alt Hacker NewsThe limits are there to limit corruption.
If managers could set arbitrary salaries, the employees could just agree to cut their manager in on 10% of their raise.
This probably happens outside of government, but it's just the private org who loses money, so it's up to them to stop it. But in the case of the government, it's the taxpayers who lose.
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Most managers even in the private sector couldn’t really pull this off because they would need someone to approve the requested salary. You’d have to have a whole pyramid scheme of kickbacks going all the way up to the top executives, but the top executives have no incentive to cooperate because they’re already pulling a similar scheme against the shareholders for their salaries.
If the limits are to prevent corruption, why do they have to be so far below market rates? I don't think anyone is objecting to there being limits. Every company out there has level based limits. The issue is where those limits are set.
I don’t think managers (even without limits) could just set salaries… it’s not like they all just pay the max at manager discretion now.
I think that’s right - more discretion creates more room for corruption.
Although there are other ways to limit corruption risk, namely process and transparency. In the Australian government you can pay someone higher than standard pay through an Individual Flexibility Agreement (IFA). But in order to do so there’s a whole process the manager has to go through where they have to justify the higher salary on a limited set of grounds (e.g. higher market value of role) and then get it all signed off by someone higher up the chain.
That’s the process side. On the transparency side you could publish everyone’s salaries and then it becomes obvious when a manger is paying their second cousin way above normal for some strange reason.