The hack on Sony Pictures, which investigators have said may be linked to North Korea, dumped a trove of highly sensitive data about employee compensation into public view. The data, according to reporters who have viewed the files, includes a spreadsheet containing the salaries of more than 6,000 Sony employees.
If they are accurate, the documents show that studio head Michael Lynton makes twice the salary of Sony CEO Kazuo Harai, his boss. They reveal what James Franco and Seth Rogen will be making for "The Interview," the film investigators have said may be the motivation for the attack. And they appear to show an unsettling gender gap in pay among the top brass: Of the 17 managers whose "annual rate" is $1 million or more, only one is a woman, according to reports. (An email to a Sony representative was not immediately returned.)
This is the stuff of H.R. nightmares. While public companies must reveal the compensation of their top five executives, and salaries for public-sector employees are often in the open, the vast majority of employee pay is shrouded in the sort of mystery one might expect for trade secrets.
That's partly due to informal social taboos surrounding salary talk—and generally, all discussion of money—in our society. But it's also because most employers don't want people to know what their peers make. Some try to keep employees from talking about wages through retaliation (a practice that the Paycheck Fairness Act, which failed to pass the Senate for the third time earlier this year, sought to correct). Employers may argue they are actually concerned about privacy, legal risks or strategic needs. Still, keeping compensation so hush-hush perpetuates a discriminatory system, whether intentionally or not.
It also creates a greater risk for highly embarrassing results if those secrets are unveiled, as they have been at Sony. Millennial employees have already shown different views than other generations about discussing what they make. And an attack like the one on Sony's probably won't be the last. "I don't know who is immune," said Dartmouth's Finkelstein, when reached by phone. "If I'm sitting there as a head of H.R. or even as CEO, I have to plan for a world where this will be revealed."
That's why Finkelstein thinks the ultimate answer will be for more companies to make salaries transparent — at least by generic job category, if not by naming individual employees' compensation. Not only will it mean fewer risks if the data end up public, it could create a more egalitarian workplace that breaks down barriers, reduces internal politics, and improves trust between workers and managers. As Finkelstein says, "It sounds like a risky, almost crazy thing to do, but I think it would create more good than bad."
He's right. Most employers, and even many employees, are likely to think transparent salaries go too far. But at the very least, corporate leaders should worry as much about fixing any secrets they're hiding as fixing the systems that safeguard them. The same advice they give for communications — don't put in email what you wouldn't want on the front page of a newspaper — should apply when it comes to paying their workers. That is, don't structure salaries in a way you wouldn't want the public to see.