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Knowledge is Power

We read a lot of articles posted by FI bloggers before we decided to start our own blog.  One thing we noticed was that there was definitely a divide in the FI community on one specific question; do you share your real numbers when writing about your journey?  I can definitely understand why folks are cautious in sharing their real numbers.

In the United States it’s very taboo to talk about wealth and income with friends, family and coworkers.  In my opinion, this core belief is not to the benefit of the average person or family.  This belief system does however benefit one entity extremely well; your employer.

The party with more information will usually have the more favorable outcome in any negotiation.  It’s in a company’s best interest to keep employees salary information a secret.  This is what your employer knows:

  1. What you have made for your entire career at your company
  2. What everyone who does a similar job as you makes at your company
  3. What a new hire will make if they were to do a job similar to yours at your company
  4. What their competitors are willing to pay someone to do a job similar to yours

How much information do you have that your employer doesn’t have?  It’s not a level playing field to start a salary negotiation. 

The goal of the company is to profit.  Each employee is a value proposition.  Do they generate more value than it costs to compensate them?  If they generate far more than it costs to compensate them then this is great for the employer, not so great for the employee.  If you are the sort of employee that generates less value than it costs them to compensate you, watch out!

Luckily today, the Internet exists and there are tons of sites that will help you figure out salary ranges for your specific field and for your location.  This is a great start in shrinking the information disparity.  I couldn’t imagine negotiating without these resources.

Always remember that knowledge is power.

When you start moving up in the ladder, the income disparities between workers that you suspected to be there are confirmed.  When I first became a manager, during salary reviews for several years, I discovered that I was paid less than the employees working for me.  I was a young manager and my employees were long service employees at the company.  I was able to use this fact to argue my way higher with my own boss.  But additionally, I would argue that the folks working for me weren’t making enough for the value they were bringing to the company.  They were producing applications that would make hundreds of other employees more efficient at their jobs, saving thousands of hours per year.

I would like to think that I’m not unique as a manager, and that most managers will fight for their own people when they see someone undercompensated.  Unfortunately, it’s very difficult to know if your boss is fighting for you because you typically only get a raise once a year during “HR Season”.  You don’t really know how your raise stacks up against others in your group performing the same function as you.  You have to take the word of your boss; because you aren’t supposed to talk about salary with others (thanks society).  Imagine what it would be like if everyone’s salaries in the company were published on an internal website.  It’s very easy to figure out who the folks in your department are that provide the most value to the company.

Would you be surprised to find out that they might be compensated the least?  You don’t know because it’s all a secret.  A high performer could be blissfully unaware that they are making less than the “team jerk”. Trust me, it happens. 

I can imagine what the world would be like if it were transparent because of a legendary incident at my company.  Almost 20 years ago before we had an internal site that people could use to look up office phone numbers, an administrative assistant sent out a monthly spreadsheet in Excel to 200+ people in a single department.  People would download the attachment, and print it out and hang it on their wall of their cube (yes it was the Stone Age).  Well… one day, shortly after this spreadsheet was sent out to the entire distribution of 200+, a panicked email followed:

“Do not open the directory file.  It was sent in error.  Delete the email immediately.  Failure to comply will result in disciplinary action”

So obviously, many did not heed that warning and instead did a deep dive into the file to figure out what was wrong with it.  At first glance it looked like every other file sent before it; a list of 200+ employees with their phone numbers.   Until someone noticed the hidden column: BASE COMPENSATION.

In one email, an entire department had the same information as the company. For the first time in their careers, they knew what everyone else was making.  From a management perspective this was a total disaster; it was chaos.  I don’t recall hearing anything about lawsuits, but you can bet that folks used this to renegotiate their salary based on what they were contributing to the company.  There were plenty on the list who deserved what they were making, some who were way overcompensated and some that were well undercompensated.  Having it out there cost the company money and made very loyal employees upset; but those were all extreme short term issues.

I would argue that in terms of fairness, it was the best thing that could have happened. 

Finally the best employees who were NOT getting the best salaries KNEW that there was a lack of fairness.  This acted as a catalyst which enabled them to renegotiate their own salary or to search for another job elsewhere. Now they knew what they could be making if they were fairly compensated.

If I were a manager at the time, I would like to think that my team wouldn’t have been upset.  Knowing this story makes me always think about a repeat incident occurring; how would that impact the perception of the decisions I have made over the years?  In recent years my company has made available a process to do equity adjustments for the “all stars” who aren’t making what they should.  It’s more pro-active than it has ever been and I’m proud that I have been able to reward people for doing great work.

I know this level of transparency is a bit of a pipe dream in the US.  But I like to feel like I can move the needle in that direction in my own little piece of the world (my team, my company, our blog).  So in that spirit we are using real numbers.  Without facts, how can you relate or have an example.  When we write about our experiences and our situations don’t match yours, that doesn’t mean FI is impossible for you.  It means that you need to pull different levers to make FI possible for your situation.

The FI heroes have secret identities, so this does give us some shelter from the negative effects of putting the real numbers out there.  It may lock us into never revealing our Peter Parker or Clark Kent real world selves but that’s probably okay. At least we hope it is for those that choose to read about our journey.

So we’re curious. If you had a blog, would you use real numbers or talk in general terms


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