0:00:01.178,0:00:02.590
How much do you get paid?

0:00:03.155,0:00:05.043
Don't answer that out loud.

0:00:05.666,0:00:07.447
But put a number in your head.

0:00:08.017,0:00:12.660
Now: How much do you think the person[br]sitting next to you gets paid?

0:00:13.176,0:00:15.335
Again, don't answer out loud.

0:00:15.359,0:00:16.461
(Laughter)

0:00:17.144,0:00:19.502
At work, how much do you think

0:00:19.526,0:00:23.464
the person sitting in the cubicle[br]or the desk next to you gets paid?

0:00:23.488,0:00:24.643
Do you know?

0:00:24.977,0:00:26.342
Should you know?

0:00:26.961,0:00:30.938
Notice, it's a little uncomfortable for me[br]to even ask you those questions.

0:00:30.962,0:00:34.112
But admit it -- you kind of want to know.

0:00:34.993,0:00:38.518
Most of us are uncomfortable with the idea[br]of broadcasting our salary.

0:00:38.542,0:00:40.691
We're not supposed to tell our neighbors,

0:00:40.715,0:00:43.907
and we're definitely not supposed[br]to tell our office neighbors.

0:00:43.931,0:00:47.445
The assumed reason is that if everybody[br]knew what everybody got paid,

0:00:47.469,0:00:49.259
then all hell would break loose.

0:00:49.283,0:00:51.384
There'd be arguments, there'd be fights,

0:00:51.408,0:00:53.597
there might even be a few people who quit.

0:00:53.621,0:00:57.400
But what if secrecy is actually[br]the reason for all that strife?

0:00:57.424,0:01:00.042
And what would happen[br]if we removed that secrecy?

0:01:00.599,0:01:04.590
What if openness actually increased[br]the sense of fairness and collaboration

0:01:04.614,0:01:05.836
inside a company?

0:01:05.860,0:01:09.446
What would happen if we had[br]total pay transparency?

0:01:10.254,0:01:11.571
For the past several years,

0:01:11.595,0:01:14.508
I've been studying the corporate[br]and entrepreneurial leaders

0:01:14.532,0:01:18.081
who question the conventional wisdom[br]about how to run a company.

0:01:18.105,0:01:20.557
And the question of pay keeps coming up.

0:01:21.105,0:01:23.555
And the answers keep surprising.

0:01:24.458,0:01:26.265
It turns out that pay transparency --

0:01:26.289,0:01:28.399
sharing salaries openly[br]across a company --

0:01:28.423,0:01:31.072
makes for a better workplace[br]for both the employee

0:01:31.096,0:01:32.683
and for the organization.

0:01:33.362,0:01:36.461
When people don't know how their pay[br]compares to their peers',

0:01:36.485,0:01:38.301
they're more likely to feel underpaid

0:01:38.325,0:01:40.260
and maybe even discriminated against.

0:01:40.646,0:01:43.221
Do you want to work at a place[br]that tolerates the idea

0:01:43.245,0:01:46.049
that you feel underpaid[br]or discriminated against?

0:01:46.697,0:01:49.207
But keeping salaries secret[br]does exactly that,

0:01:49.231,0:01:52.114
and it's a practice[br]as old as it is common,

0:01:52.674,0:01:54.766
despite the fact[br]that in the United States,

0:01:54.790,0:01:58.240
the law protects an employee's right[br]to discuss their pay.

0:01:59.417,0:02:01.975
In one famous example from decades ago,

0:02:01.999,0:02:04.105
the management of Vanity Fair magazine

0:02:04.129,0:02:06.249
actually circulated a memo entitled:

0:02:06.273,0:02:09.478
"Forbidding Discussion Among[br]Employees of Salary Received."

0:02:09.502,0:02:12.824
"Forbidding" discussion among[br]employees of salary received.

0:02:13.482,0:02:15.629
Now that memo didn't sit well[br]with everybody.

0:02:15.653,0:02:17.699
New York literary figures[br]Dorothy Parker,

0:02:17.723,0:02:19.485
Robert Benchley and Robert Sherwood,

0:02:19.509,0:02:21.950
all writers in the Algonquin Round Table,

0:02:21.974,0:02:23.755
decided to stand up for transparency

0:02:23.779,0:02:25.511
and showed up for work the next day

0:02:25.535,0:02:28.749
with their salary written on signs[br]hanging from their neck.

0:02:28.773,0:02:30.321
(Laughter)

0:02:30.716,0:02:32.291
Imagine showing up for work

0:02:32.315,0:02:35.805
with your salary just written[br]across your chest for all to see.

0:02:37.573,0:02:40.843
But why would a company even want[br]to discourage salary discussions?

0:02:40.867,0:02:44.199
Why do some people go along with it,[br]while others revolt against it?

0:02:45.906,0:02:48.950
It turns out that in addition[br]to the assumed reasons,

0:02:48.974,0:02:52.277
pay secrecy is actually a way[br]to save a lot of money.

0:02:52.301,0:02:54.212
You see, keeping salaries secret

0:02:54.236,0:02:57.187
leads to what economists call[br]"information asymmetry."

0:02:57.211,0:02:59.482
This is a situation where,[br]in a negotiation,

0:02:59.506,0:03:02.504
one party has loads more[br]information than the other.

0:03:02.887,0:03:06.297
And in hiring or promotion[br]or annual raise discussions,

0:03:06.321,0:03:09.979
an employer can use that secrecy[br]to save a lot of money.

0:03:10.518,0:03:13.142
Imagine how much better[br]you could negotiate for a raise

0:03:13.166,0:03:14.973
if you knew everybody's salary.

0:03:17.612,0:03:20.053
Economists warn that information asymmetry

0:03:20.077,0:03:21.724
can cause markets to go awry.

0:03:21.748,0:03:23.654
Someone leaves a pay stub on the copier,

0:03:23.678,0:03:26.096
and suddenly everybody[br]is shouting at each other.

0:03:26.866,0:03:28.572
In fact, they even warn

0:03:28.596,0:03:33.413
that information asymmetry[br]can lead to a total market failure.

0:03:34.095,0:03:36.109
And I think we're almost there.

0:03:36.133,0:03:37.299
Here's why:

0:03:37.323,0:03:42.251
first, most employees have no idea[br]how their pay compares to their peers'.

0:03:42.834,0:03:46.684
In a 2015 survey of 70,000 employees,

0:03:46.708,0:03:50.089
two-thirds of everyone who is paid[br]at the market rate

0:03:50.113,0:03:52.345
said that they felt they were underpaid.

0:03:53.036,0:03:55.915
And of everybody who felt[br]that they were underpaid,

0:03:55.939,0:03:58.892
60 percent said[br]that they intended to quit,

0:03:58.916,0:04:01.804
regardless of where they were --[br]underpaid, overpaid

0:04:01.828,0:04:03.407
or right at the market rate.

0:04:04.200,0:04:06.660
If you were part of this survey,[br]what would you say?

0:04:06.684,0:04:07.960
Are you underpaid?

0:04:07.984,0:04:10.309
Well, wait -- how do you even know,

0:04:10.333,0:04:12.466
because you're not allowed[br]to talk about it?

0:04:12.911,0:04:16.510
Next, information asymmetry, pay secrecy,

0:04:16.534,0:04:19.313
makes it easier to ignore[br]the discrimination

0:04:19.337,0:04:21.804
that's already present[br]in the market today.

0:04:22.217,0:04:25.914
In a 2011 report from the Institute[br]for Women's Policy Research,

0:04:25.938,0:04:28.062
the gender wage gap[br]between men and women

0:04:28.086,0:04:29.824
was 23 percent.

0:04:30.451,0:04:33.070
This is where that 77 cents[br]on the dollar comes from.

0:04:33.641,0:04:35.104
But in the Federal Government,

0:04:35.128,0:04:37.191
where salaries are pinned[br]to certain levels

0:04:37.215,0:04:39.255
and everybody knows[br]what those levels are,

0:04:39.279,0:04:41.364
the gender wage gap[br]shrinks to 11 percent --

0:04:41.388,0:04:43.964
and this is before controlling[br]for any of the factors

0:04:43.988,0:04:46.881
that economists argue over[br]whether or not to control for.

0:04:47.264,0:04:49.936
If we really want to close[br]the gender wage gap,

0:04:49.960,0:04:52.448
maybe we should start[br]by opening up the payroll.

0:04:52.864,0:04:56.086
If this is what total[br]market failure looks like,

0:04:56.110,0:04:59.378
then openness remains[br]the only way to ensure fairness.

0:05:00.274,0:05:02.775
Now, I realize that letting people[br]know what you make

0:05:02.799,0:05:04.445
might feel uncomfortable,

0:05:04.469,0:05:05.984
but isn't it less uncomfortable

0:05:06.008,0:05:08.888
than always wondering[br]if you're being discriminated against,

0:05:08.912,0:05:12.674
or if your wife or your daughter[br]or your sister is being paid unfairly?

0:05:13.353,0:05:17.293
Openness remains the best way[br]to ensure fairness,

0:05:17.317,0:05:19.230
and pay transparency does that.

0:05:19.991,0:05:22.671
That's why entrepreneurial leaders[br]and corporate leaders

0:05:22.695,0:05:25.488
have been experimenting[br]with sharing salaries for years.

0:05:25.512,0:05:26.925
Like Dane Atkinson.

0:05:26.949,0:05:30.828
Dane is a serial entrepreneur[br]who started many companies

0:05:30.852,0:05:32.434
in a pay secrecy condition

0:05:32.458,0:05:35.811
and even used that condition[br]to pay two equally qualified people

0:05:35.835,0:05:37.531
dramatically different salaries,

0:05:37.555,0:05:39.724
depending on how well[br]they could negotiate.

0:05:40.091,0:05:43.422
And Dane saw the strife[br]that happened as a result of this.

0:05:43.888,0:05:46.115
So when he started[br]his newest company, SumAll,

0:05:46.139,0:05:49.249
he committed to salary transparency[br]from the beginning.

0:05:49.821,0:05:51.559
And the results have been amazing.

0:05:52.424,0:05:54.046
And in study after study,

0:05:54.070,0:05:55.946
when people know[br]how they're being paid

0:05:55.970,0:05:57.999
and how that pay compares to their peers',

0:05:58.023,0:06:00.956
they're more likely to work hard[br]to improve their performance,

0:06:00.980,0:06:03.829
more likely to be engaged,[br]and they're less likely to quit.

0:06:03.853,0:06:05.255
That's why Dane's not alone.

0:06:05.279,0:06:07.450
From technology start-ups like Buffer,

0:06:07.915,0:06:11.261
to the tens of thousands[br]of employees at Whole Foods,

0:06:11.285,0:06:14.452
where not only is your salary[br]available for everyone to see,

0:06:14.476,0:06:17.476
but the performance data[br]for the store and for your department

0:06:17.500,0:06:19.419
is available on the company intranet

0:06:19.443,0:06:20.665
for all to see.

0:06:21.985,0:06:24.447
Now, pay transparency[br]takes a lot of forms.

0:06:24.471,0:06:26.069
It's not one size fits all.

0:06:26.093,0:06:28.589
Some post their salaries for all to see.

0:06:28.613,0:06:30.914
Some only keep it inside the company.

0:06:30.938,0:06:33.523
Some post the formula for calculating pay,

0:06:33.547,0:06:35.321
and others post the pay levels

0:06:35.345,0:06:37.123
and affix everybody to that level.

0:06:37.147,0:06:39.196
So you don't have to make signs

0:06:39.220,0:06:41.744
for all of your employees[br]to wear around the office.

0:06:41.768,0:06:44.682
And you don't have to be[br]the only one wearing a sign

0:06:44.706,0:06:45.928
that you made at home.

0:06:46.494,0:06:49.698
But we can all take greater steps[br]towards pay transparency.

0:06:50.233,0:06:52.261
For those of you that have the authority

0:06:52.285,0:06:54.079
to move forward towards transparency:

0:06:54.103,0:06:55.578
it's time to move forward.

0:06:55.943,0:06:58.411
And for those of you[br]that don't have that authority:

0:06:58.435,0:07:00.414
it's time to stand up for your right to.

0:07:01.263,0:07:02.988
So how much do you get paid?

0:07:04.186,0:07:06.813
And how does that compare[br]to the people you work with?

0:07:07.190,0:07:08.496
You should know.

0:07:09.312,0:07:10.587
And so should they.

0:07:11.936,0:07:13.104
Thank you.

0:07:13.128,0:07:16.306
(Applause)