
Balsamiq : Salary Policy - jagira
http://blogs.balsamiq.com/team/2011/09/12/salary/
======
ekidd
A common trap: _We want amazing programmers, and we pay them slightly better
than average._

I'm good at what I do, and I aim for more than "a little better than someone
with your same job in your geographical area."

Some of the most amazing consultants I know charge _far_ above their local
market average. And I'm always happy to write them checks, because they're
amazing programmers, and they would be a steal at 5 times the typical market
rate.

~~~
nadam
Could you provide an example what such an amazing programmer knows? In my
experience beyond a level employers cannot even measure your knowledge,
because that would require them to be really good at what you know best. If
you are an extremely good developer, you can get a job at Google or at a
similar company, and you will receive slightly better than average
compensation. But getting 5x market rate? Being a good programmer is not
enough for that I think, no matter how good you are (unless you built
something truly special, like solving NP problems in P.:)). You have to build
up your personal 'brand' for that I am afraid.

Edit: I am really curious who are those extremely smart programmers.

Guys on the top of this list?

<http://community.topcoder.com/tc?module=AlgoRank>

Or guys who were at the top of the Netflix prize top scores list?

Those are some truly gifted guys (one in a million caliber), but even most of
them don't earn 5x market rate.

~~~
ekidd
When I'm interviewing programmers, I would define "amazing programmer" as a
combination of 3 things:

1) Talented: Can they code well, even when things get tricky? This loosely
correlates with things like TopCoder rank, but it leans more towards software
engineering and debugging skills.

2) Driven: Are they relentlessly productive, even without supervision?

3) Solves the right problem: If there's a solution which provides 80% of the
benefits for 20% of the cost, do they find it? Do they also know when it's
time to turn a nasty ball of hacks into a rigorous model?

If you have these 3 things, then you will easily create 5 times more value
than the average programmer. Note that you won't necessary get _paid_ 5 times
more, because that also depends on your negotiating skills, your marketing
ability, and how much money your clients or employers have.

~~~
nadam
I live in Eastern Europe. I have worked at the local branch of several
multinational companies. When I applied to a job, I solved the interview
problems and then I was offered a slightly more than average salary the same
way as my colleauges. None of the interview questions were deep enough to
mirror how I think about really hard problems. The only way I can really
measure myself is to work on problems like the Netflix prize, build my
hobbyprojects (and I participated in math competitions when I was a child),
etc.., but these are not related to my day-job. I earn $36000 a year
currently. I once started a topic on HN where I have written this: please give
me a very hard 'test' task (which can be solved in one or two days, but very
tricky), and if I can solve it I would be interested in remote work for more
than $36000 a year. (Which is slightly above market in Hungary) But no one
answered.

About your 3 points: I agree that having these in one person is a good
combination. However people are rarely exceptional in all 3 points. Some guys
are exceptional algorithmizers, others have really good intuition for
enginering, creating an amazing design (for code), yet others have exceptional
memory so that they can dive into huge bloated shitty code, and yet others
deal well with monotony (when you have to do unchallanging tasks, or deal with
other people's shitty code). Some people are fast like hell, others can grow
beautiful thoughts if you give them days to think about a problem. But I agree
that a bit of all of this is needed mostly. Also being strong in one territory
you can emulate other strengths. If the tasks are not on your limit, you can
emulate fastness with smartness, and emulate smartness with being fast. But
when the problems are hard enough that you are at your 'limit', this emulation
no longer works.

~~~
ekidd
One of the most amazing programmers I've ever worked with was Vadim Zeitlin, a
core contributor to the wxWidgets project and resident of Paris. We hired him
to port Quake 2 to run on top of the wxWidgets, and it took him 3.5 days. His
work helped save a multi-million dollar project. Now, his daily rate wasn't
cheap, but we were delighted to pay it.

If you want to earn more than average, here are some suggestions:

1) Contribute heavily to an open source project, preferably one used by people
with lots of money. This demonstrates your talent and drive more clearly than
a few interview questions.

2) Learn how to market your skills and how to negotiate. For the former, study
patio11's career. For the latter, try reading "Getting to Yes" from the
Harvard Negotiation Project.

~~~
nadam
Thanks. I am creating a component-based GUI lib right now which is written in
pure Javascript and which is all painted on a HTML5 Canvas. (it is intended as
a Flash/Flex killer) (5200 lines is ready currently) I've implemented all the
styling, dynamic layout and painting from scratch. I will open source it, so
even if it will not be successful as a startup, I hope at least it will be
good to convince clients/employers that I can design/program nontrivial
things.

------
edw519
_everyone knows how much everyone else makes_

This may work well when things are going well, but as soon as there are
internal "issues", it is a recipe for disaster.

"Joe earns 25% more than me, but doesn't show up until 10:00, so why should I
bust my ass coming in earlier."

"For what she earns, Shirley should be providing way better specs than this."

"Cut me a break. I spent 3 weeks overtime getting that thing done, and Fred
gets all the credit (and money!)"

"I'm way better than Jim. Pay me as much or I quit."

"Jerry must have something on the boss to be paid that much for doing so
little."

I could go on and on, but you get the idea...

Team building is tough enough. Making compensation public adds another layer
of complexity. Now every internal concern is made more difficult because the
dollars come into play. There is no argument or discussion where salary is off
limits. Before long, that's what everyone will be thinking about when you
really want them thinking about anything else.

~~~
Duff
People get over it.

I work for a public sector employer. My salary is fully searchable and posted
on the local newspaper's website.

Unless your company is doing dumb things like discriminating against certain
types of people, there aren't many surprises to be had. Frankly, working with
a useless coworker is frustrating regardless of salary.

~~~
eli
Yeah, but your employer probably has a pretty well defined process for setting
salaries and giving raises, right? Perhaps it isn't a _fair_ process, but at
least _consistent_. Private companies aren't always like that.

~~~
Duff
Exactly -- inequity is the issue, not disclosure.

It's a bigger issue for the employer -- it doesn't take a rocket scientist to
figure out that certain people are buying new cars at bonus time, while others
cannot afford lunch.

~~~
sokoloff
When it comes to compensation (for tech workers), fair is not equal and equal
is not fair.

I know that you didn't make the claim that they were, but it's a logical half-
step to "unequal is definitionally inequitable".

My best colleagues made/make more than my average colleagues, at every place
that I've worked, and that's exactly as it should be, IMO.

~~~
Duff
I agree.

IMO, it shouldn't be an open secret that the top performers make more.
Designate them Senior Widget-Makers or whatever. If they are masters of their
craft, recognize them for it.

When things are kept secret, there are abuses. The top performers whom you
respect may get paid more, but then so can the below average performer who is
politically strategic to whomever makes compensation decisions.

Obviously that is not an issue with a startup, but that happens everyday in
larger orgs.

~~~
kelnos
_Obviously that is not an issue with a startup_

... if only that were true...

------
encoderer
Anybody in the United States may be interested to know that they are permitted
by federal law to discuss their salaries with their co-workers.

The NLRB is known primarily as the board that governs unions and union
organizing. Well, for many years they've considered employees discussing
salary info as protected organizing activity. Any employee that experiences
adverse action by an employer after discussing salary with a coworker should
contact the NLRB. They will pursue the issue on the employees behalf.

This advice comes from my lawyer, but you should consult your own before you
do anything. Also, my 0.02 is that as an employee, I feel I'm often at the
higher or top end of my employers range, and despite the fact that I legally
COULD, I don't really see any value in discussing my pay with a coworker.

~~~
copper
> I feel I'm often at the higher or top end of my employers range, and despite
> the fact that I legally COULD, I don't really see any value in discussing my
> pay with a coworker.

Back in the day, I used to work for this place where, you've guessed it,
according to the people who did my salary reviews, I was _always_ close to the
top end of my employers range. So, yeah, you can imagine how that worked out
:)

While it's always possible to get a general impression of what a coworker
earns (always assuming it's possible, or legal), it's no substitute for
numbers.

~~~
Duff
When I went to buy a new car, the salesman said the "market for trade-ins was
awful", and my car was worth like $8,000. Meanwhile, not 50 feet away, the
same car with more miles was listed for $22,000.

The salesman fluff I heard is identical to the "you're near the top end of the
range for this title" crap that you hear from HR. It's fluff, intended to make
you suck it up and go away.

~~~
copper
Yes, exactly - I only wish someone had explained that to a younger, dumber me
back then.

------
kamaal
I read this somewhere on HN a while back _"Pay a man by the hour and he will
put in as many hours as he can, Pay a man by the brick and he lay down as many
bricks as he can"_.

I would go on to add and say, If you a pay people flatly some will work, some
won't and rest will do mediocre. The guide to get work done is to drive the
rewards in that direction.

I fail to understand what stops companies from paying people on the basis of
work done, rather flatly or hours spent. Is it because it will set a dangerous
precedent and that productive people will end up earning more than what you
expect to pay?

I refuse to believe that people are not motivated by money or that money is
somehow not a major motivating factor. All passion, determination et al
management talks is OK. But I'm not happy earning less than what I'm supposed
to. Just because I could it doesn't mean I should. I do more than everybody
else back at work, so I obviously I deserve more.

The way salaries work is to get bulk of the work from a few. But then reward
every body equally on a average basis. That to me seems like expecting a few
to carry a burden of the whole lot. And has a strong stench of communism to
it.

~~~
mattmanser
The problem with this idea is that it's very easy to incentivize the wrong
metric.

What are you going to do for a programmer?

Feature? Prepare for features that barely meet the spec and nothing else.

Lines of code? Prepare for massive code bloat.

And all of these will also mean no-one will bother with internal tools or any
quality of life clean ups. Refactoring will be avoided. Helping other people
will mean earning less money.

There's also research out there that shows this is a bad idea. This type of
incentivization has negative effects on productivity in our type of work.
People won't say no to more money, but it doesn't make them work better.

Your final paragraph highlights bad management, not communism. If you've a few
stars and a lot of mediocre then your management has failed. Be it their
hiring, their day-to-day management, their personal development of their
staff, their lack of challenging work, poor planning, whatever it is it's not
expecting a few to carry the burden, it's letting a few carry the burden
because of bad management.

~~~
kamaal
I disagree here,

There is good enough metric for your 'work', its wealth generated at the end
of it. Many even refer to it as value created. Again I know the next question
you will ask is what if the person worked hard and still fail. Well that is
not going to be often.

Team work is every body working to achieve something. One set of people making
up for other peoples inefficiency isn't team work.

I am not telling people must be paid more money to motivate them, I am
saying.. We must ask people to work more to earn more money. Which is
perfectly acceptable. I don't know why I should earn equal to some guy sitting
next when I do far more than what he does.

Again counter argument to that which people put is, that putting in extra
effort is personal choice so it shouldn't be compared. Well in that case, the
other argument is also valid. If some one _chooses_ to be inefficient its
his/her problem.

~~~
AlexandrB
> There is good enough metric for your 'work', its wealth generated at the end
> of it.

In a company larger than a startup, this is usually outside the employees
control. A project with a small (or no) market, isn't going to make a lot of
money, even if it was a lot of work to create. The people assigned to work on
such a project may not be there by choice. Also, what about "internal"
projects that don't actually generate revenue, but make everyone more
efficient?

~~~
kamaal
Those projects generate wealth too!

The point isn't that a productivity can't be measured, but there seems to be a
lack of willingness to measure it.

Its simple, if you actually start paying people by their work. You are at the
same time putting a lot of other not-so-good-but-lucky people in serious
trouble. People higher up in the hierarchy are especially very afraid of this.
People who got quickly promoted during the gold rush, people who benefiting
from job hopping by claiming 30% hikes on each hop every 9 months will be in
serious trouble.

In a place where all your work is transparent and your rewards are driven by
it. A few productive people will run the asylum.

The majority isn't going to be happy with this. People love getting rich by
chance and not by choice and work.

~~~
Woost
This still doesn't deal with the problem of "what you work on isn't your
choice" If I get assigned to, maybe, improve the front page by implementing a
design from the graphic designer who gets paid more if the front page drives
more signups?

The graphic designer, for his/her awesome design? Me, for the time I spent
implementing it? Both of us?

What if it fails horribly? Do I take a hit (in the sense of not creating
wealth/not getting paid more) because the graphic designer did a horrible job?
Orders came down that said "Implement this" and I had no choice but to say
"ok" (maybe I could argue the point, but at the end of the day it's not my
decision)

------
StavrosK
So an employee that lives in X makes less than an employee who lives in Y for
the same amount of work... I don't see how that's fair, since I would be
getting paid $1000/mo by those standards. Conversely, I would get a raise of
an order of magnitude if I wanted to up and move to, say, New York.

~~~
danmaz74
Look at it the other way around. If where X lives a decent home costs you
$1,000/mo, and where Y lives the equivalent home costs $2,000/mo, how fair
would it be to get the same wage?

~~~
StavrosK
Completely fair? They're getting paid to work, not to live in expensive
houses.

~~~
shasta
The relevant issue isn't "fairness", it's "market value". There is a lower
supply of people willing to work in regions with high cost of living (for the
same wage).

~~~
StavrosK
If I'm working remotely, I'll go to whomever pays the highest (hint: it's not
the company that gives me a salary cut based on location).

~~~
shasta
If.

~~~
StavrosK
I _am_ working remotely. I'm getting paid "London" rates, not "Greek village"
rates.

------
latch
I've seen a handful of companies with remote employees adopt a different
policy. Essentially, they pay you an average salary by hot-market standards
and don't adjust downwards. So, if you live in an expensive city (SF, NY, TK,
LO) you are paid a fair market wage in those cities. If you live in a cheaper
area, than lucky you.

Personally, I prefer this. Maybe because I tend to like smaller and less hip
cities. But it keeps things simpler for the company, and it means that, as an
employee, you have a pretty significant say in, what we can call, your net
income.

~~~
balsamiq
I don't think that's fair, not everyone can move easily (family etc).

~~~
cageface
It seems unfair to me that I might be paid less because I've opted to live in
a cheaper area. Why should I have to subsidize my teammate's expensive, hip,
urban NYC lifestyle if I've decided to live somewhere cheap and save money for
early retirement, starting my own business, supporting a larger family etc?

~~~
toyg
Sorry, am I reading correctly? Peldi should subsidize you starting your own
business? _That_ seems unfair to me :)

Aside from the clear moral judgement you're making here, which doesn't belong
in any salary policy, the problem with your argument is that chances are that
you made that choice while maintaining a "urban" salary... i.e. you are
fundamentally exploiting a loophole in "classic" remuneration systems thanks
to telecommuting, and you're now complaining that those systems might be
catching up.

~~~
cageface
If I'm providing exactly the same quality and volume of work, why should my
zip code matter? You're reading a moral argument in my comment that I'm not
making. If anything this sets up a reverse incentive to live in NYC like a
college student and pocket the difference.

What you're calling a loophole is the new reality of information-based labor.
Companies that penalize their employees for taking advantage of this
flexibility to set their own lifestyle priorities are going to suffer in the
market for top talent.

~~~
toyg
"If anything this sets up a reverse incentive to live in NYC like a college
student and pocket the difference."

It's a choice; everyone makes lifestyle choices, like you say, as an employer
there's nothing you can do about that. Peldi's policy gives you a chance to
make enough money to live comfortably wherever you want to live; I think
that's quite a perk, for most people. If your lifestyle choices completely
trump your professional interest in joining the company, you'd probably not be
a good match anyway.

Besides, the policy is weighted by bonuses, and sounds more like the starting
point for a conversation rather than a straight-jacket. Knowing the man a
little -- we went to the same highschool, although he already was a celebrity
and I wasn't ;) -- I'm quite confident he'd do his damnedest to find a
satisfying and realistic agreement for anyone interested in joining.

~~~
cageface
If you're willing to effectively penalize people for making lifestyle choices,
why not also cut salaries for people without kids? Or people with spouses with
good jobs? They don't need the extra cash. This sounds like a deal you'd offer
a co-founder, not an employee.

I'm sure Peldi's intentions are good here but from a potential employee's
point of view I don't see why anything but the quality of my work should
determine my salary.

------
scottjad
Using location based salary comparison sites is broken if the job is for
remote not onsite work.

If hackers in NYC are paid $150k, and Philly $80k, neither of those numbers
matter. What you want is the going rate for remote-working English speaking US
citizens in eastern time zone close to a major airport with the given skill
set.

What this company is doing is like deciding how much to pay an employee based
on whether or not they have a pool and tennis courts in their backyard, rather
than based on supply and demand.

Note: Location still matters, which is why I mention timezone because
depending on business, location/timezone of existing employees, and where HQ
is located it may change the demand. Also since most remote workers travel to
gettogethers occasionally I mentioned airport.

------
kingofspain
The average wage where I live now is shockingly low - and that's after coming
from a somewhat depressed former mill town. I moved here though because it's
absolutely stunning and my life will be immeasurably better because of it
(once I finish this damn never-ending contract and get some free time at
least!).

I'd hate to have to take a giant pay cut just for wanting to actually enjoy my
life. If anything my productivity and quality of work has gone _up_. Pay me
less for that and I'm off!

------
vacri
I'm curious as to how this policy affects someone like me - the jack of all
trades. I'm the guy who comes into a place wearing one hat, and for better or
worse, ends up wearing four or more different hats in sometimes quite diverse
positions. It's hard to figure out what salary I "should" get on the market
because my position doesn't exist on the market.

~~~
jaryd
Could you identify people in your industry that perform a similar job to you?
If you could select the comparison pool than I would think it would be more
accurate/useful than, say, an aggregate based on simply job title.

~~~
three14
I'm in a similar situation, and I can't. I sometimes do IT for a small Windows
network and for Linux and the VPN that connects everyone to both. I program in
C#, perl, Java, shell, and XSLT depending on which part of my job I'm doing,
and some of my job is "software architecture" which other people actually
program. My industry is a tiny niche, and generally hires programmers from
outside it and trains them, so salaries aren't a function of the industry. How
would I find a good comparison?

------
mbesto
Just read Dan Pink's _Drive_ where this idea comes to fruition and it makes
complete sense (especially in my own life). From _Drive_ [1]:

 _Instead of paying employees the wages that supply and demand would have
predicted, they gave their workers a little more. It wasn't because they were
stupid. It was because they were savvy. Paying great people a little more than
the market demands, Akerlof and Yellen found, could attract better talent,
reduce turnover and boost productivity and morale._

Highly recommend reading Pink's book.

[1] - [http://www.amazon.com/Drive-Surprising-Truth-About-
Motivates...](http://www.amazon.com/Drive-Surprising-Truth-About-
Motivates/dp/1594484805/ref=sr_1_1?s=books&ie=UTF8&qid=1315821748&sr=1-1)

------
Murkin
Enjoy it while it lasts. Sure its cool and fun while there is a small
'startup-minded' team, racking in huge bonuses.

But once you grow a bit, you will inevitably have employees take a look around
and think:

    
    
      "Hey.. home come I am much better than these two guys around me, 
      and we all make the same money ?"
    

Socialism has been tried in many different forms and ways, sadly "equality
between equals" is not a concept Humans are willing to accept too well.

~~~
balsamiq
Not everyone makes the same money. If you're better, you will be compared with
more senior jobs (and I mean senior as "more capable", not with more years
worked).

~~~
Murkin
So you basically have two people sitting in the same room:

    
    
      a) 45 year old veteran, 3 years in the company, titled "Software engineer II"
      b) 25 year old grad, 1 year in the company, titled "Software engineer V"
    

Sure its all open and nice, but don't you think (a) might be a bit..
disgruntled ?

~~~
Silhouette
I'm not sure they would, actually.

It's been my experience that there are several clearly recognisable
personality types and work ethics in a typical software development team, with
two groups in particular that always stand out.

You can have people who come into work, do a decent job, and then go home and
spend time with their kids and other things that really matter to them. The
job isn't something they live for or feel deeply invested in, and they are
unlikely to go "above and beyond" on a regular basis. They welcome training to
develop their skills and will consider new working practices with a reasonably
open mind if a good case is made, but it is up to the company to arrange and
manage such things. However, the bottom line is that these people do competent
work to a reasonable professional standard. In my experience, this is by far
the largest category in most software companies.

Then you have the geeks, the ones who love the work, spend a lot of their
spare time programming as well just for fun, follow all the latest trends, and
-- dare I say it -- often frequent forums like this one. It is in the nature
of this group that they will learn and develop their skills faster both
because they spend more hours programming themselves and because they are
exposed to more diverse influences within a shorter period of time. These
people won't be the ones waiting for the company to organise training, they'll
be pushing to get the latest book or go to a useful conference, or they'll be
giving the training themselves to share with their colleagues some new ideas
that they've discovered elsewhere. The risk with the younger members of this
group is always that they will go too far: while they can be many times more
productive if properly guided, almost all architecture astronauts, latest-
shiny-development-process evangelists, and similar poisonous influences fall
into this category as well. The risk with older members of the group is that
their priorities in life may change, often as they have growing family
commitments, so even if the desire is still there, the time to keep up as much
as they used to may not be. You can usually recognise the ones who manage it,
because they'll be the ones who somehow manage to help half a dozen different
colleagues to solve some non-trivial problem each day, even though they still
get their own work done faster than most anyway.

In my experience, everyone in the office knows which of these (or other)
categories everyone else falls into within a few weeks of working with them.
The former group don't tend to begrudge the effective keen ones the faster
career advancement and more rapid pay rises they tend to achieve, because they
recognise the difference in approach. On the other hand, they also have little
time for the keen-but-poisonous ones, and become mighty upset when someone who
thinks they're all that but isn't really generating the results to back it up
is being mistaken by management for one of their more productive brethren and
rewarded disproportionately.

In short, there are different types of people and they know who each other
are. As long as reward and career advancement are based on genuine merit, I
don't think most older "journeyman" professionals do begrudge the young high-
fliers their faster progression.

(Edit: As an aside, I assumed your examples were exaggerations. I have never
met the 25 year old, my egotistical self included, that was worth a senior job
in a larger development group, even if they thought they were at the time.)

------
usedtolurk
Heheheh... all these comments just go to show that no one policy can be fair
for everyone. :)

Balsamiq have a policy that aims at fairness, is transparent (and yet open for
discussion!) and has a better-than-average chance of appealing to their target
audience - people who aren't driven by money but don't want to be taken
advantage of.

If you can't find a compromise that works for your situation - go work
somewhere else.

------
marklittlewood
Great post Peldi.

Before people get too bogged down in just the _salary_ piece of this puzzle,
you should also read Peldi's comments on bonus:
<http://news.ycombinator.com/item?id=2986673>

Balsamiq is a fairly unusual business and Peldi has grown something pretty
extraordinary. This is a highly profitable business that has made a conscious
decision to be great on its own terms, not on the terms that a Silicon Valley
venture capital firm might impose on the business.

If you want some more background, go and watch this video of the talk Peldi
gave at Business of Software last year. There is also a transcript you can
speed read if you don't have an hour to spare.

[http://blog.businessofsoftware.org/2011/08/do-worry-be-
happy...](http://blog.businessofsoftware.org/2011/08/do-worry-be-happy-peldis-
brilliant-talk-about-keeping-sane-as-a-software-ceo-video-transcript.html)

------
wpietri
I think this policy could use something about fairness, too. Some great
programmers don't care much about money and hate negotiating. You want to be
sure they get paid as well as somebody who is as good but is greedier or more
aggressive.

~~~
cageface
I didn't care much about money when I was younger. Now that I appreciate more
how brutal this field is for older programmers and what it means to be older
and less employable in a bad economy I'm much more aware of my running bank
balance. I'm also more aware that I have a finite amount of mental energy for
coding every day and if I'm selling it instead of building my own things I'm
not willing to do it cheap.

------
benaston
This is all bullshit. Each company pays what is profitable for its business
model. Work in a hedge fund? Your pay is commensurate with the business model.
Work in a digital agency, likewise. As far as I can tell a digital agency is a
digital agency, is a digital agency. They all work the same market with the
same overheads. It doesn't matter that the dev in the hedge fund is doing
precisely the same job (in my hypothetical scenario).

"You are paid a little better than someone with your same job in your
geographical area."

Of course you are, otherwise your employer wouldn't be in business. The
operative word being "little". Substitute "a lot" and either they have a
disruptive business model and are willing to pass on the cream to their
employees (unlikely), or they are going out of business.

Give me any dev in any city in my country and I will be able to tell you what
they are on based on their seniority and sector plus or minus a few grand (and
what's a few grand after higher-rate tax?).

Tldr - this policy is moot because salaries are open secrets.

FWIW, if you want to earn more go into contracting (i.e. take on more personal
risk), move sector (i.e. go into finance), start your own company, or move
into a more traditional profession.

------
tomh-
So how is this going to work? Pick the highest salary found in the area and
add X, where X is a little? I never found the numbers from sites such as
'salary.com' or 'glassdoor' to be very reliable as it always 'depends'.

~~~
balsamiq
It is indeed a bit of a fuzzy process. We look at stuff together (ranges from
salary.com, other similar job postings), then we agree on what's "a little
better than the average". Maybe it means picking 3/4 point in the range...in
general, I have found that people have a number in mind that would make them
happy...it's a matter of finding it out and making sure it fits within the
policy...it's easier to do than to explain. :) So far, those one-on-one where
we decide the new level have been fairly easy meetings.

~~~
jaryd
Has this resulted in anyone taking a pay cut yet? Does everyone know what
everyone else gets paid (including management)?

------
biot
Why not go further? Everyone submits their living expenses to the company
including food, shelter, and so on. Limits are set on what is considered to be
a reasonable expense. Above and beyond that, everyone gets the same base
weekly stipend plus an additional 50% of the stipend, cost-of-living adjusted
for their area. To further promote equality amongst employees, company robes
can be distributed to everyone. Multiple employees living in the same city can
move into the company commune to further enhance the brotherhood and keep
everything fair.

------
ylem
I think the problem is what happens with time. Imagine that you have a
graduate in a time when the economy is doing poorly. There will be lots of
people out of work and competing for jobs, so salaries (in general) should be
less generous. Later, if the market picks up, then that year's crop of hires
will have higher salaries. Fast forward a few years. Assuming that the
difference in skill levels is negligible, salary differences could still be
significant. Now, imagine that salaries become public...

------
flexd
That is sort of a odd policy. I get the impression everyone works remotely
from wherever they live (but I might be mistaken). For someone with a computer
science background the salary here is like 80k - 100k USD. I don't know what
people average in the US but it's certainly not the same across the globe. For
bigger companies I can understand this might not be such a problem but for
smaller ones the salary difference would make up a lot of money.

But I guess they stick to having people work remotely from within the US?

------
jaryd
Balsamiq,

How does the open salary policy work? Are salaries posted on a big white-
board? Does the open salary policy have an effect on employee behavior? In
many cases people are reticent and fearful to talk about/compare their
compensation. People tend to attribute their personal self-worth to their
number and consequently hold on to it pretty tight. How did you guys get over
this particular hurdle?

~~~
balsamiq
They are in a spreadsheet in a shared drive, along with all the rest of the
stuff. What I have found is that because of our base salary policy, people
don't really care about the hard numbers...they know that they are paid well
and that their colleagues are paid well...at least that's from what I can see.
One employee told me that they'll not look at the numbers because it makes
them uncomfortable, and that's fine with me too.

~~~
jaryd
Ah -- so it's just the base salary in that spreadsheet? Why not share total
compensation as well (including bonuses)?

~~~
balsamiq
That stuff is there too (in the monthly expenses).

~~~
erlendfh
Really cool to see a company implement such open policies! Have you by any
chance read Maverick or The seven day weekend by Ricardo Semler? Lots of
similar ideas in there, and well worth the read!

<http://www.amazon.com/Ricardo-Semler/e/B000APW260/>

------
zura
What about this situation:

X and Y are places with similar cost of living, but people in X have lower
wages and they are used to live cheaper (i.e. they buy less goodies, etc..)
than in Y.

In other words, maybe it would be better (more fair) to compare costs of
living instead of average salaries?

~~~
balsamiq
I think that's too subjective. We look at average local salaries as a way to
see "what does the local market say this job is worth right now?" - basically
deferring the range to what the market decides is fair.

~~~
zura
On the other hand, you seem to use cost of living comparison for profit
sharing.

Quote from: <http://blogs.balsamiq.com/team/2011/09/12/profitsharing/>

"9. then all weighed by the cost of living in each location: this is important
because it's fair. The fact that we're using cost of living instead of average
wages is even more fair (i.e. Italy has low wages relative to the cost of
living)."

The last sentence, regarding Italy, corresponds to the situation I described.
So, if it is fair for profit sharing, then it also seems logical to treat it
as fair for salaries as well.

~~~
phamilton
Competitive wages are incentive to not leave. Profit sharing is incentive to
do good things.

The former must be dependent upon local wages. The latter is able to
incorporate fairness.

~~~
zura
I wouldn't differentiate it regarding fairness. Salary + Profit ==
Compensation for the work done. Compensation should be fair.

------
toyg
I'm amazed at some of the replies here. "He'd pay a better-than-average base
salary -- THAT'S NOT ENOUGH!"

Guess what? Outside the Valley bubble, more often than not it IS quite enough.

------
dmoney
How do you do the profit sharing? Does everybody get the same percentage, or
is it based on how "senior" they are?

~~~
balsamiq
<http://blogs.balsamiq.com/team/2011/09/12/profitsharing/>

------
leon_
In a world of tele commuting it's pretty backward to base salaries on
locations. If someone is great pay him what he is worth to you and not what he
would get if he decided to go and work at the local cubicle farm.

I'm hoping for a future where you get paid what you are worth and can travel
around the world working from wherever you want. A boss that says "Yeah, the
beaches there are wonderful and people earn $5/month. So your new salary is
$6" is a deal breaker in that dream ;)

~~~
jamii
> I'm hoping for a future where you get paid what you are worth and can travel
> around the world working from wherever you want.

If you're a competent programmer, you're already living in that future. Remote
work is pretty easy to get these days, especially if you freelance and do
either web dev or iOS/android. I don't do either and I've still managed to
live on three continents in the last year or so.

------
rscale
This policy rubs me the wrong way, because I believe in value-based pricing.

If I generate $1m of value for your company, I should be able to negotiate the
capture of a reasonable chunk of that value. My decision to live in a high or
low cost city doesn't change how much value I'm delivering, so it shouldn't
have a meaningful effect on my price. Either I'm worth it, or I'm not.

~~~
balsamiq
Hi rscale, we have a profit sharing program in place as well. Also, if you're
a super-senior person, that's who your base salary will be compared to. Also,
you might get an extra performance-based bonus. Basically I consider the base
salary to be just that...the base.

~~~
scottjad
Your profit sharing program does not answer rscale's question, it compounds
it, since you also reduce profit sharing by cost of living.

