
Lockstep Salaries Are Making a Comeback - frostmatthew
http://techcrunch.com/2015/05/24/lockstep-salaries/
======
fredkbloggs
So instead of negotiating pay, candidates will negotiate titles (except for
women, presumably, who will continue putting themselves at a disadvantage in a
new way). And instead of salary envy you get title envy. And instead of
uncertainty and negotiation over raises, you get uncertainty and negotiation
over promotions. And by the way, if you have ever worked for a large
corporation with salary bands, you know that this is _exactly_ what happens
there.

I fail to see any material difference.

~~~
CyberDildonics
I think that is a good point, and I'm sure approaches like this don't solve
the issue, but there is a difference in transparency.

Pay isn't public, but titles are. So if you are in the company you can see the
landscape and know if you should be in the group of people with the better
title. This would mean that although women might not be as inclined to
negotiate, it would become clearer to people where themselves and others
should be with their titles, so discrepancies between performance and title
and pay would be more obvious.

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Implicated
Seems like a great way to ensure you have mediocre talent.

Maybe I've just been on my own too long, but I at least want the allusion that
I'm being paid a fair market rate, instead of that which is 'fair' to my co-
workers or company.

Those of us who are passionate about what we do, and work very hard, should
run from something like this. I'm very open to conversation as to why that's
not a good idea.

Buffer is an example of what seems like a cool product and company...but their
salary system, IMO, favors Buffer. Not the people building the product. I'd
never work for them.

~~~
rayiner
As a counter example, most of the most profitable and selective law firms are
lock-step top to bottom.

~~~
nostrademons
The causality may run the other way. Lock-step salaries work best when the key
driver of the firm's success is not the knowledge and skills that individual
employees bring to the firm, but rather pre-existing market advantages that
the firm itself has that let its employees be more productive and make more
money. Otherwise, the firm has a strong incentive to acquire those individual
knowledge and skills to make itself more profitable.

The most profitable and selective law firms are such because they've built up
very strong brand names and client relationships over time. They make an
employee's career; an employee doesn't make the firm's success. As a result,
the employee doesn't have the negotiating leverage to demand a higher salary,
and the firm has a strong incentive to ensure harmony and control costs among
its workers.

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dmitrygr
Sounds like a great way to collect a company of low performers. Since all the
people who can do great things will go elsewhere, where they will actually be
paid for being above average in their skill & efficiency.

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omouse
How about software developers form a programmers association and learn to
negotiate and hire agents and lawyers and all that to make sure they're fairly
compensated?

If you're going to have lockstep salaries then you also better have solid
onboarding and training programs and an actual promotion process other than
"if you aren't bored and stay a while you'll get promoted".

~~~
te_chris
Oh, you mean like a union? No couldn't do that, we're not communists.

~~~
serge2k
No, like a professional association.

~~~
tormeh
What's the difference?

~~~
omouse
one doesn't get tarred and feathered and lose their jobs when they call it an
association.

for example:

* screen actors guild * nhlpa - national hockey league players association

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Jemaclus
I've been appalled to find out how much more I make than some of my
colleagues, even though we have the same job title. Now, I feel like I produce
more than they do (and higher quality, to boot), so maybe my higher pay is
justified, but really, I don't think it's _that_ justified.

I would much rather have levels with merit bonuses than have to rely on being
a good negotiator. I could be the best programmer in the world sitting next to
the worst programmer in the world, but if she negotiates better than I do, she
makes more. Or vice versa. And I don't think that's particularly fair.

~~~
7Figures2Commas
> I've been appalled to find out how much more I make than some of my
> colleagues...

Have you done anything about this?

~~~
Jemaclus
I did complain to my immediate boss, and then when I became a manager, I went
to HR fought to make the pay more equitable. Not a whole lot happened, as far
as I can tell.

To be fair to them, it's not quite so easy though. You can bring underpaid
people up to "fair", but you can't really bring overpaid people down, so you
still wind up with some unfair (imo) compensation going around.

Incidentally, the last time I got a raise was when I became a manager and
became more aware of the exact compensation numbers for the rest of my team.
My plan for the next time I get a raise was to ask them to give it to some of
my underpaid team members instead, but I'm leaving this company soon, so I
won't be able to see if that strategy would work or not.

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jedmeyers
Should basketball teams pay the same salary to their players, based on their
'experience'?

~~~
siegecraft
Well, for the NBA at least, the minimum salary you can be paid does scale with
your years in the league. There is also a a salary cap (per-team) and a
maximum salary for any one player based on your previous salary and years of
experience. One of the interesting things to happen because of this is that
the top-tier players are underpaid by their teams (relative to their
competition), and end up making more money from their shoe and advertising
deals than their team salary. It also means that veterans who are willing to
take minimum salary may find themselves priced out of the league since their
minimum is higher than less experienced players.

~~~
fsk
>It also means that veterans who are willing to take minimum salary may find
themselves priced out of the league since their minimum is higher than less
experienced players.

Actually, the NBA CBA has that loophole covered. If a veteran player accepts a
minimum salary contract, the team only has to pay the minimum salary for a
player with 3 years of experience. The league pays the difference, and the
difference does not count against the salary cap.

So, the minimum salary scale for veterans is not a disincentive against hiring
a veteran who is willing to play for the minimum.

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jfoutz
Up or out is a supremely effective way to drive people to meet organizational
goals. On the down side, you have to be super careful about what you measure.
Enron made extensive use of up or out. It worked really really well, right up
until it didn't.

If that's really going to happen, executives are going to need to be at least
as precise than an assembly programer when setting metrics.

~~~
jjoonathan
Bad things happen when the "competition knob" is turned to 0 (everyone free-
rides) and 11 (everyone cheats).

> you have to be super careful about what you measure.

Do you really think you can design metrics so perfect that they won't be
gamed? Even if it were possible (I'm pretty sure it isn't), could you do it
without undermining cooperative team dynamics that create organizational
value? I'm not saying all metrics are bad, but I _am_ saying that turning up
the heat with up-or-out is the equivalent of turning the "competition knob" to
11 and that it has a large number of obvious failure modes which make me
puzzle over your declaration of its efficacy (unless you meant it in the
tautological sense, but that would be silly?).

I'm further puzzled that you brought Enron up as an example of incentives done
correctly. Most people think of them as a case-study in runaway incentives and
how turning the competition knob to 11 inevitably causes, well, exactly what
happened to Enron. When the choices are "cheat or get fired," your company
will inevitably fill itself with cheaters. Unless your metrics are perfect, of
course, but are you willing to bet your company on it?

~~~
jfoutz
> Do you really think you can design metrics so perfect that they won't be
> gamed?

Nope. I think it's super super hard. I think a lot of executives will say, oh
we'll just add "Up or out" to dial up the competition knob, and then they'll
self destruct.

Executives make great decisions all the time. Unfortunately most of those
decisions involve "close enough" thinking. Up or out introduces razor sharp
edges. Everything appears better than fine, hell it appears fantastic. Until
it isn't. and when it isn't it's terminal.

I used assembly specifically to highlight the care that must be taken. I
wanted to evoke images of bricking devices. Very few executives have the
mindset that if i'm not certain i'm right, then i'm wrong. Often their
thinking is squishy at the edges, and that's just the cost of doing business.

I do think if it's possible to do "Up or out" effectively, that corporation
would be formidable. If gaming the metric advanced the corporation's goals,
that would be amazing. But, super hard. Folks selected for being the smartest
guy in the room are most likely to fool themselves into thinking they can
handle it.

~~~
jjoonathan
I think where we fundamentally disagree is that you believe it's generally
possible to design an incentive system which is well-behaved in the asymptote
of extreme competition whereas I do not, except under select conditions where
the sum total of value provided by an individual is trivially quantifiable and
separable from the contribution of his peers (e.g. assembly line work).

"Care must be taken" simply doesn't cut it; the comparison to assembly
programming is ridiculous. For most devices it's hard to screw up badly enough
to brick them and even if you do you are out, what, a few hundred dollars?
Also, the feedback is unambiguous and instantaneous. Screw up a big
organization and you are out millions or billions with only vague, ambiguous
feeback that arrives years after you institute the policy. Even a comparison
to rocket science doesn't come close to capturing the difficulty involved
because rockets are designed to be separable into subsystems which obey well-
characterized physical laws whereas most creative processes can't be broken
down so rigorously.

The hypothetical perfect incentive system is like the hypothetical analog
computer which gives you infinite accuracy and precision for free: it only
appears to be an exciting possibility if you neglect all of the factors that
limit its efficacy in practice.

~~~
jfoutz
I think it works really well in adversarial contexts. I'd guess the best is
probably law. Win cases, bill hours. Lack of ethics are exploited ruthlessly
by the opposition - that's grounds for appeal.

Somewhat less effectively, sales. Car salesmen have horrible reputations, but
lots of technical sales are smart, knowledgeable and helpful. I think the long
term relationship aspect helps.

Even less effective, but still clearly in use is finance. Insider trading and
collusion are tough to prove, and there's not much incentive to keep the
system in check. But finance clearly takes advantage of up or out.

Bricking a device is a fine analogy. Sometimes the slippery slope argument is
not a fallacy. I think this is one of those times. You seem to agree, we're
just not clear on stakes. I think the slippery slope exists in a 2 person
startup all the way up to microsoft or google.

Perfect anything is a pipe dream. "It has been said that democracy is the
worst form of government, except all those others that have been tried". If
somebody wants to try a social experiment with their investors money, best of
luck to them. It's unlikely i'd invest or be interested in working there
though.

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hacknat
Whatever. People will figure out ways to game this system too.

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dataker
Whereas Stack Ranking uses greed to estimulate achievement on projects,
Lockstep uses greed to solely achieve a job title.

Therefore, Lockstep salaries are more vulnerable to office politics and
employees pretending to achieve, in order to 'look good' and get a better
salary.

------
cocoflunchy
This reminded me of the transparency thing they had going at Buffer
([https://open.bufferapp.com/introducing-open-salaries-at-
buff...](https://open.bufferapp.com/introducing-open-salaries-at-buffer-
including-our-transparent-formula-and-all-individual-salaries/)), but it looks
like they're moving away from it now (to "self-managed salaries"
[https://open.bufferapp.com/buffer-in-march-5-9m-annual-
reven...](https://open.bufferapp.com/buffer-in-march-5-9m-annual-revenue-self-
managed-salaries-more/))

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fleitz
It's a really good idea to pay average talent an average wage.

Instead of negotiating for salary, just negotiate for title, if you have a
title that no one else has all the better.

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sosuke
They say they are making a comeback and then list one place that is using
lockstep salaries.

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serge2k
Awesome, then we can make promotions tenure based and make it virtually
impossible to fire someone for incompetence.

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paulhauggis
"Outside of reduced competition, two other advantages to lockstep are
eliminating salary negotiations and increasing transparency"

I never knew that this was called "lockstep salary", but it's essentially how
all of the unions work.

It hurts many employees because it takes away all your negotiating power.

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sirseal
> On the first, few people effectively negotiate with their employers for
> salary increases, and a lot of people fail to negotiate at all.

Boo-fucking-hoo.

Grow the fuck up. If one cannot learn how to effectively communicate, then one
will face the consequences.

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throwawayaway
> the ecommerce startup launched by Marc Lore, which uses a form of the
> lockstep model. Lore described his company’s system in an interview.
> “Everyone at the same level makes the same comp. Everyone knows that no one
> is getting paid more at a similar level,”

revealing this could easily lead to having staff hired away once the levels
are figured out.

