By now you may have already seen a report about Google’s recent audit of their employee compensation records, seeking to determine whether or not there was a pay equity gap resulting in women being paid less than men for similar work. The story has been generating a lot of guffaws in some quarters because their findings indicated that, in many cases, it was the men who were being paid less. While that may sound amusing, there’s probably more to be learned from this tale than some basic message about the supposed gender pay gap. (NY Times)

When Google conducted a study recently to determine whether the company was underpaying women and members of minority groups, it found, to the surprise of just about everyone, that men were paid less money than women for doing similar work.

The study, which disproportionately led to pay raises for thousands of men, is done every year, but the latest findings arrived as Google and other companies in Silicon Valley face increasing pressure to deal with gender issues in the workplace, from sexual harassment to wage discrimination.

Gender inequality is a radioactive topic at Google. The Labor Department is investigating whether the company systematically underpays women. It has been sued by former employees who claim they were paid less than men with the same qualifications. And last fall, thousands of Google employees protested the way the company handles sexual harassment claims against top executives.

So how did women come to the conclusion that Google was paying them less than men when the opposite was true in more cases? Because companies don’t tend to discuss individual compensation packages, they try to discourage workers from doing so, and many people still find such discussions distasteful (or at least problematic.) If you choose to see the traditional secrecy about paychecks as a problem, you need to be prepared to offer a viable solution.

There are actually several reasons for this common practice in the private sector and they’re all valid. From the company’s perspective, they’re in business to make money. Negotiating salaries is a tricky business under any set of circumstances, but if someone isn’t great at such bargaining sessions and are willing to take a lower salary, the company will obviously agree and save money where they can. On the other side of the coin, someone who plays hardball for a high salary and sets unrealistic expectations for how they will perform will soon find themselves unemployed if they don’t live up to their own billing.

More to the point, if you replace this competitive system with some sort of fixed pay scale for everyone to avoid “inequity” or a gender/race “gap” (as the government does), you remove all incentive for superior performance. Why work harder and produce more if you’re going to be given the same pay as the person in the next cubicle who is obviously doing the minimum required and just phoning it in? This idea of non-performance based pay equity is a particularly socialist notion. It replaces the concept of equality of opportunity with equality of outcome, and the total productivity of the system suffers for it, just as you see on a wider scale in socialist countries. What some may consider pay “inequity” others see as justifiable rewards for the top performers.

Finally, would you really want to see your salary and everyone else’s posted in public? Imagine the resentment and hard feelings that would follow. People would be quitting or sabotaging their co-workers right and left. I’m not saying this is an easy subject to tackle, but the private sector wage system evolved the way it has for a reason. And if you want to “fix” it, you’d best make sure you’re not breaking the larger system as a result.