Is “Pay Secrecy” Ethical...?

PAY SECRECY – Is it Ethical...?

Should SALARY and PERKS be kept CONFIDENTIAL...?

Musings on Business Ethics

By

VIKRAM KARVE

Sometime ago – at a social gathering – I met a young man who works as an investment banker.

I had heard that investment banking is a lucrative profession.

In my usual loud voice – I asked him how much salary he got.

He looked at me aghast – as if I had committed sacrilege.

Everyone around us looked at me in disbelief – as if I had committed a great faux pas.

To whet my curiosity – I repeated the “indiscretion” – by asking whoever I met – his or her salary.

I was surprised to see that today’s youngsters are very secretive and unwilling to disclose how much they earn.

I observed this secretive nature – and reluctance to disclose salaries and compensation packages – across professions – ranging from nerdy IT “Techies” – to Street Smart MBAs of all hues.

I just do not understand this “cloak-and-dagger” obsession with pay secrecy.

In the 1970’s – after getting our B. Tech degrees in Engineering – all of us in our class took up a variety of jobs – in the government – and in the industry – in public and private sectors – in MNCs and PSUs.

Whenever we met – we discussed our new jobs – and we freely discussed our pay, our salaries and what perks we got in our respective jobs. 

There was nothing to hide.

In those glorious “pre-liberalization” days of “socialism” – it was considered ethical to be equitable – and that is why – salaries were comparable – whether you worked in the private sector or public sector.

Yes – though the private sector paid slightly more – there was no excessively disproportionate disparity in pay – for the same type of work and level of posts – between one place and another.

How things have radically changed – with the advent of liberalisation and globalisation...!!!

Today the concept of “equal pay for equal work” seems to have been forgotten – and we see an obscene imbalance in compensation packages.

Those days – in the 1970’s – Salary Structures were simple – you got a Basic Pay, Dearness Allowance, some well-defined perks – and – in some cases – publicly declared incentive and bonus.

Everything was transparent – and – to the best of my knowledge – such “Machiavellian” concepts – like “Cost To Company” (CTC) – ESOPs – other “secret” allowances – and “hush-hush” incentives and bonus – such clandestine things did not exist.

I feel that “pay secrecy” is a concept which is alien to conventional Indian Ethos.

It looks like this “secretive” Human Resource Management Philosophy – comprising elements like “confidential salaries” – all this has become prevalent in India after 1991 – post-liberalization – with the entry of foreign companies – who have brought along with them their own distinct organizational cultures.

Can somebody please tell me what is the need for you to keep your pay secret...? 

Or – what is the need for your employer to keep the salaries of employees confidential...?

Even today – as far as government jobs are concerned – pay, salaries and allowances are public knowledge. 

There is total transparency in pay scales, increments – and all payments made to employees in government and public sector jobs. 

I think that there is pay transparency in some large industries – especially in traditional Indian organizations of the “old mould” as well.

Then – why have this obsession with pay secrecy in some firms – especially in companies with foreign organizational cultures like MNCs and IT Companies?

It is said that an Ethical Human Resource (HR) Management System must have three attributes:

1. It must be FAIR

2. It must be JUST

3. It must be TRANSPARENT

The concept of pay secrecy violates all these three tenets.

Let me give you an example.

I have a friend whose son migrated abroad to the USA many years ago for his studies and he continued to live and work in America and he became a US citizen. 

He was “posted” to India by his company (an MNC).

Though the boy is of Indian origin – since he is based in America – he is considered to be an Expatriate (Expat).

I was told that – because he is an “expat” – he gets a much higher salary and attractive compensation package – for doing the same job as compared to his Indian counterparts.

In fact – he also joked – that had he remained in India like his brother – or had he come back to India after his studies abroad and joined the same firm in India – he would have been paid much less for doing the same job. 

Whereas in India – foreign expats are paid more than Indians – the reverse may be true in America – where Indian “expats” are probably paid much less than their local American counterparts.

Is this fair...?

A fair system will ensure equitable compensation and will provide equal pay for equal work.

What is the justification for paying different salaries to employees of the same company for doing the same work...?

This blatant discrimination based on nationality – is it ethical and moral...?

In such a scenario – you may have a ridiculous situation – where a junior gets more salary than his senior – just because he belongs to a different country.

Is this absurdity not akin to racial discrimination...?

I feel that openness is always better than secrecy – particularly in HR Management Systems – which must be Transparent.

It has been my personal experience that – a Transparent and Honest HR Policy nurtures a sense of Trust and Loyalty in employees.

Secrecy breeds distrust – and creates an negative atmosphere of intrigue and suspicion in the workplace.

Such unhealthy and undesirable vibes create a sense of insecurity and disloyalty – which in turn cause a feeling of stress in employees.

If there is workplace stress – people may not enjoy working in such an insalubrious environment – and this is not conducive to friendly and open interpersonal relationships as well.

I feel that Compensation Management Systems must be ethical and non-discriminatory.

A candid, sincere, fair and transparent HR Management System will inspire a sense of justice and harmony by ensuring equitable, fair and transparent compensation mechanisms for all employees.

Dear Reader: 

Do you agree...? 

What are your views on pay secrecy...? 

Should salary and perks be kept confidential...? 

What are the pros and cons...? 

Why has pay secrecy become the norm in most organizations...?

Please comment. 

I eagerly look forward to your views. 

VIKRAM KARVE

Copyright © Vikram Karve
1. If you share this post, please give due credit to the author Vikram Karve
2. Please DO NOT PLAGIARIZE. Please DO NOT Cut/Copy/Paste this post
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Revised repost of my article PAY SECRECY – Is it Ethical...? posted online earlier at url: http://karvediat.blogspot.in/2013/04/pay-secrecy-is-it-ethical-should-salary.html

How much Pay does a Defence Officer get...?

Today someone asked me: “How much pay does a Defence Officer get...?” 

And – I remember this delighful memoir for my wonderful early Navy Days...

WHAT IS THE PAY OF A DEFENCE OFFICER...?

“How much pay does a Army Captain get...?” a civilian gentleman asked me sometime ago.

“Why do you want to know about the pay of a Army Captain...?” I asked.

“We have a marriage proposal for our daughter from an Army Captain...” he said.

“Well an Army Captain would be in “Pay Band 3” – where the Basic Pay ranges from 15600 to 39100 – so – if he is at the centre of the pay band – he would be getting about Rupees 25,000 per month...” I said.

“That is his Basic Pay – what about DA...” he asked.

“Well – if you add 100% Basic Pay as DA – you can add another 25,000 – so that makes it around 50,000 Rupees per month...” I said. 

“What about other allowances – and value of perks – I want to know the “CTC” of an Army Captain...” the civilian gentleman asked. 

A Military Veteran sitting with us said: 

“And now – after the implementation of the 7^th Pay Commission – the Pay – and – more importantly – the “CTC” will surely become more attractive.”

The moment I heard the term “CTC” – I remembered the story of the “CTC” Lieutenant. 

So – Dear Reader – let me delve deep into my “Humor in Uniform” Archives and pull out this hilarious “memoir” for you to enjoy – have a laugh – and think about.

This story happened around 39 years ago – in the late 1970’s.

Read on:

THE STORY OF THE “CTC” LIEUTENANT

Hilarious Memories of My Wonderful Navy Life

A Fictional Spoof

By

VIKRAM KARVE 

THE “CTC” LIEUTENANT – a spoof by VIKRAM KARVE

“How much pay do you get...?” the man asked me.

“1100 rupees per month...” I said.

Well – this story happened around 39 years ago – in the 1970’s. 

I was a newly promoted Lieutenant in the Navy (Equivalent of an Army Captain or Air Force Flight Lieutenant) – and – those days – our pay scale was Rs. 1100-50-1550

Yes – those days – Lieutenants started off with a basic pay of Rs. 1100 – with an increment of Rs. 50 every year – and – we remained Lieutenants for 8 long years. 

You were promoted to the rank of Lieutenant after 3 years of service as a Naval Officer – and – after a long wait of 8 years as Lieutenant – and a total of 11 years service as an Officer – we became Lieutenant Commanders with a pay scale of Rs. 1450-50-1800

Of course – now – with the Ajai Vikram Singh (AVS) Cadre Review bonanza in 2006 – promotions are much faster – and the junior-most officer rank has been abolished.

At the time of this story – as a newly promoted Lieutenant – I had started off in the pay scale of Rupees 1100-50-1550.

The gentleman had asked me how much pay I got.

So – I told the gentleman my ‘Basic Pay’ – which was 1100 Rupees a month.

“Do you know Lieutenant ‘G’...?” the gentleman asked me.

“Of course I know Lieutenant ‘G’ – he is my course-mate – and he is serving on a ship of my squadron...” I said – and I named the ship on which Lieutenant ‘G’ was serving.

“Yes. Yes. It is the same person...” the gentleman said.

The gentleman paused for a moment – and he said to me: 

“Your friend Lieutenant ‘G’ – how much pay does he get...?”

“Well – he must be getting 1100 Rupees too...” I said.

“Are you sure Lieutenant ‘G’ gets only 1100 Rupees a month...? Lieutenant ‘G’ told me that he gets much more pay that that – are you sure he doesn’t get more...?” the man asked.

“How can he get more pay than me...? Sir – I told you that Lieutenant ‘G’ is my coursemate – and like me – Lieutenant ‘G’ is also a recently promoted Lieutenant. In fact – I am two months senior to Lieutenant ‘G’ – I got promoted to the rank of Lieutenant two months earlier than him – since I gained more seniority in our Sub Lieutenant training courses – so surely – Lieutenant ‘G’ cannot get more pay than me – because he is junior to me...”

“That’s strange...” the gentleman said... “your friend Lieutenant ‘G’ told me that his pay is 5000 rupees per month...”

“5000 rupees per month...? That is just not possible...” I said, “Even an Admiral does not get that much.”

“Maybe – Lieutenant ‘G’ gets some additional pay...” the man said.

“That is not possible. He cannot get more pay than me. Like me – Lieutenant ‘G’ is in the Surface Navy. And even Aviators and Submariners don’t get the amount of pay that Lieutenant ‘G’ is saying...” I said.

“So – Lieutenant ‘G’ is telling lies...?” the man said.

“Well – I may not call it telling lies – but obviously – Lieutenant ‘G’ is exaggerating his pay quite a bit...” I said.

“He told me all lies...” the man said again, looking downcast.

I looked at the gentleman – and I asked him: 

“Sir – please tell me – why are you asking me all this about Lieutenant ‘G’...?”

“There was a marriage proposal for my daughter...” he said.

“There is a marriage proposal from Lieutenant ‘G’ for your daughter...?” I asked.

“His parents approached us. Or rather – we approached his parents when someone told us about Lieutenant ‘G’ – that he was a suitable “status match” for our daughter. Well – we live “up-north” – and we really don’t know much about the Navy. There was some business work in Pune – so I decided to come myself – rather than send my Manager – well – I thought it would be a good idea to go to Pune via Mumbai – and personally have a look at the boy Lieutenant ‘G’ – before progressing matrimonial matters further...” he said.

The Deccan Queen started its climb up the Western Ghats – and soon we reached Lonavala – where I got off the train. 

(I was travelling in my Navy Uniform since I had rushed from my ship to catch the Deccan Queen which departs from Mumbai at 1710 (5:10 PM) to go on a last-minute Temporary Duty. Maybe – the gentlemen had started the conversation about Lieutenant ‘G’ – since I was in spotless white Naval Uniform)

                                                                

A few days later I ran into Lieutenant ‘G’ at an official party.

“So – I believe that you are planning to get married...?” I asked him.

“Not really – why...?” he said.

“Well – I met your prospective father-in-law...” I said.

And – and I told Lieutenant ‘G’ about the gentleman I had met on the Deccan Queen.

“Oh, that...? It’s just in the first stages. I will see the girl when I go home on leave next month...” Lieutenant ‘G’ said.

“Why did you tell him that your pay was 5000 rupees a month...?” I asked.

“He told you that...?” Lieutenant ‘G’ asked me.

“Yes.”

“And what did you say...?” asked Lieutenant ‘G’ – with an anxious look on his face.

“Well – the gentleman asked me my pay – so – I told him it was 1100 rupees a month...” I said.

“Are you crazy...?” Lieutenant ‘G’ exclaimed.

“Why...? Isn’t our pay 1100 rupees an month...?” I said.

“1100 rupees is our bloody basic pay. That’s the problem with you Maharashtrians – you guys always “undersell” yourselves...” he said.

“But – how can you say that your pay is 5000 Rupees...? Even if you add the Dearness Allowance (DA) – and all other allowances – your pay will not be more than 1500 Rupees – isn’t it...?” I said.

“What about the monetary value of all the other benefits and perks we get...?” Lieutenant ‘G’ said.

“Other benefits and perks...?” I asked.

Lieutenant ‘G’ looked at me and said: 

“We get so many things as perks. Let’s take married accommodation – do you know the market rent of the houses we get in prime localities...? And what actual rent do we pay...?”

“So – you added the difference between “Market Value of Rent” and the “Actual Rent” we are charged – while calculating your total pay...?” I asked.

“Of course...” Lieutenant ‘G’ said, “and there are so many perks and facilities that we get – CSD Canteen, LTC, Medical Treatment, Membership of Messes and Clubs, Duty Free Liquor…”

“What...? Duty Free Liquor...? Booze...? But – you are a bloody Teetotaller – you never drink Liquor. Don’t tell me you included the Difference in the Cost of Booze between Navy Rates and Civil Rates...?” I asked, feeling aghast.

“Of course I did – the differential between “market value” and “what you actually pay” is tantamount to “notional salary” – isn’t it...?” he said matter-of-factly.

“So – you have included the so-called money value of each and every thing when you calculated your salary as 5000 rupees a month...?” I asked Lieutenant ‘G’.

Lieutenant ‘G’ looked at me – and he said to me: 

“Obviously I did that. I considered the “notional value” of all benefits, perks, facilities, subsidies – everything – and – I came to a figure of 5000 rupees a month. You see – 1100 rupees may be our “Basic Pay” – but 5000 rupees is our “Notional Pay”...”

I wanted to have the parting shot – so I said to Lieutenant ‘G’: 

“Since you are so money-minded – instead of the Navy – you should have joined the Army...”

“Army...? Why...? Why should I have joined the Army instead of Navy...?” Lieutenant ‘G’ asked me.

“In the Army – you would have got the additional perk of a Batman – a Sahayak – and – you could have added the “Notional Cost” of the Sahayak to your pay. Tell me – what is the pay plus the perks – the “notional value” of a soldier – 1000 Rupees...? 2000 Rupees...? Just imagine – of you were in the Army – you could have told your prospective father-in-law that your pay was 7000 rupees – instead of 5000 rupees...!!!”

“You have a point. How come I never thought of that...?” Lieutenant ‘G’ said, looking thoughtful.

“And – unlike in the Navy – where you have to use your own vehicle – in the Army – you get free transport. Think of the cost of the petrol...” I said.

“That is true too...” Lieutenant ‘G’ mumbled.

As I walked away – I noticed a curious expression on his face. 

It seemed that Lieutenant ‘G’ was busy calculating something in his mind.

Maybe – Lieutenant ‘G’ realized – that – with the Army giving so many extra perks – like “Sahayaks” – Transport – et al – he would have been better off as an Army Officer – rather than a Naval Officer.

I was sure that Lieutenant ‘G’ was regretting – that he had joined the Navy – instead of the Army.

EPILOGUE

It was much later while I was doing my Management Course – that I learnt of the concept of “CTC” or “Cost-to-Company”.

It was only then – that I understood what Lieutenant ‘G’ was talking about – many years ago.

Yes – Lieutenant ‘G’ was way ahead of his times.

Later – in his illustrious Naval career – Lieutenant ‘G’ distinguished himself as a successful “Businessman” in Uniform.

VIKRAM KARVE

Copyright © Vikram Karve 
1. If you share this post, please give due credit to the author Vikram Karve
2. Please DO NOT PLAGIARIZE. Please DO NOT Cut/Copy/Paste this post
© vikram karve., all rights reserved.

Disclaimer:

1. This story is a fictional spoof, satire, pure fiction, just for fun and humor, no offence is meant to anyone, so take it with a pinch of salt and have a laugh.

2. All Stories in this Blog are a work of fiction. Events, Places, Settings and Incidents narrated in the stories are a figment of my imagination. The characters do not exist and are purely imaginary. Any resemblance to persons, living or dead, is purely coincidental.

Copyright Notice:

No part of this Blog may be reproduced or utilized in any form or by any means, electronic or mechanical including photocopying or by any information storage and retrieval system, without permission in writing from the Blog Author Vikram Karve who holds the copyright.

Copyright © Vikram Karve (all rights reserved)

 

I had first posted this hilarious Naval Yarn on my Blog almost 4 years ago in September 2013. 

This is a Revised and Updated Version of my Story THE “COST TO COMPANY” (CTC) LIEUTENANT First Posted by me Vikram Karve in my Academic and Creative Writing Journal Blog at 9/25/2013 11:45:00 AM at url : http://karvediat.blogspot.in/2013/09/humor-in-uniform-cost-to-company.html  and reposted later at  http://karvediat.blogspot.in/2014/12/humor-in-uniform-ctc-lieutenant.html  and  http://karvediat.blogspot.in/2015/03/what-is-pay-of-defence-officer-story-of.html and http://karvediat.blogspot.in/2015/11/humor-in-uniform-ctc.html and http://karvediat.blogspot.in/2016/05/humor-in-uniform-ctc-aka-cost-to-company.html  and  http://karvediat.blogspot.in/2016/12/what-is-ctc-of-defence-officer.html