

Ask HN: Why not make everyone's salary public? - aiurtourist

Say, hypothetically, I'm starting a new company that's extremely tech-heavy and I want to recruit the best engineers in the world. Fairness, recognition for effort, high hiring bar, the best equipment... all things that are important.<p>Why not go an extra step to be fair and make everyone's compensation public, including the founders? Why not open up the cap table to everyone, employed or potentially-employable? Then there's no question as to whether a candidate is getting a good deal.<p>What could possibly go wrong?
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nyrulez
1\. People who think they are equivalent to someone getting higher pay (and
there will always be plenty, regardless of the actual truth) will get
demoralized and lose motivation. This can happen at any level, not just junior
employees.

2\. In a market where great talent is scarce, you will lose your ability to
negotiate if the candidate has a better offer from your competitor. Sometimes
bidding up makes sense.

3.More generally,this works less well in any field where there is a high
possible variance in ability of folks with same credentials and experience.
This is especially true in tech (only matters if you are in the market for top
talent, not the median. Burger king doesn't need to care, but Facebook and
Google can't survive with median talent). Without the ability to have that
variance in compensation, you lose the ability to get top 25% folks,
especially when your competitors are not restricted in the same way.

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cjbprime
I think Fog Creek does this:
<http://www.joelonsoftware.com/articles/fog0000000038.html>

They also have "levels", with compensation tied to a level, so it looks like
they've basically removed compensation negotiation from the company. You don't
mention wanting to do that. If you do want to do that, something like Joel's
setup sounds like it can work out fine.

If you don't want to remove the ability to let people negotiate their
compensation, it sounds like you're setting yourself up for unhappy and
jealous and resentful employees, because some of your employees will be much
better negotiators than others.

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jasonm23
To be fair, you'd just making a different set of people resentful, those who
know they could negotiate a better deal, and they leave to start their own
venture. If people feel like their wasting time, ie. getting paid less than
they know they could earn, because they're folded into a salary level system,
they're going to leave.

Frankly making salaries public knowledge is an egregious invasion of privacy,
and a security risk.

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cjbprime
_shrug_ I work at a US nonprofit, so the salaries of all our "key employees"
are legally required to be public knowledge. As I understand it, this is also
true of all H1-B recipients. You seem to be over-reacting.

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S4M
In Norway, the salaries are public. I have never lived there, but a colleague
who has worked in Norway told me that it was a pain, not because your
neighbours know your salary, but because people can target you commercially as
they know how much you can afford. But apart from that, nobody cares.

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runarb
I live in Norway. Its not the salaries per se that is public, but how much you
pay in tax. But from that you can quite accurate estimate someones salaries.
Your capital assets are also public.

This is nice reading for all kinds of scammers. Thus list are actively being
analysed by banks and financial institutions when soliciting potential
customers, and burglars are literally driving around with thus list when
looking at houses to break into.

Until two years ago thus list was publicly available on the internet, but now
you have to log in at a government run portal to search them. But everyone can
still search anyone.

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geon
> burglars are literally driving around with thus list when looking at houses
> to break into.

That surprises me. You could just pick a random home in the right area and hit
the jackpot every time.

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runarb
_That surprises me. You could just pick a random home in the right area and
hit the jackpot every time._

Doing your burglaries in the right area is impotent, but for what I can gather
from reading the newspapers professional burglars also looks at other things
to maximize their profit.

For example in an area you can have to houses that looks the same, but one is
own by a couple that is old and not that rich. They do have the money to live
there, but barely so they don't spend that much. In the other house you have
someone that is younger and just got rich. They will be more likely to have
movable objects like jewelry, Loui Vuitton handbags and a new TV one can
steal.

The local junkies are of course just breaking into random apartments, but a
lot of the burglaries her is done by professorial teems. They want to know
what to expect when burglarizing someone.

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johnrgrace
If you make salaries public you can't screw someone over on pay while making
them feel great.

I worked at a small company a big company bought bought and moved from the
finance group to the business development group and kept my salary the same,
another business development person who had our key accounts was paid 60% of
what I was because she had been promoted twice in a few years. Her salary was
rising at double digits a year, but was still far under where her peers were.
Getting 12-15% raises every year feels great, until you learn you make a lot
less than others. The company was going to easily save over 150k in salary
moving her up to the average over a period of years.

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1123581321
I think you can do it if you quantify everything that goes into the number and
list that too. For example, if you hire top talent from Google and pay
$30k/year more, you could note in the salary table that being from a
prestigious company at that level is worth so much, and give a range. It would
take work, but if you credit everything that could possibly explain the
difference, you might satisfy people or at least explain to some exactly why
they make less.

Or, and I prefer this, you could not disclose but pay everyone above market
rate so they don't think about money, but not so high that it's an issue/fuels
the desire for perpetually more.

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alok-g
PS: My comment relates to economy as a whole and not just implementation
within a specific company.

Not having access to information is one of the things that makes an economy
suboptimal, so _overall_ , I think making salaries public should be good.

At least some of the issues in actually implementing the above is the impact
of the transition. The economy becomes more optimal if everyone takes this new
information to make intelligent decisions about themselves (and not be caught
up with pure jealousy type of things), and the resulting shuffling balances
the salaries out again according to people contribution/skill levels. During
the transition however, a lot of messy things would happen, leading to short-
term losses in the economy.

I generally hear that such transitions often have to be slowed down
considerably and implemented in phases to not have negative spiraling effects
on the economy, like the stock of an underpaying company going down
considerably even if the company as such was doing good, or HR salaries
overshooting because of the sudden overload that may come.

I highly welcomed glassdoor.com when it showed up.

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scheff
2 reasons I can think of.

1 - nobody would get a pay rise because "If I give you a pay rise, then I have
to give everyone a pay rise" would be the mantra of managers in an established
organisation. Anything less would create arguments.

2 - the ego of every employee. "Oh, right, just because he's an engineer, he's
more important than me in marketing ... which one of us improves how much
profit you generate?" ... and so for every other class of employee. even
between engineers - "I'm sorry, but I'm better than that guy because of X, Y
and Z (subjective reasons) and I should get paid more."

The extension of 2 is - "If I don't get paid the same as that guy then I'm not
working nearly as hard as I have been ... I mean - what's the point?"

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hjay
From my limited understanding, it's not the best idea for companies who want
to keep their costs to a minimum.

There are employees who are being underpaid and don't have many metrics to
look at if they want a higher salary (win for the company). Then there's also
that if companies make their employee's salaries public, there will be a more
aggressive and obvious effort to poach employees from competition. Potential
employees will benefit off of this war, while the companies will be just
trying to one-up each other.

Not to say companies don't currently poach employees from competitors, but I
think making those figures public would make that much more prevalent.

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rm999
I prefer the glassdoor approach: aggregate anonymized numbers so people get a
good idea of the income and bonus distribution by company, job title, city,
and experience. This really gives anyone a ton of useful information without
drama.

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maniacwhat
I think ideally this would be great, but in practice de-anonymization (by
cross-referencing etc.) is extremely hard to prevent. So for the effort you
may not even benefit from the bulk aggregation, only adding a layer of
obscurity.

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smartwater
That sounds like the least creative way to use mathematics. They can de-
anonymize till the cows come home for all I care. In the grand scheme of
things, it doesn't matter at all. Plenty of salaries are made public for
various reasons.

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gamechangr
It's hard to take this post serious??? There are soooo many reasons not to do
that. I can assume you don't live in the valley or anywhere there is a
shortage of developers.

Biggest one:

More expensive for the company initially and way less secure. Talk about
telegraphing to your competition what it would take to poach your top
employees!

You would end up with 80% of your staff believing they were underpaid (even if
that was not even close to true--perspective is reality)

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cybernomad99
Interesting thought. I heard that Nordic countries like Fin, Swede.. make
their government information public, not sure if they include salary
information.. Transparency inspires trust. But in practice there is more to
that.

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Mz
Given your remark about "socialist assholes," I will suggest that it is
extremely hard to pursue "socialist" agendas and business in a heirarchical
setting. Rock groups sometimes split the credits and the money evenly, not
caring who actually wrote the lyrics, but they are generally not heirarchical.
I don't know the answer to this question. I do know I would do more research
than tossing the question out on hn if it were my company. You can't easily
put the cat back in the bag if you try this and conclude it was a disaster.

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coryl
And if some employees don't want their salary to be shared?

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aiurtourist
That's not my question, exactly. Inevitably, as the company grows, the
probability of someone not joining because we're "socialist assholes" goes up.
I want to know what's wrong other than sentiment.

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aiurtourist
Thank you all. Fascinating discussion.

