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When Salaries Arent a Secret

In: Business and Management

Submitted By msha
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Case Analysis: When Salaries Aren’t Secret

Case Summary
RightNow!, a retail chain specializing in women’s clothing, led by
◦ Hank Adamson as CEO. ◦ Charlie Herald as the VP of HR and ◦ Harriet Duval as the CFO.

Someone exposes the salaries of all 165 employees via email. Since RightNow! Was exapanding fast, they hired people at a wide range of salaries; making the new salaries disparate from existing ones. Immediate reaction of employees - comparing each other on the basis of pay. Several started contacting HR to discuss disparity in pay. Charlie and Harriet come up with two opposing views on how to handle the situation. Hank must decide what to do.

Charlie’s View
Opened Pandora’s box and facing possible resignations and lawsuits. Need to turn this into a positive result. Keep salaries public henceforth.
◦ No need to have extra security and secrecy built around salaries. It might happen again anyway ◦ Most people share what companies pay online anyway ◦ Employees will self-correct pay disparities ◦ Fame to RightNow! Because of this policy

Harriet’s View
Short-lived gossip and furor which will pass soon. Disparities in income are present in all companies. Cant spend time explaining to each employee why they earn more/less than someone else Since the cat’s out of the bag, the company should revisit pay disparities and conduct review. Beef up computer security to avoid future incidents like this

Commentator’s Advice - Victor Sim
Exposing incomes would lead to breach of privacy Loss of ability to compete for talent as competitors can easily poach employees knowing how much to offer them Hank needs to acknowledge disparity in come to employees Establish new compensation system with pay grades and range for each grade. Use employee inputs Do “Value Hiring”: Talent that’s ready for the position but doesn’t get paid at that level yet

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