A pay system that DOESN'T discriminate!

I just discovered a GREAT pay system model that could do away with the gender pay gap if all companies decided to implement it. Joel Spolsky, of Fog Creek Software, wrote about his company's unique pay system and I must say, I couldn't have agreed more. Here is basically how it works:

Create pay levels - Everyone in the same level gets the same salary. If one person gets a raise, everyone gets the same raise. Your numerical level is determined objectively by years of experience, responsibility, and skills.

Make all salary levels transparent- Everyone knows what everyone makes, why they make it, and how to get to the next pay level. Clarity of the salary path is crystal clear. My favorite quote from the article, "The trouble with keeping salaries a secret is that it's usually used as a way to avoid paying people fairly." Yes, Lilly Ledbetter has kindly demonstrated that for all of us. Want better morale among your employees? Install transparent, objective, and fair compensation for all employees.

Don't let incoming employees negotiate their salary- Negotiation creates and enables unfairness, which pisses people off who've been around longer but may have been hired when the job market was tighter with more applicants than positions (hello salary inversion!).

Pros of this System
-Fair
-Extremely Objective
-Better morale for employees
-Great performers who are poor negotiators can still be compensated fairly
-Good negotiators with bad performance/low skill set do not get more compensation
-Clear path to salary increases incentivizes skill building
-Your company is likelier to be listed in "Best Companies to Work For" lists, which is a boon to recruiters in HR!

Cons of this System
-May not be able to attract quality applicants who are used to over-inflated salaries
-When margins are bad, may not be able to create monetary incentives to increase performance
-Performance is not compensated for individuals, so slackers may prevail
-Experience and skill set are on the same level for pay level criteria when having the experience for the position may not reflect the level of ability for the required skill set (think young people with tech skills v. their older counterparts with less tech but more experience)

Yet, this system is not the panacea for fair compensation for women. I can see one way that women would already start out behind in Spolsky's system. For example, he calculates experience based on the the number of years of full-time experience, which puts all historically part-time workers (the majority of jobs held by women are part-time) at an immediate disadvantage. They will immediately be calculated into a lower level. Also, doing "menial work" (which is described as secretarial work by Spolsky) despite years of experience can never equal more than a year's worth of experience when calculating a candidates pay level. Secretarial/admin support work is predominantly performed by women and in this system, Spolksy would only give one year of experience credit for an admin's experience even if she worked six years doing said "menial work." Depending on a candidate's work history, I could forsee this calculation setting back a lot of capable women who started out in a pink collar job. Typically, most men do not start their careers answering phones.

Overall, I think this pay system has the potential to create positive morale among workers and in particular, have a very positive impact for female employees in any company. But keeping wages secret is still a very strong enculturated characteristic of most work environments. Are you looking to create a fair and equitable work environment where people feel good about their compensation or at least, about others? Consider transparency.