When Salaries Aren't Secret (HBR Case Study)

The day before Treece McDavitt was to leave RightNow!, an off-price women's fashion retailer, the 26-year-old computer wizard accessed HR's files and e-mailed employees' salaries to the entire staff. Now everyone knows what everyone else is making; they are either infuriated that they are making too little or embarrassed that they are making too much. Salary disparities are out there for everyone to see, and CEO Hank Adamson has to do something to smooth things over. Hank's trusted advisers talk extensively with the CEO about his options, ultimately coming down on two sides. Charlie Herald, vice president of human resources, takes a "You get a lemon, you make lemonade" approach: keep making the salaries public to ensure fairness and to push employees to higher performance, he advises. Meanwhile, CFO Harriet Duval sees the need for damage control: apologize, clean up the company's compensation system, and continue to keep--or at least try to keep--salaries private, she says. In R0105A and R0105Z, Victor Sim, Dennis Bakke, Ira Kay, and Bruce Tulgan offer their advice on the problem presented in this fictional case study. For teaching purposes, this is the case-only version of the HBR case study. The commentary-only version is reprint R0105Z. The complete case study and commentary is reprint R0105A.