
Our Open and Autonomous Salary System - dsr12
http://www.multunus.com/blog/2015/09/our-autonomous-salary-system-the-background-story-part-1/
======
jstanley
> We made the compensation revision system democratic. Everyone chooses their
> preferred salary and then tries to get enough support from the rest of our
> team to justify their expectation.

So you turned a private conversation into a massively political process. This
might be better for you, but I bet it's a lot worse for a lot of your staff.

~~~
physguy1123
Agreed, the line

> Higher pay for those with higher influence and negotiation skills

being portrayed as a negative seems like a main goal was to make it harder for
people to negotiate higher salaries.

~~~
justinlardinois
I think that's a bit cynical. There is the very reasonable idea that your
compensation should reflect your skills, abilities, and worth to the company,
rather than how good you are at negotiation.

I'm not sure if there's any reasonable way to remedy that problem though.

~~~
cloudjacker
Your worth to the company is reflective of your worth to the market.

The company doesn't want to admit that at first but you are already aware.

This is where negotiation comes into play, and negotiating something higher
than what your peers in the company perceive, while remaining in line with
reality. Best case is that you move the "average salary" for that position
upwards a notch.

~~~
justinlardinois
> Your worth to the company is reflective of your worth to the market.

Not necessarily. You could certainly be worth less or more to your company
than what you're worth on the open market. If it's the former, you probably
need a new job.

------
quadrangle
If you actually want democracy and fairness, make the whole thing a co-op.

Sure, it's good to reveal salaries. The "don't tell the others what you make"
common thing from management is actually a way to keep employees disconnected
and powerless so they don't organize. I'm not sure the revealing of salaries
has to go along with this complex political system they've invented. Co-ops
already have worked out ways to deal with these things. We don't need constant
wheel-reinvention.

~~~
lukewrites
Absolutely. If you want a democratic workplace, form a co-op.

If anyone's interested in reading about cooperativism in the tech world, a
starting point is [http://techworker.coop/](http://techworker.coop/)

I can't think of many tech companies that are coops. Plausible Labs,
developers of VoodooPad
([https://plausible.coop/voodoopad/](https://plausible.coop/voodoopad/)), is
the one that springs to mind first. Most of the other coops I know of are
small design/development studios.

Can anyone else name any tech coops?

~~~
walshemj
Poptel in the UK was one and quite well known in the UK Coop movement.
Unfortunetly we went bust :-(

------
chefandy
Uggghh... So the very important managerial task of divvying up the cash was
too time consuming and didn't engage their creative selves enough, so they
just picked it up and dumped it in everybody else's lap under the guise of
democracy and transparency. Classic management. Maybe they should quit their
executive jobs and become graphic designers if they aren't sufficiently
stimulated by managerial tasks.

My being an excellent quality, steadily improving developer is all the
justification I should need to provide for my steady paycheck, and if I
provide an increasingly good value to the company, regular reasonable salary
increases. Don't make me fight with some shiny new MBA in Sales that drools at
the thought of a cutthroat negotiation, just because management feels that
making the decision themselves is too difficult or boring.

~~~
nickpsecurity
I sort of agree with you but they claim to be getting some results:

[http://www.multunus.com/blog/2016/01/20-investment-time-
back...](http://www.multunus.com/blog/2016/01/20-investment-time-background-
story/)

What do you think of the 20% time? I've steadily been in favor of it for
knowledge work.

------
carlmcqueen
Did overall expense on salary go up or go down, did I miss that?

This system likely shames large outliers out, maybe saving the company money.

Salary would seem to become more of Mediocristan[1] in this system.

[1]
[https://en.wikipedia.org/wiki/The_Black_Swan_(Taleb_book)](https://en.wikipedia.org/wiki/The_Black_Swan_\(Taleb_book\))

------
aantix
The only thing that should be transparent in these conversations is the profit
per engineer, not what your jackass co-worker two cubicles down is making.

You as an engineer have the capability to make wealth, massive wealth, that
scales. Know what monetary value you bring to the company and then negotiate
from there.

Don't apologize. And certainly don't position your salary negotiations
relative to some introverted programmer who doesn't have enough courage to ask
for what he's worth.

~~~
st3v3r
And how are you supposed to do that without having the knowledge of what other
people doing similar work are doing? The employer you're negotiating against
certainly knows that amount. Why shouldn't everyone else?

~~~
aantix
Because you're leaving money on the table. For a profitable company, the
employer isn't going to hire your services for more than they can sell it. But
as an individual, obviously it's advantageous for you to capture as much of
that value as possible.

Answer this: which makes you angrier? 1) You're making 100K when the product
that you're the senior engineer for brings in 20 million for the company? OR
2) You're making 100K and Data Dan one desk over is making 110K?

It's all about what you anchor yourself to. Anchor yourself to everyone's
else's salary, and awesome, you're making an average salary..

------
JonFish85
Moving compensation away from value-added-to-company and towards likability
seems misguided. Pay seems like it's been correlated to how much value a
person adds to a company at a given time. I don't really see how this is a
positive thing at all. If I'm a developer, I don't want to have to make
decisions on how much my peers should get paid. Jamie just had a baby, but
Jerry's wife just lost her job, and such-and-such had a medical emergency,
sounds like a hassle to have to think about with respect to how much a person
should be paid.

At the end of the day, salary is a distraction. At least personally I prefer
just to have one person to deal with about it and not a room full, and once
it's settled, it's not something that I think about. I also don't want the
responsibility of having to listen to coworkers present their cases for more
money. I want my relationship with my peers to be purely based on work, not
decisions about their compensation.

~~~
phamilton
I think we forget that pay is not about contribution but about cost of
alternatives.

For the employee, there is a salary floor at which alternatives are more
attractive. For the employer there is a ceiling at which alternatives are more
attractive. Compensation by definition is somewhere in the middle.

High contributions raise the ceiling, market rates raise the floor. Everything
else is just positioning.

------
ascotan
This is a truly terrible idea on every level.

1\. Most places where I have worked, management are given large under-the-
table bonuses that are not reflective of their salaries. So even if you put
out the amount of money management is making on a spreadsheet it's not fully
transparent if people are getting end-of-year bonuses.

2\. People WAY overestimate their abilities when they have to 'self-rate' for
management. If you've ever filled out a performance review, you know that
everyone gives themselves 5 stars in virtually every category. Now I get that
it has to be peer-reviewed, but I can easily see this turning into a circle
jerk where everyone says everyone else is a 'python master'.

3\. Your salary is not really anonymous in this system because you are
required to get 'upvoted' by peers on your salary choices.

> We asked everyone on the team to get upvotes from at least 6 others in the
> company with a good distribution of roles, skill levels and leadership
> levels - demonstrating support for their individual decisions.

So if you said I'm a 'tech weenie, python master' I would need to get 6 other
people to upvote me on this. People would then be able to figure out basically
how much I'm getting paid.

> Salary is a personal matter for some people: While we do appreciate this
> fact, our priority is higher trust across the team.

and

> One of the key challenges we’ve struggled with is creating a high sense of
> trust between the founders and the rest of the team.

Therefore, the entire point of this exercise seems to get the team to believe
that the 'founders' are not overpaid. I guess if this is a concern there may
be other issue at play here other then peoples salaries. Frankly It sounds
slightly passive agressive to say "The team has the impression we are over
paid, lets release everyone's salary to show that we are not."

There's nothing worse in a company than politics and this system creates a
gigantic burden of politics on people that should be focusing on building a
product.

~~~
bitewhite
I'm sure the self-declared "master executive officer" knows what they are
doing.

------
msane
>The Evening of Chaos: We scheduled a 2 hour marathon session one late
afternoon to meet with everyone. The goal was to get everyone’s numbers
decided, finish the whole process and just move on with our lives. This
however turned out to be much harder than what we’d expected. It was chaos.

What a terrible idea. I feel for everyone involved.

I love the arrows that say "component", "attribute", "attribute number" on the
salary spreadsheet. It's something that just doesn't make 100% sense, but
sounds fancy enough to make the reader second guess their own intelligence.

------
GauntletWizard
A few questions for the authors on a hot button issue, the gender pay gap:

When you opened your salaries, did you see/did anyone notice a gender
disparity in pay? Have subsequent rebalancings changed that? One of the
findings Google made was that women were less likely to ask for promotion, but
that could be corrected by giving regular nudges to everyone to ask for it. Do
you find that women are more involved than men in the salary democratic
process or less?

------
shostack
How did you factor in market data on what current market rates were, and what
was your source for that data? Was that source data also available and agreed
upon by your employees?

If market rate changes for certain roles more than say, a fixed percentage
every year, you can run into the trap of people falling behind market rate.
Without some mechanism to correct for that, people increasingly feel they need
to leave in order to get compensated fairly.

Taking a step back, I commend this effort. I have faced endless stress because
of totally opaque salary situations in the past, and often thought it would
alleviate the pain and save a ton of time for both parties if companies were
just more open about these things. No system is perfect, but there's a lot to
learn from trying this.

Perhaps the biggest challenge is that many people did not sign-up for a
company with this system and may prefer the old system. They are now forced
into what becomes a very social and political situation where they may not be
super social themselves, and may have strong desires to avoid politics like
the plague (I know I sure hate office politics). If my livelihood suddenly
depended on that MUCH more than it used to, I might no longer enjoy working at
such a place, even if I felt I was compensated at a fair rate because the
amount of constant stress from the process would be a huge increase and
detract my focus from my actual work.

Personally, I think a happy medium between the two worlds is agreeing upon
solid, tangible goals for employees with a clear picture of how that impacts
comp, as well as a neutral 3rd party salary data provider whose process and
data are available for employees to review to ensure it isn't favoring the
company (since that is who pays them).

In fact, if anyone has strong recommendations for any such data providers I'd
love to hear them--Glassdoor is a helpful starting point, but their data is
often lacking.

------
Jabbles
I bet they'll end up with a gender pay gap.

See, e.g. [http://www.businessinsider.com/google-hiring-data-reveals-
tw...](http://www.businessinsider.com/google-hiring-data-reveals-two-things-
women-can-do-to-get-hired-and-promoted-more-2012-8?IR=T)

~~~
nickpsecurity
I'd actually like to see the pay rates in a year just to see if that happens.
Good democracy in action or tyranny of the majority?

------
sytelus
Among many problems as others have pointed out, you are also incentivizing
your entire staff to heavily pursue leadership positions. This means a great
technical person would have no choice but to take on management tasks to
increase his/her compensation. You not only lose great technical talent in the
process but you end up with "leaders" who probably don't like management as
much. Every one I know in the valley has learned that comp should never be
tied to "leadership component". In many top tier companies it is possible for
a person in non-management position to get same or better comp as management
position - everything else being same.

------
tyingq
Confusing. On the one hand, they state _" the salary of every employee is
published and shared with every other employee"_...

Then, later... _" We decided not to reveal the existing salaries of our
people. Only the newly revised self-determined would be open to everyone."_

That seems counter to their view that they didn't want _" Higher pay for those
with higher influence and negotiation skills"_

Starting with an open view only of "what I think I deserve" certainly favors
the better poker players in the group.

~~~
quadrangle
They just meant they only revealed the new salaries determined by this system
and not the salaries from the old system.

~~~
tyingq
Yeah, I read it a few more times. Sounds like the new formula completely
disregarded the current salary.

Sounds like a pretty big shaming factor for those with current salaries higher
than the formula. They have to publicly plead their case for an exception.

------
ErrantX
> Leadership at the company is by invite only. We’re always looking for more
> leaders - so you can rest assured that you will be personally invited to
> formally join the leadership team.

Is this not just the performance management you we're trying to get rid of? I
mean, fair enough if this is more palatable/workable. But still, it's not a
huge difference from the old way?

------
gavinh
Those job titles are literally nauseating.

------
dpeck
so the bucket of crabs approach to salary negotiation.

------
systems
what if they all simply agree (or conspire) to give everyone maximum, they all
win ... except maybe the owners

