Open Salaries: Not for China

I recently discussed the article Why Secret Salaries Are a Baaaaaad Idea with my Chinese friend Mike. It’s an interesting read. The main points the article makes for why open salaries are a good idea:

  1. Salaries will become more fair. The system gets a chance to adjust itself.
  2. It will be easier to retain the best employees because they’re more likely to feel they’re getting a fair salary.
  3. The pressure is on the people with the high salaries to earn their keep. Everybody has to pull their weight – the higher the salary, the larger the weight.

Mike is an accounts manager for a Chinese company in Shanghai, and he has business experience in several companies. Unsurprisingly, he was convinced such an idea could never work in China. The main ideas we discussed:

  • The open salary system is based on an overall assumption that the boss is devoted to the idea of a fair workplace. In Mike’s words, “no Chinese boss wants to be fair.” The average Chinese boss exploits unfairness to the benefit of the company. The example he gave is that for the exact same job, a Shanghainese employee might be paid 5,000 RMB per month, whereas an employee from Gansu would only get 1,000. That’s just the way it is.
  • Many Chinese companies keep two sets of books in order to pay less taxes. If the company were to make public the fake books, it’s a meaningless action. But you obviously can’t make the real books public.
  • Mike’s conclusion: “It’s a nice idea in theory, but it would never work in reality. It’s like Communism!
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