Netflix wants you to keep an eye on your own paper—and not just when it comes to sharing passwords.
The streaming giant’s director-level executives — senior managers who aren’t C-suite executives or vice presidents — have long been able to see their peers’ salaries. Now, they are in the same boat as the rest of us, The Wall Street Journal reported Wednesday.
According to Journal sources at Netflix, the walkback stemmed from the vast expansion of director-level hires in recent years, some of which demanded an explanation for the discrepancy in their pay. Despite the many layoffs, Netflix employed 11,300 full-time workers by the end of 2021, which represents headcount growth of nearly 60% from 2018.
The move comes as Netflix tries to tighten its belt after experiencing a hemorrhaging of subscribers in the first half of 2022. The cancellation of access, which took place late last year, is a contradictory move by the company which, as Journal he said, now “offers rare transparency for the workforce.” That’s largely due to co-CEO Reed Hastings, who says transparency is essential to a healthy company culture.
“Transparency has become [our employees’] the greatest symbol of how much we trust him to act responsibly,” Hastings wrote in his 2020 book, There Are No Rules. Netflix has historically relied on a laissez-faire approach to leadership and management, he wrote, which required “increasing organizational transparency and eliminating corporate secrecy.”
There’s also the fact that Netflix, like many Fortune 500 companies, must comply with new salary transparency requirements in places like Washington, Colorado, California, and New York City. Like many companies, they have taken a backhanded approach, put a very wide band in the job posting. One software engineer job offers a salary range of $90,000 to $900,000.
The push and pull of salary transparency
Transparency laws that apply across the country have breathed new life into the debate about efficacy. Data shows the answer is simple. A growing research initiative from the University of Utah’s David Eccles School of Business found convincingly that knowing what your co-workers are doing “reduces the gender pay gap, as well as other forms of pay inequality.”
When institutions increase wage transparency in centralized ways like Netflix, the Utah researchers saw a gender pay gap close to 50%, and wage adjustment policies “substantially” changed—that is, by giving larger pay increases to historically underpaid groups.
Pay sharing also has the potential to spur collective action. In a study from the Journal of Economic Behavior & Organization, James Flynn, Ph.D. Candidate at the University of Colorado, found that workers respond to perceived wage injustice by withholding their efforts—or, to use the term. of the daystop quitting—but by changing your efforts to better match what you’re getting paid for.
Firms that pay workers low wages, Flynn wrote in his conclusion, “have a strong incentive to keep salary information confidential, while firms that pay higher wages can benefit from policies designed to increase salary transparency.”
The kind of “transparency shock” that comes with seeing what your co-workers are paid won’t make anyone nervous—except the bosses who know they’re making more than the workers. This may be the case at Netflix, where Hastings’ total compensation in 2021 will exceed $34 million. (For co-CEO Ted Sarandos, that number rises to $40 million.)
Despite eliminating pay transparency perks, Netflix employees still enjoy a higher level of insight than many similarly sized public companies, including access to “strategic documents,” Journal write. Netflix did not respond Fortune’s get a comment on what, exactly, it is.
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