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Thursday, December 18, 2008
Salaries Are In The Open
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 likeGlassdoor.com,PayScale.comandSalaryScout.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 siteSalary.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 onGlassdoor.comand 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."
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FOX Translator
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It's time to let you in on a dirty little secret: You may not own the stock you own. That's right, if you invest with a brokerage firm, the shares you bought are almost certainly not held in your name. Technically, they're held in the name of the Wall Street firm you do business with, hence the term "street name."
No, you haven't been robbed. Ultimately, the decision to hold shares on the books under a different name doesn't affect the economic ramifications for you. You¿re listed as the "beneficial owner," even though the firm is the official owner of the shares. But, you are giving up some rights, and investors concerned about good corporate governance might want to get that stock back in their own names.
Here's the problem: If your stock is technically owned by, say, Merrill Lynch, then Merrill Lynch gets to do things with it that might work against your wishes. Take short selling. Investors who want to sell shares short need to first borrow those shares. The lenders are often the big Wall Street firms that are handing out Street-name shares. So, if you feel that a company you own is a victim of aggressive short selling, chances are your own shares are being used to fuel the shorting.
Also, your brokerage firm can cast ballots on some corporate matters affecting a company without getting your input. Technically, this can only happen in votes considered ¿routine¿ by securities regulators. But, there's a big catch: some big events, like board elections, are considered "routine" under law.
The good news is that you can easily fix the Street name problem: Just request that your brokerage firm makes you the listed owner of the shares. If they refuse, find a new firm.
