Why W.L. Gore are afraid to have open salaries

W.L. Gore is one of the most famous democratic companies in the world. They are 100% owned by employees; there’s very little hierarchy, with leadership occurring organically by people voluntarily choosing who to follow; and a high level of personal freedom for employees to innovate and be autonomous in their roles. It works spectacularly well. They are massively profitable and market leaders in several product areas.

So I was surprised to learn recently that at Gore, salaries are kept secret, which is contrary to the transparency around financial information in most democratic companies.

For most traditional companies where salaries and other financial details are kept under wraps, it’s usually fear driving the behaviour: Fear of the consequences of unfair salaries being discovered or fear of letting go of control of important information. Gore doesn’t seem to have these fears. Colleagues are evaluated by their peers to ensure salaries are set fairly and they have demonstrated in many areas that they are not afraid to give up control. So what’s going on? Why would they not want the benefits of higher trust and scrutiny that fully open books bring about?

Gore say that they have a different fear: They want leadership to be merit-based above all else and they fear that if colleagues know what everyone else earns then they may show a bias towards following the higher earners rather than the best person in a particular context. I can understand the logic behind this, but to me it’s still a practice rooted in fear rather than freedom, possibility and trust (the mindset of the best democratic leaders) so I wonder if they could do better.

Humans are not purely rational creatures and we are naturally biased in many different ways. Even with closed salaries, it’s possible that people may be biased towards following leaders based on age, gender, personality, physical characteristics and many other traits which are even further removed from true merit than salaries. I wonder if having closed salaries is fighting a symptom of bias, when perhaps a better approach would be to educate and increase awareness of bias among all colleagues to help them make more conscious decisions. If they did this then they could enjoy the benefits of greater transparency, and make better decisions about choosing leaders and more.

Tribal Leadership

This is one of those books that you read and then wish you’d read years ago. I thought it was going to be full of examples of quirky management practices, but it’s actually based on a huge 10 year research project into company culture and leadership.

The authors have a very simple five-stage model of company culture which I think is extremely useful. Rather than focussing on a set of behaviours as most culture change folks do, the authors look at the language that individuals use in the company to determine what stage they are at. The goal is to lift individuals, one stage at a time up to stage 4, with ‘peak’ moments of stage 5.

As you read about these five stages, think about where your culture is at the moment. And also note that people tend to think their culture is at least one stage ahead of where it really is. They key thing is to listen to the language people use.

Stage 1. “Life sucks”

This is where life at work is so bad that people can’t even imagine that things could be better or that they could be happy. Think Enron on the verge of collapse, or the disaffected employee who turns up to work with a shotgun. Fortunately it’s pretty rare for individuals or entire cultures to be at this stage.

Stage 2. “My life sucks”

The big difference as people drag themselves out of stage 1 is that there is hope. They can see that life could be better, but often use language around why they are having a tough ride, the barriers in their way or why other people are getting all the breaks. Think The Office or the movie Office Space. Dysfunctional, broken and demoralising with a feeling of “why is this happening to me?”

Stage 3. “I’m great”

This is the most common stage for companies that are performing well. People are positive and achieving results, but if you listen carefully to their language it’s all about them. When they talk about work, it’s mostly “me” and “I”. The subtext to ‘”I’m great” is “…and others aren’t.” It’s all about them hitting their targets; how they are building their own career; and how they are beating the competition inside and outside the company. People protect information, contacts and other assets to keep their ‘edge.’ Stage 3 companies can do well, but they are a long way from optimal. I found this interesting as often we unwittingly design companies to only reach stage 3, for example with very individualised targets, objectives and evaluations – all that matters is that YOU are doing well, and we hope that means the company as a whole will be performing well. We’re encouraged to write resumes that talk about ‘my achievements.’ Also, most personal development books (the famous Getting Things Done springs to mind) are all about YOU: Tips, tricks and hacks to ‘get ahead.’

Stage 4. “We’re great”

This is where the magic starts to happen, as people realise that the job of creating truly outstanding results is beyond any one individual. The language changes from “me” and “I” to “we” and “us.” When people talk about work they talk about the results that the team or company is getting. People actively share contacts and information and a culture of collaboration is established where the whole becomes greater than the sum of its parts.

Stage 5. “Life is great”

At stage 5, something important about the nature of competition changes. It’s when the group is committed to a higher purpose beyond making money, and a set of values which set their standards for ethics and behaviour (what they will and won’t do in order to fulfil their higher purpose.) For example, a pharmaceutical company where people talk about the ‘competition’ or ‘enemy’ being cancer or HIV, rather than a rival firm. In comparison to the real challenge of fulfilling their higher purpose, external competition just seems mundane. This level of peak performance is difficult to sustain, but the best companies are stable at stage 4, and have peak moments where they achieve stage 5. Steve Jobs’ team at Apple when they were working to bring previously unimaginable computing power into the home to enrich people’s lives with the first Macintosh computer is another example.

Moving up through the stages

The book offers tips and ideas to spot what stage individuals are at and how to raise them up through the different stages. A key insight is that you have to move people one stage at a time. If you replaced the boss David Brent from The Office with Steve Jobs and tried to immediately get everyone to world-changing teamwork and performance, it would be too much too soon. People need to be moved one stage at a time. For example, having a colleague who’s at stage 3 provide coaching and help to someone at stage 2 so they can start to get some personal results. And once you have a dominant stage 3 culture, begin to set tasks for individuals that are impossible to achieve alone, so that they start to realise collaboration is the only way to achieve outstanding results. Perhaps many culture change projects fail because they try to move too quickly to the optimal and don’t take people on a journey.

Tribal Leadership and strategy

The book also offers a very simple and powerful model for creating strategy that high performing groups will buy into and actually execute. This is a great example of democratic planning. Everything starts with the higher purpose of the company within the constraints of its values. Yet more evidence that ‘higher order’ clarity in a company is the foundation of success.

In a nutshell, the planning process defines ‘outcomes’ (subtly but importantly different from goals in that it’s about the journey as much as the end result.) The group then looks as what assets they already have to help them achieve the outcomes (technology, relationships, brand etc) and decides if the assets are sufficient. If not, then the strategy is re-framed with new outcomes to create the required assets. Once the assets are sufficient, the group then defines behaviours – things they will actually do – to use the assets in order to achieve the outcomes. Members of the group volunteer to take responsibility for each behaviour enthusiastically because they know that they already have the ingredients for success.

With this approach, you notice how a leader acts as an instigator and facilitator for this process, but it’s the group that actually produces the plan and takes responsibility, without the need for old-fashioned delegation. It’s easy to see why the companies that the authors studied who work in this way tended to produce better plans that the people bought into and actually put into motion.