Netflix has revoked the ability of senior managers to see their co-workers’ salaries

The streaming giant’s director-level executives—senior managers who aren’t C-suite execs or vice presidents—have long had the ability to see their colleagues’ salaries. Now they are in the same boat as the rest of us, the Wall Street Journal reported on Wednesday.

According to Journalof Sources at Netflix, the walkback comes from a wide range of director-level hires in recent years, some of whom have asked for explanations for their salary differences. However elimination roundsNetflix employed 11,300 full-time workers by the end of 2021, representing a nearly 60% growth in headcount from 2018.

The move comes as an embattled Netflix tries to tighten its belt after bleeding subscribers in the first half of 2022. The revocation of access, which began late last year, is a controversial move by a company that, as the Journal put it, previously “offered an exceptional level of transparency to its workforce.” That’s mainly because of its co-CEO Reed Hastings, who said transparency is essential to a healthy company culture.

“Transparency has been created [our employees’] biggest symbol of how much we trust them 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 requires “increasing organizational transparency and eliminating company secrets.”

There’s also the fact that Netflix, like most Fortune 500 companies, must follow the new salary transparency requirements in places like Washington, Colorado, California, and New York City. Like many companies, they take a backhanded approach, putting very wide bands in their job postings. A software engineer job offers a range of salaries $90,000 to $900,000.

The push and pull of pay transparency

Transparency laws to be implemented across the country have given new life to the debate about their effectiveness. The data suggests the answer is simple. A big research initiative from the David Eccles School of Business at the University of Utah found that knowing what your co-workers are doing “can reduce the gender pay gap, as well as other forms of pay inequality.”

When institutions increase wage transparency in a centralized way like Netflix does, Utah researchers find that the gender wage gap is almost 50%, and wage adjustment policies are “huge” that changed—namely giving larger wage increases to historically low-wage groups.

Sharing salaries also has the potential to encourage collective action. In a study from Journal of Economic Behavior & Organization, James Flynn, an economics Ph.D. candidate at the University of Colorado, found that workers respond to perceived pay inequity not by withholding effort—or, to use the term du jour, silent pause—but by shifting their effort to be more aligned with what pays more.

Companies that pay their workers low wages, Flynn writes in his conclusion, “have a strong incentive to hide salary information, while high-wage companies can benefit from policies designed to increase salary transparency.”

The kind of “transparency shock” that comes with seeing what your co-workers are paid shouldn’t make anyone nervous — except the bosses who know they’re meeting. more unforgivable than their workers. That may be the case with Netflix, where Hastings’ total payout is in 2021 exceeded $34 million. (For co-CEO Ted Sarandos, that number jumps to $40 million.)

Despite the removal of the pay transparency perk, Netflix employees still enjoy higher-level insights than many public companies of similar size, including access to “strategic documents,” the Journal wrote. Netflix did not respond It’s fortune request for comment on what, exactly, that is.

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