

Ask HN: Have you been in a company with transparent salaries? Good? - gdilla


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swombat
I've done exactly that, and very deliberately, with GrantTree. All salary and
bonus information is available (anyone in the company can log in to the
accounting system and check it, along with all the other company financials).

It does mean that there's some people you won't be able to hire, if they
demand a higher salary than their peers and won't budge on it - but then
again, I'm of the view that I'm better off not hiring those anyway. I think
the benefits of having an open, trusting, transparent culture far outweigh any
benefits a single individual can bring to the company. Someone who's willing
to damage the culture of the company for their individual benefit is probably
not someone I want in this company.

What are those cultural benefits? Well, for example, because we are
transparent all the way through, this is also reflected in the very open and
relaxed culture, and it then is reflected onto our clients - after all, your
employees will treat your clients in the same way you treat them. Most
companies are "open" in quotes, but then when you get to sensitive information
they closed up, which sets up an uneasy tension. We don't have any uneasy
tensions at GrantTree. That's a huge benefit to me. I don't like dealing with
uneasy tensions and lying to people and hiding stuff.

It's important to combine transparent salaries with transparent ways for
people to increase those salaries, in my opinion. If you don't, people will
feel stuck (transparently so). But if you do, people will feel that there is a
known path for them to increase their pay and they'll work on that path rather
than try to ingratiate themselves to get a pay raise in private.

Any further questions about this - feel free to ask. I'll do my best to
respond.

PS: If you're in London and looking for a client management, sales or office
manager/admin/support role, or if you know someone who is, we're hiring!

Client Manager (x2): [http://blog.granttree.co.uk/post/45842335082/join-us-at-
gran...](http://blog.granttree.co.uk/post/45842335082/join-us-at-granttree)

Office Manager/Admin/Support (I really don't know what to call that role):
[http://blog.granttree.co.uk/post/43396425717/come-work-
with-...](http://blog.granttree.co.uk/post/43396425717/come-work-with-
granttree)

Sales: [http://blog.granttree.co.uk/post/38246842231/join-
granttrees...](http://blog.granttree.co.uk/post/38246842231/join-granttrees-
sales-team)

~~~
rational_indian
>It does mean that there's some people you won't be able to hire, if they
demand a higher salary than their peers and won't budge on it - but then
again, I'm of the view that I'm better off not hiring those anyway.

So what you are saying is that you are perfectly happy hiring average people
and you won't hire people who are better than those already in your employ?

~~~
swombat
Not at all. You're assuming there's a correlation between demanding a high
starting salary and being "better". That's a load of crap.

There are a lot of benefits to working in a company like GrantTree that are
worth more than the money - and you can get the money eventually, anyway, you
just have to earn it. At this stage, though, if your main concern is getting a
high initial base salary, don't work with us. In my experience, concern about
initial base pay is entirely uncorrelated to how good you are.

Edit: another way to look at it, is that what you're describing is someone who
is both exceptional and an asshole. My view is, if you interview someone who
is like that, don't hire them. Hire only people who are exceptional but not
assholes.

~~~
charlieflowers
Wanting to maintain a salary consistent with what you've been earning before
you join a company does not make you an asshole. This "asshole" label comes
off as a strong-arm negotiation tactic on your part. (I may be wrong, but
that's how it appears. If I am wrong, please enlighten me).

And there is at least decent correlation between ability and the compensation
you've received over the past several years.

~~~
swombat
_Wanting to maintain a salary consistent with what you've been earning before
you join a company does not make you an asshole._

Agreed. But we're talking about desires, not actions, then.

 _This "asshole" label comes off as a strong-arm negotiation tactic on your
part. (I may be wrong, but that's how it appears. If I am wrong, please
enlighten me)._

Not at all... However, if/when on the end of a conversation with someone we're
hiring, they say "But I need more money", then I explain the system to them.
If they then say "I really like your company, but I'm afraid I won't be able
to take the offer because it's too low" that's fine. That's not being an
asshole, that's just being realistic about what kind of role is a good fit for
you. After all, if you have a massive mortgage and 3 kids, getting a massive
pay cut - however short-term it may be - is simply not an option, no matter
how much you want the role.

If, on the other hand, having all the stuff in this discussion basically
explained to them, including why I can't give them extra pay initially because
it will damage the company culture, they then proceed to insist that they want
to get some extra money somehow "because they're worth it", and start
explaining to me why they're worth the extra money, and so on, then either
they just don't get it (and then they're a bit stupid), or they just don't
care about the company they're thinking of joining, and in that case I would
be happy to declare them an asshole.

 _And there is at least decent correlation between ability and the
compensation you've received over the past several years._

Agreed, but I didn't talk about "earning a higher salary", I talked about
demanding a higher starting salary in a context where it has been explained
that that's not possible.

~~~
charlieflowers
The crux of it is that you have designed a system which you feel can
objectively quantify each individual's level of contribution, and then you are
willing to directly reward people based on that contribution.

And I agree -- if you pull that off, and if you follow through with the
reward, then it allows someone to take a lower starting salary, knowing that
it is just a matter of time until things get back on the right track.

But for many kinds of work, including software development, I've never seen
anyone figure out how to quantify individual contributions directly (as Paul
Graham talks about [1]). Maybe your company has fewer of those kinds of jobs.

[1] <http://www.paulgraham.com/wealth.html>

~~~
swombat
_> But for many kinds of work, including software development, I've never seen
anyone figure out how to quantify individual contributions directly (as Paul
Graham talks about [1]). Maybe your company has fewer of those kinds of jobs._

That is true and a fair criticism. I'm only talking about the example of my
company, not declaring universal rules. :-)

------
snomad
I work for the California State University system. Using FOIA requests,
various media outlets have built up a database where we can see everyone's
salary. For example: <http://www.sacbee.com/statepay/>

Overall, I would say this has not been a bad thing for us employees. 1\.
Transparent government is a good thing. 2\. I am very sympathetic to a number
of people who receive less base compensation then they would in the private
sector with similar responsibilities. 3\. It shows the importance of career
path as there are bands per department (e.g. engineers in one range, computer
people in a separate range).

Still, there are down sides. 1\. The upper management has found ways to hide
salary and compensation. 2\. It does lead to some discontent when people are
told their is no money for a raise, but person X manages to get one.

~~~
18pfsmt
I can't figure out why so many public university employees reply to this
thinking their situation is relevant. Governments and 501(c)3's are very
different beasts than for-profit companies.

------
lnanek2
I worked for SUNY, State University of New York, for a while. Salaries,
bonuses, raises were all public. Never really noticed anything bad come from
it.

~~~
ajays
I used to work at SUNY too. Every January, when this list came out, my boss (a
professor) would send his secretary to the library as soon as possible to get
this information. Then he would use it to pester the dean.

------
drewcoo
Fog Creek has transparent salaries. Or at least they did when Joel posted
this. It doesn't seem evil to me when it's all out in the open and it's
obvious to individual contributors what to do to climb the salary ladders.

<http://www.joelonsoftware.com/articles/fog0000000038.html>

------
shanelja
The company I work at have a completely opaque approach to salaries, I don't
get to now anyone elses salary and no one else gets to know mine - the only
people who would be privy would be my employer and the external company
accountant, but my last job had a pretty open attitude, so I know both sides
of the coin:

This is both a positive and a negative in a few ways:

 _A couple of positives_ :

Nobody else knows how much I earn, there isn't any envy for the people junior
to me and it doesn't make them feel undervalued - as someone who used to work
for less than minimum wage, I know how demoralizing it can be to know how much
less _valuable_ to your employer you are than other people.

I don't get jealous of the people above me, I know they have nice cars and
bigger houses, but I'm not constantly thinking about this figure and trying to
work out why in the hell they are £30,000 per year better than me.

 _A few negtives:_

Negotiating a higher wage is much more difficult, I don't know that A co-
worker of equal level gets £2,500 more than me per year just because he
negotiated, so I'm more likely to stick with the status quo.

It becomes taboo to speak openly about wages, the boss hides it from us, so we
hide it from each other. Any questions to each other are effectively met with
"none of _your_ business."

Feeling uncomfortable talking to my employer about wages and increases in
salary makes me more likely to leave a company - it's far easier to go to an
interview and negotiate with a stranger you don't care about than potentially
having hard feelings towards someone you have to work with daily if they
refuse you a raise.

~~~
MetaCosm
But, wouldn't it be just as awkward if you went to you boss and yo said your
co-worker that makes 2.5k more than you per year and your boss goes, "yeah,
(s)he is smarter and more valuable than you".

Seems to me that rejection is rejection either way (compared to another
employee, another company or just in absolute terms).

------
adjwilli
I worked for a public university and the salaries were public by mandate. I
found it harmless for a while, but it ultimately led to me to search for other
jobs when I discovered a new co-worked who I considered lazy made $15,000 more
than me.

I think a better idea than going completely transparent is to calculate the
group or division averages and publish that number. It offers some of the
benefits of transparency while depersonalizing the controversial data. But of
course that would only work in mid- to large-sized companies.

------
niggler
As great as it sounds, transparent salaries are harmful.

I was in an awkward situation where I was paid much more than other people who
joined at the same time as me. One day one of my coworkers found out (due to
some accident in distributing stubs) and the relationship became really tense
-- he thought he deserved more pay (even though he did half the work I did, he
saw it as a measure of the value of his time)

~~~
chaghalibaghali
That's the opposite of transparent salaries - you just described a leaking of
a small bit of information in a closed salary system.

~~~
niggler
There's a certain type of person, prevalent in many circles including finance
and technology, who cares strongly about relative salaries and would never be
happy if he wasn't the highest paid person in the company. I have met quite a
few of those people

~~~
swombat
I've met some of those too. The solution to deal with those people is
ruthlessly simple: don't hire them.

~~~
charlieflowers
I definitely agree with that.

------
RyanZAG
Transparent salary only works if you start off the company with transparent
salary and make financials transparent too, along with linking salary to real
product performance to remove a lot of harmful politics.

So transparent salary can be good if everything else is transparent also -
otherwise it is very bad and leads to terrible politics.

~~~
MetaCosm
Even in that situation I would think hard to evaluate/define/explain roles
would be nightmare.

------
18pfsmt
The first startup I worked at, the founder wanted to make salaries not only
transparent, but made known as a fraction of the CEO (e.g. 1/3*CEO_pay). The
board, made mostly of VCs, did not like this idea at all and convinced the
founder it would bring down the morale of the engineering team if they saw
what the sales guys were making (the sales guys were compensated mostly by
commissions, of course). I still think it would be a great thing to establish
if done when the organization is small enough (and before any investors were
involved).

~~~
damoncali
At first glance, making the CEO pay a baseline seems really self centered.
What was the thought behind that? From my eyes looking at:

    
    
      CEO: $100k
      Me: $33k
    

makes me think, "well, I'm a junior guy. That will change over time."

    
    
      Me: 1/3 CEO
    

makes me think "why does he think he's worth three of me?

It's an emotional distinction, so it could just be me.

~~~
wting
This is a form of price anchoring.[0] By representing salaries as a fraction
of CEO income, it makes all employees evaluate their worth relative to the
CEO.

On the other hand, representing the CEO's income as a multiplier of the
company's average income is standardized and represents a company-oriented
view.[1][2]

[0]: <https://en.wikipedia.org/wiki/Anchoring>

[1]: <https://en.wikipedia.org/wiki/Executive_pay#United_States>

[2]:
[http://www.shrm.org/hrdisciplines/compensation/articles/page...](http://www.shrm.org/hrdisciplines/compensation/articles/pages/payratios.aspx)

------
richo
I've not but I'd make the counterargument for working at a business where I'm
not sure I care.

I occasionally get curious for curiosities sake, but I've never really been
bothered. So long as I make enough to support the lifestyle to which I've
become accustomed the fact thtat I probably won't be buying a yacht any time
soon doesn't really bother me.

------
chmullig
The FEC mandates many political groups detail all transactions in publicly
available databases. If the relevant laws cover you, you can use that to see
what other people in your organization make.

I never found it too upsetting, except as additional evidence for why people I
thought were incompetent should go.

------
meerita
Yes, the last company I worked (www.tractis.com) we knew the salaries of
everyone in the team. At start it is something cool to know they company aims
to be transparent, but then it is something you let it pass and forget.

------
michaelochurch
Government has transparent pay and it's never an issue, but it also selects
for people who are not financially ambitious. There are plenty of hard-
working, very driven people in the public sector, but no one's there to get
rich.

The issue with what we do in private-sector technology is that performance
itself is opaque. If we're insistent on matching compensation to performance
on a year-by-year basis, then we're going to struggle with transparent
salaries, because it means that performance evaluations are public (and can be
questioned) and, to be quite frank, that means we (as leaders) make high-
stakes, not-easily-reversed decisions on imperfect information, and that's
bound to piss people off.

I like transparent compensation, but there are issues to be addressed.

Fully opaque salaries "work" in a way, but it's goddamn unstable. People talk,
and in fact policies that prevent them from disclosing salary are can't
legally be enforced (anti-unionbusting provision). Soon, people discover all
the things that happened because they were expedient, but are unfair-- the guy
earning $185k for $120k work because he was plucked from Goldman Sachs. As
soon as one person starts talking, the whole edifice comes down.

To make it more interesting, companies that try to enforce a pay meritocracy
get hit in a different way. Most technology companies have such a rubric,
where each level and job-description has a tight band, but have an informal
and semi-secret "High Compensation Program" for people they take out of Wall
Street, in order to get their pay back to a comfortable level within 1-2
years. I'll admit that I've exploited such programs, but they are actually
_more_ unfair, because they mean that not only does your Wall Street leverage
get you a higher salary, but _it also gets you faster career progress_.
Instead of paying you more than your performance merits, they _make you into a
high performer_ with fast promotions and plum projects. Great work if you can
get it.

There's no easy way to solve this problem. However, I do think that
transparency is a fundamentally good thing.

Now, here's a radical idea. Readers of my blog have noticed that I've been
delving into the problems of organizations and concluded that there are 4
organizational cultures. The bad ones are the rank (lawful evil /
authoritarian) and tough (chaotic evil / kill-or-be-eaten) cultures that
comprise most corporate hellholes. The good ones are the guild (lawful good /
superior-as-mentor) and self-executive (chaotic good / open-allocation)
cultures. The deep issue is that neither the guild or self-executive culture
is very stable, especially amid growth; some stronger alloy of the two is
needed.

So, here's a radical idea I'd like to try. Compensation _is_ fully
transparent. Salary and every bonus is visible. Exceptional individual
performance (especially if sacrificial but important) gets a bonus, with heavy
input from the group that the achievement merits it. It's not the 20% year-end
bonus that everyone gets. This is possibly 50-500+ percent of salary. Classic
self-executive reward structure. That should not be expected by anyone. It
should be rare and it's not a ding if you never get one.

 _Salary_ , on the other hand, is generous but doesn't come from individual
achievement. You're assumed to be a good performer, working hard to do great
things. Salary (above market) accounts for that already. You get a better
salary by taking a _mentorship_ role. (I'm bringing in what the guild culture
has.) If you _teach_ people, you're sacrificing individual achievement for the
good of the group, and that deserves recognition. In other words, it's the
silent multiplier contributions that often go unnoticed (they're not
macroscopic achievements, but they make the organization symbiotic and great)
that get you a salary-level bump.

That's the model I'd try if I were in charge.

~~~
dasmoth
Rewards-for-mentoring seems kind-of like the academic model, or at least what
the academic model at its best is trying to be. I'd agree that it has its good
points if implemented well, but isn't the worry that it'll push ill-suited
people into the mentoring roles because it's the only way to get ahead?

There's also the age-old question of how you assess, or even define, quality
of mentorship.

~~~
michaelochurch
Academia actually shot itself in the foot when most of its luminaries decided
that teaching was commodity grunt work, with research being the real stuff
that determined a person's career.

Research is important, but if you don't go out and teach people how to use
what you discovered, they'll write it off as irrelevant, abstract wankery.

This led (among other things) to society's reduced investment in academia/R&D,
and MOOCs are throwing their "teaching is just a commodity" ideology right
back in their collective face.

------
adrian_pop
not possible, at least not in the IT industry.

~~~
psycr
Valve has exactly this, clearly it's not only possible - but possible within
the IT industry.

