democracy platform WorldBlu know how much the others make. Founder Traci Fenton, 33, says being upfront about pay has made her workers more loyal and engaged. She also believes salary transparency will be the norm in five years. "This is the way things are going," she says. "You're only kidding yourself if you're not paying attention to this trend."
—By Chris Penttila.
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