
Open Salaries: Outcomes - fridek
http://blog.lunarlogic.io/2016/open-salaries-outcomes/
======
scarmig
Hmm. My experience tells me that a lot of this depends on the details of the
team, and that there isn't a right-for-everyone policy.

My story:

I worked for a company that paid a bit below market salaries, for the SF Bay
Area. I was on a team with two more junior engineers. At one point one
disclosed to me that they felt underpaid. That led to a salary discussion
where I explained that the company habitually underpaid people, and I was
happy to share my salary with them so they would know they're not the only
ones underpaid (and also, implicitly, so they'd know if they were getting
taken advantage of, since I'm all about employees looking out for each other).

As it turned out, however, I was making around 40% more than both of them.
Some of that was due to more experience, but it was more a matter of me being
underpaid versus them being outright screwed. Naturally they went and asked
for a well-deserved raise, and the company, of course, said no.

This changed the team dynamics in a fundamental, toxic way. It engendered
bitterness from them not only toward the company but to me as well, which
ultimately led to all of us leaving the company for greener pastures but with
lots of bad feelings all around.

You could say the takeaway is don't work for companies out to screw their
workers, but that's most of them.

~~~
marme
no two employees with the exact same job title should have more than 10%
difference in pay. If someone is making 40% more than others with same title
then they should be promoted to higher title and if they dont deserve that
title then why is the company paying them so much. It is one thing to want to
minimize salary costs but another to disrespect employees with absurdly low
salary.

~~~
mason55
Doesn't the Peter Principle come into play here? What if we do the same job
but I do it twice as fast? That doesn't mean I'd be a good fit for the next
level up, it might just mean I'm really good at doing this specific job very
quickly.

~~~
ellisv
In my mind this is one of the cases where "Jr" and "Sr" titles can be useful.

~~~
jsprogrammer
Or a 20 hour work-week with full salary.

------
willyt
I read about this idea once as a case study. I think it was first tried at a
manufacturing company[0] in Brazil where everyone from the CEO down to the
packers in the dispatch shed has their salary decided by a consensus
employees. It's a 3000 person company with a revenue of $160m now.

[0]
[https://en.wikipedia.org/wiki/Ricardo_Semler](https://en.wikipedia.org/wiki/Ricardo_Semler)
[http://www.freibergs.com/resources/articles/leadership/semco...](http://www.freibergs.com/resources/articles/leadership/semco-
insanity-that-works/) [https://hbr.org/1989/09/managing-without-
managers](https://hbr.org/1989/09/managing-without-managers)

~~~
nickpsecurity
That's incredible. Thanks a million for those links as I try to collect these
to get something close to significant data on them for analysis.

~~~
earljwagner
You might also be interested in books that profile other companies
experimenting with this kind of transparency:

"Reinventing Organizations" by Frederic Laloux

"An Everyone Culture: Becoming a Deliberately Developmental Organization" by
Kegan and Lahey

The latter profiles Bridgewater, a hedge fund in which every meeting is
recorded and available to anyone in the company via the intranet.

------
jjordan
I'd like to get the perspective and opinion of an employee in the open salary
system, rather than just a recount from the top.

~~~
szynszyliszys
Hi, I can give it to you since I work for Lunar Logic. How it looked: everyone
felt a bit anxious and not 100% sure if it will be the good decision, but we
decided to go for open salaries anyway (it was a collective decision after a
series of long discussions of a whole company, not a decision at the top).
When the salaries list was released, everyone took a look and there was no
disaster. Most of the salaries felt just fine and we fixed ones that were bit
too low soon after the list was released. We all treat it as a normal part of
our job now and I think no one regrets that we went for it. Being transparent
about it makes everything easier to be honest and we treat it as one of the
coolest things we did last year.

~~~
dominotw
>but we decided to go for open salaries anyway

What happened to the people who didn't want to reveal their compensation. Was
is it revealed anyways?

~~~
szynszyliszys
There was a choice and these people would just not see the salaries list and
participate in salary raise process. But we went all in, everyone was ok with
revealing their salaries.

~~~
swissoak
So there was the implicit threat that if you didn't join, you wouldn't be
eligible for raises? Also, how could you enforce them not seeing the list?
It's illegal for an employer to deter the discussion of compensation amongst
employees.

~~~
szynszyliszys
They would get raises in an old way, from CEO. We are based in Poland, and as
far as I know there is nothing illigal about it. Someone mentioned shoulder
surfing - I believe people who would not join, would be decent enough to play
by the rules and not do this.

------
0xmohit
Also worthwhile reading:

Buffer's transparency dashboard: Public salaries, equity and more [0].

The original post: Open salaries at Buffer [1].

[0] [https://buffer.com/transparency](https://buffer.com/transparency)

[1] [https://open.buffer.com/introducing-open-salaries-at-
buffer-...](https://open.buffer.com/introducing-open-salaries-at-buffer-
including-our-transparent-formula-and-all-individual-salaries/)

------
hardwaresofton
While this sounds awesome in theory, I don't think I'd find it fun to have
everyone deciding on what everyone in the company should be paid. It seems
like weird office politics, jealousy, and unrelated things would get involved.
This is all just my opinion, but I feel like even though this idea is good in
theory, it will be ruined by people, just like valve's org structure model.

The truth is, no one knows what anyone should be paid, really. The market
decides it. I feel like this kind of policy just creates a powderkeg of
opinion and emotion. Maybe it works for a team of 25 (at least as far as we
can see), but definitely not for a company of 500.

Please everyone just put your salaries in Glassdoor and call it a day.
Everyone make sure they get paid market or above, be a responsible adult and
look out for yourself.

~~~
pawelbrodzinski
Similar systems built around transparent salaries work for companies bigger
than 500. Look for stories from Morning Star or Semco for example. Obviously,
with a few thousand people you need at least a bit more structure, but in
principle the model is the same: people collectively set their own salaries
with respect to economical constraints of an organization.

~~~
hardwaresofton
I was wrong to generalize so much and say it wouldn't work for companies
bigger than 500, but my problem with it is this -- I don't care about the
economical constraints of any individual organization. I care about which
organization is able to pay me the most, for my labor. I also have near-zero
faith in my peers to determine what I am worth, to any given company.

People have to somehow pick "reasonable" salaries for themselves, and it seems
like a thin layer of bullshit. If I could set my own salary, I'd set it way
higher than any company is willing to pay me, because I'd rather make tons of
money then NOT work anymore. Obviously, that's not a thing that is
sustainable, and it's up to me to find a business that pays me as close to
that impossible number as possible.

This whole like "let's work together and make reasonable salaries for
everyone" smells like bullshit to me because no one knows what a reasonable
salary is. In the extreme (not so extreme in bubbles) case, if the market
moves and all of a sudden your position is worth 30% more than it was a year
or two before, will everyone in the company be fine with you getting a 30%
raise? Maybe not. I don't ever want to deal with the situation that someone
who either doesn't value or understand (completely) tries to value my work.
What do developers know about how much project managers should be paid? or
vice versa? A good project manager will make or break an entire initiative at
times, but I bet most developers can't properly understand their value (and
vice versa).

Openness in salaries is one thing. I'm all for knowing what people are worth
to a give company, and knowing what the market rate for your position is. This
lets-all-decide-everyones-salaries-together system is definitely an idea that
grows in parallel, and is very closely related, but I think they're separate
things.

Or maybe the reasonable solution to such a mismatch in perceived value is that
good employees who can make more money elsewhere just leave (at the risk of
maybe entering a less open and enjoyable atmosphere)?

------
davidgrenier
I'd like to get push-back to the idea of everyone earning the same salary. Why
wouldn't it work from some people who seem to have some experience like you
have?

~~~
lucaspiller
Do you mean everyone in the same role, or everyone in the company? I guess you
could argue that everyone contributes equally in their own way, but it sounds
like it would be hard to deal with market rates. For example, if the market
rate for a support agent is $30k and the market rate for a developer is $70k
what do you do?

~~~
crdoconnor
Pay market rate and be honest about it?

I don't understand the problem here. Support agents are unlikely to demand a
developer's salary.

~~~
gwbas1c
There is no objective definition of what "market rate" is once you get into
skilled labor.

This is, in part, because every job will value someone slightly differently
depending on the unique situation.

~~~
crdoconnor
And?

That's still not a reason to be secretive. In fact it was cited by the article
as one of the great positives of salary openness: you got much more accurate
feedback much more quickly which made it easier to make those tricker
decisions.

------
aantix
If you're any good at your job, you should avoid these open companies like the
plague. Don't piss away your leverage..

~~~
brianwawok
This got downvoted, and the tone is a bit harsh.. but it does speak a bit of
truth.

What happens to the guy in open salary co who is legit 50% better than
everyone else? Do his peers vote to give him 50% more money? Or does it settle
on sort of a union style pay scale, where everyone with the same # of years of
work makes the same money (which is great for the worst performances, and
terrible for the best performers)

~~~
ryandrake
I didn't down vote, but the comment would be better if it were expanded with
some details about why he thinks people who are good at their jobs should
avoid open salary workplaces. I would think nearly all employees benefit from
open salaries. For most companies, the salary information asymmetry is an
effective way to keep the salaries of high performers DOWN. If you don't know
that the mediocre guy who sits next to you makes $40K more than you, you're
less likely to complain or look elsewhere.

The people who have the most to lose from open salaries are the dopes who
somehow are making top-of-market salaries.

~~~
moduspwnens14
> I didn't down vote, but the comment would be better if it were expanded with
> some details about why he thinks people who are good at their jobs should
> avoid open salary workplaces.

I've tried a handful of different ways to explain this (before backspacing out
this comment box and trying again), but here's the best I can come up with:

You always have the ability to negotiate for higher pay. If you've spent much
of your life in different workplaces, you'll probably know that people
(generally) think they deserve raises for reasons other than those that make
sense. Those can include:

* Poor personal money management

* Poor life decisions leading to more money needed

* Number of years spent with the company

* Number of hours worked each week

* How busy they appear to be

* How much they think they get done

* How much more work they think they do than they did last year

* How much more work they think they do than their peers

* and more

None of those things really matter, though. Factors that actually matter
include:

* How much other employers will pay for your skillset

* How likely you are to leave

* How much it would cost to replace you

This is important because the people actually running the business have to
understand this, but the rest of the employees don't. As a high performer,
you'll be negotiating a raise based on those factors that actually matter and
your boss (hopefully) understands that. You don't want to put him in a
situation where he can (or has to) fall back on how the rest of the company
will feel about your pay, because they don't necessarily weigh the correct
factors in deciding whether or not you "deserve" it.

~~~
jsprogrammer
According to the article, anyone can negotiate for a raise at any time. All
you have to do is execute the negotiation process.

~~~
moduspwnens14
My response was relating to an open salary company in general, but the process
in the article takes it even further by having the employees themselves play a
significant role in the decision-making.

If I consider myself a high performer, I don't want to have to justify my
request relative to others at the company, or what they received, or what they
used to win over other people to vote to give them more money that isn't
theirs. That's going to put me in a position where I need to win a popularity
contest, be around a while (to comment positively on others' raises), or wait
a few more months so I don't look pushy and selfish to the entire company.

...because none of that matters if I just do an interview elsewhere and get
what I want!

------
coldcode
This might work for a company of 25, but what a disaster it would be for a
company of 100,000+

~~~
herge
Really? A lot of governments are one of the few employers with more than 100k+
employees, and have a lot of open salaries for civil servants.

~~~
lucaspiller
I'm currently working for a UN-agency (as a contractor) and the salaries for
staff are fixed based upon your job level and number of years of service, so
basically everyone knows what everyone else gets:

[http://icsc.un.org/resources/sad/ss/sal201201.pdf](http://icsc.un.org/resources/sad/ss/sal201201.pdf)

A senior developer is usually P-3 or P-4. It may seem on the low side compared
to market rates if you in New York or Geneva - but bear in mind they don't
need to pay taxes and get quite a lot of other benefits.

Edit:

This site has more details on the salaries, benefits and theory behind it:

[http://www.un.org/Depts/OHRM/salaries_allowances/index.html](http://www.un.org/Depts/OHRM/salaries_allowances/index.html)

~~~
co_dh
First, are you sure that everybody is paid according to that table? Or it's
just a guide line? Secondly, if it's true, then the salary is not related to
performance, and I would image people just stay there, the longer the higher
salary.

~~~
takingflac
This sums up most government jobs. Also, the job security is an added bonus.
When was the last time you heard of the government having a mass layoff?

~~~
TeMPOraL
2013?

[https://en.wikipedia.org/wiki/United_States_federal_governme...](https://en.wikipedia.org/wiki/United_States_federal_government_shutdown_of_2013)

~~~
takingflac
How many people were actually fired or laid off from this? There was a bit of
a kerfuffle with temporary unpaid leave and some people working without pay
for a bit(they got back pay latter) but nobody lost their job.

------
ellisv
Reminds me of 360-degree feedback -- which may not lead directly to a raise
but provide the employee with frequent feedback and build social support for
the reviewee.

------
partycoder
Some people prefer a compensation model with a base pay + bonuses. Others to
have a peer review process like this one.

The problem is that those processes work only when there is certain level of
mutual trust, selflessness and honesty. If you have really selfish people this
thing can start being gamed... e.g: I refer 100 friends in exchange and have
them recommend me for a promotion, raise and bonus every quarter.

~~~
0xmohit
s/selfish/asshole/ please.

Assholes can game any system.

------
dustinmoris
If these 25 employees would be clever then you'd get 25 massive pay rises in a
very short amount of time by everyone quickly realizing that if you all praise
yourself endlessly in those discussions then it is difficult for 1 single boss
to push back on 25 people's amazingly positive feedback. Not trying to plant
an idea though. Just saying.

~~~
szynszyliszys
Unless you care for the company and you are a decent person that doesn't only
care about money. We care about the organization, we care about our financials
and we are just nice people. Money is less valuable to us than a nice
environment and autonomy. We don't want to destroy this.

------
sytse
After you define salary ranges for positions the only variables left are
promotions and experience within the role. I don't think it makes sense to
have people that are not working with a person decide that. I think the direct
boss of the person should decide after getting input from others and subject
to approval by the boss' boss.

~~~
RodericDay
If there's a need for approval from the boss' boss, why not also an approval
from the employee's peers (and employees)?

Doesn't it make sense that disgruntled employees should be able to bar a
manager giving themselves raises, purely as a matter of symmetry?

~~~
sytse
The boss' boss approval is there to prevent people playing favorites. Asking
the whole team for approval doesn't make sense to me, it is the task of the
boss to be aware what everyone is contributing. The rest of the team should
primarily be concerned with their own contributions, not those of others.

Nobody can give themselves a raise. This is always proposed by a boss and
checked by the boss's boss. If I want to set a salary for one of my reports I
have to consult with the board. The board also determines my compensation.

------
swissoak
We can see from this article (50% raises happening after implementation) that
even in the most cognizant companies wanting as much fairness as possible in
salaries, you have huge discrepancies and hugely underpaid people because they
can get away with it. They only time it was fixed was when they were
essentially shamed into doing it, even if that shaming was self-inflicted.

Why did it take implementing this program to give those people a 50% raise?
Was it not obvious prior to this that they were below market rate? Did Lunar
do the traditional salary negotiation discussion with new hires prior to open
salaries?

------
matthewowen
When I've seen companies make their salaries publicly transparent, they've
been below market rate (eg Buffer).

I wonder if the same tendency exists for companies that become internally
transparently?

------
brightball
I wonder how many of these open salary companies are just doing LLC payments
to people for additional compensation so they can still say they disclose all
of the "salary" information?

------
stana
No mention of share allocations at the company which could affect salaries?

------
behnamoh
I read it Open Solaris (RIP)!

------
chinese_dan
Companies love open salaries. Why? They can now pay a developer with 5 years
of experience and the developer with one year experience the same low salary
for the same position.

Salary should be based on the individual (relevant experience and education)
not just a job title.

Why would an employee give away one of the only bargaining chips they have to
get a higher salary? When I was working a regular job, I was regularly able to
negotiate a 20-30% higher salary than co-workers with the same title.

~~~
RodericDay
Where are these rancid lies coming from?

Companies _hate_ public salaries, and there is ample evidence everywhere to
look, including efforts to legally prohibit employees from disclosing their
salaries and unenforceable claims in employee handbooks.

More information can never make a market more inefficient.

