
We Let Our Employee Set Their Own Salaries - ry0ohki
http://figure53.com/notes/2013-08-30-we-just-set-our-salaries/
======
rdl
I intellectually really like these experiments, but one of the things
virtually every startup advisor tells you is "only innovate when and where you
must" \-- basic things like how you do accounting, offices, etc. should be
standard, so you don't screw them up, so you don't think about them too much,
etc. Big companies with spare resources can afford to experiment on non-core
things, and a 0.1% improvement in A/R efficiency _would_ be material to GE,
but not to a $150k/yr revenue startup.

There is an argument that hiring is one of the "core" things for startups,
_and_ it is hard to do, so innovation might be warranted. Something like this
experiment in setting salaries is only good if it makes
recruiting/retaining/utilizing more effective. If you're doing it for any
other reason, you probably have the wrong priorities. (The other part of this,
paying everyone the same, actually does make a lot of sense in early stage
startups, too.)

I think bringing people into the organization is probably harder than
retaining them, though. (at least for the first year or two) I'd personally be
more inclined to experiment with "set your own referral bonus" rather than
"set your own salary". (I think in SFBA right now, for engineers, that number
should be USD 20k. USD 10k might be justifiable. In a lot of cases, people
like gifts more than the equivalent amount of money, so maybe USD 10k + USD
10k in travel/gifts/etc. Charity donations might also be valued more than
money in some cases.)

~~~
fnordfnordfnord
> \-- basic things like how you do accounting, offices, etc. should be
> standard,

I fired a company once that was paying me quite well, and where I liked my co-
workers and liked my job very well, just because they wouldn't make some
changes to these simple things. They were stuck in a very rigid office culture
mode where everyone had to dress the part, keep certain hours, park in a
certain place, etc. I'm not the only good employee they chased away like that
either. Unlike me, some of the others went to work for competitors, or formed
companies that competed with them.

~~~
GuiA
>I fired a company once

I like that phrasing a lot :)

~~~
darkmethod
Agreed. I'm going to have to remember that one.

------
derefr
I'd be careful with this: this "democratic" budgeting has a similar feeling to
"democratic" scheduling--that situation where you tell people to work
"whatever hours they like." Everyone sees everyone _else_ putting in extra
hours "for the good of the team", and so you get a team slowly whipping itself
into a death-march no one actually wants or needs, and resenting anyone who
tries to just stick to the (healthy!) 9-to-5. Similarly, in this situation,
I'd strongly bet on there being a ratchet effect, where salaries are voted
down in tough times, but not voted back up in good times.

~~~
zerr
In the long run, 9-to-5 is terribly unhealthy as well. I wonder when we get
rid of this 40 [or more] hr/week stigma.

~~~
ams6110
What's a reasonable workweek then? And why?

~~~
malyk
I know that I have about 5ish hours of good programming work in me a day. I
know that I like to take a 45ish minute lunch. I know that I have some admin
type stuff to do on occasion.

So, sign me up for a 6 hour day and you'll get my full attention all day. I
won't "need" to spend time on HN or twitter or whatever to kill time because
I'll be fresh enough to work all day.

Also, because i believe there is a hell of a lot more to life than work, we'll
work 4 days a week.

A guy can dream, can't he?

~~~
saraid216
I wish we were more actively working towards such a world. Instead, we keep
getting caught up in political discussions about how people who don't work are
lazy.

------
andrewljohnson
Disappointed by the lack of any numbes at all. No revenue, salaries, funding
numbers... Expect to learn nothing from this article, and you won't be
disappointed.

While we're at it though, letting employees set their own salaries is stupid.
It seems like a short term gimmick, absolutely plagued with problems as a
company grows. I don't even believe it's true - you'd end up leading people to
the number you require, and it's like declaring the organization is flat, then
leading it with subtle manipulation and hidden cliques.

In a weird paradox, startup CEOs love to avoid leadership, blog about it, and
say it's a hip new approach.

~~~
adbachman
Preface: I work at Figure 53, nearing three years. We're an LLC (so he's
owner, not CEO), not a startup, not funded, profitable for five years, and we
only have five full time employees.

I think the set of principles we've been operating under have been working
pretty well and I believe Chris to be a genuine person, but I'm biased by
being personally involved with this particular story. It might also be
important to note that while he didn't give the numbers in the story, we all
who voted got to see the numbers before and after (he's never hidden them from
us) and the effect the new salaries have on our bottom line.

I can see how it could go wrong given employees trending towards
unhappy/defensive and a boss trending towards dishonest, but that would be an
awful situation to be in no matter what kind of gimmicks the bosses introduce.

~~~
bjourne
So then stop teasing us and tell us what the numbers were already! I mean it
doesn't make sense to blog about this idea about transparency and then
withhold the most interesting point which is what the actual dollar amounts
were.

~~~
Chris_Ashworth
Why are the dollars the most interesting point? I find the concrete numbers
less interesting than the relative result.

At any rate, we're not really obligated to share our numbers on our blog. :-)
Might be reasons we'd want to keep those private, no?

~~~
keithwarren
You showed a scale, but there was no relative basis. Just sharing percentages
would be interesting as it would help us understand what the variance is. Did
you want to give everyone a raise of about 10% and they wanted 15%?

BTW - I love the experiment and may use it for my next hires, your
transparency is commendable and while it may not work for everyone I love the
idea of making new hire salary negotiations into true salary discussions.

~~~
Chris_Ashworth
You're right, I need to include information to show how close my guess was;
I'll try to edit it in the coming week to include that.

------
mdkess
I really like that this is collaborative and anonymous. I could see as the
company grows, bands and bonuses being set by popular vote.

At the same time however, you have to pay market rates. If a good employee has
an offer for 20% more than they are making, and they just had their first kid
so they'd kind of could use more money, what do you do?

On one hand, you give them a raise - which breaks the collaborative system. On
the other, you don't give them a raise, and you lose a key contributer who was
bringing in far more revenue than their salary.

The fact is, your best employees are going to be constantly getting offers
above what you pay them, and you need mechanisms in place to keep them. At the
same time, transparency has to really be transparent if it's going to be a
core value of the company - if I was told everyone was making $X but I found
out that some of those people were making more, I'd be annoyed.

So my question is, how do you solve this?

~~~
SatvikBeri
You always have tradeoffs. Which tradeoffs make sense depend on the culture
you want to foster, the size of your company, and probably a hundred other
factors.

Transparent criteria for salary mean that you avoid the politics associated
with salary negotiations. And making even a single exception typically breaks
that, meaning that now _everyone_ at the company is incentivized to get
higher-paying offers and bring to you, asking for more money. Ben Horowitz
wrote a great post on this: [http://bhorowitz.com/2010/08/23/how-to-minimize-
politics-in-...](http://bhorowitz.com/2010/08/23/how-to-minimize-politics-in-
your-company/)

Personally I would say that you should avoid ad-hoc raises. I really like the
idea of matching salaries to titles and matching title changes to a bi-annual
performance review (for companies over a certain size.) And it gets a lot of
the advantages you want-transparent compensation, no incentives for
politicking, ability to pay people differently, and the ability to adjust the
pay for the role according to market rates.

Edit: Fog Creek's compensation system is a good example.
[http://www.joelonsoftware.com/articles/fog0000000038.html](http://www.joelonsoftware.com/articles/fog0000000038.html)

~~~
michaelt
Matching salaries to titles means your best-performing developers can't get a
raise without becoming managers, or getting a raise for everyone in their
title (i.e. a raise that's much more expensive for the company), or leaving
the company.

Seems like quite a pair of handcuffs to put on yourself.

~~~
SatvikBeri
Most places have more than one developer title. See e.g. the Fog Creek link.

------
goofygrin
This is retarded.

The owner has employees. Not partners. He is carrying all the risk. Slow pay?
He pays. Personal guarantee needed? His house is on the line. Needs cash to
hire the next employee or to float more payroll while the work ramps up? Ya
its his cash.

He's effectively made everyone an equal partner with unequal risks and
responsibilities.

~~~
wpietri
What's your evidence?

Typically, people who are involved in decisions feel much more engaged in
dealing with the results. My expectation is that if something happened to the
company, his employees would be much more loyal. Certainly if I worked for
him, I'd be willing to take some bad times with the good times.

The one open-books company I visited had extremely loyal employees and great
camaraderie. Causality is hard to untangle there, but it's not unreasonable
that this is much smarter that the "Mine! It's all mine!" approach to employee
relations that is a common alternative.

~~~
ghostdiver
at the end of the day for most of employees all that matters is how much money
lands in their pocket

if they wanted to be business partners they wouldn't become employees in first
place

~~~
wpietri
I don't believe that first sentence is true. The studies I've seen for
programmers put money relatively far down on their list of priorities. See
McConnell's _Rapid Development_ for a summary of the research.

------
delinka
I am reminded of CD Baby's employee profit sharing initiative: the summary is
that employees asked for a profit sharing program, and the owner said "set it
up" and they pretty much took all the money.

I suppose the lesson is that the owner/CEO should be involved and observing
these decisions.

~~~
Jasber
For anyone else that's curious about this:
[https://news.ycombinator.com/item?id=342134](https://news.ycombinator.com/item?id=342134)

------
dhfromkorea
You're not alone. Here's an early variant of such a policy. SEMCO, a Brazilian
company run by Ricardo Semler, has since 1980s had the policy where people
could set their own salaries.

Some excerpts off his book on 37signals:
[http://37signals.com/svn/posts/945-excerpts-from-ricardo-
sem...](http://37signals.com/svn/posts/945-excerpts-from-ricardo-semlers-book-
maverick-the-success-behind-the-worlds-most-unusual-workplace)

His book: [http://www.amazon.com/Maverick-Success-Behind-Unusual-
Workpl...](http://www.amazon.com/Maverick-Success-Behind-Unusual-
Workplace/dp/0446670553/ref=sr_1_1?ie=UTF8&qid=1377979232&sr=8-1&keywords=maverick+ricardo)

------
acjohnson55
I have to say that I admire the author's attempt to rethink the employer-
employee, capitalist-labor dynamics. As someone who once spent all my time
working on a startup I owned (and jealously guarded that ownership stake), I
often wondered whether these dynamics are really even just. Are we just
perpetuating the issues of class division and privilege?

Sure, company owners typically take bigger risks in a startup than paid
employees, but often, it seems to be the case that most people who take the
plunge have safety nets, alternatives, and upfront capital that represent
significant privilege over the norm. Perhaps, relatively speaking, its just as
risky for the employee who takes a paid job that may not exist in matter of
months.

In our society, for people in which the startup thing really works out, our
system could make you a multibillionaire. You could literally have one
thousand times the wealth of someone who is a multimillionaire. Or a million
times the wealth of someone whose managed to squirrel away a little bit of
cash from the two jobs they work. It takes some serious stones and principles
as an owner to deviate from a system that's designed to enrich you if
everything goes to plan. I hope it works out.

------
robomartin
OK, I'll be the grown-up in the room.

Are you fucking kidding me? No, really.

OK, maybe, just maybe, if you have a very small homogeneous team and all of
you are hippies this could make sense. Outside of that scenario it has
disaster written all over it. This is just being a lazy CEO and not wanting to
make decisions.

Part of your job as a CEO is to understand such things the ebbs and flows of
the business and ensure that it can survive even potentially deadly
(financially speaking) scenarios.

Do people vote themselves a pay reduction during bad times? Good luck with
that one.

Do all employees understand and plan for future acquisitions, investments and
expenditures? Of course not. Sometimes you have to horde cash to get ready to
make an investment, launch an initiative or hire more people. It is my
experience that few people in a typical organization truly understand the
financial dynamics of a business. People tend to see a two million dollar sale
as two million dollars and not as the risk it can represent and the timeline
to making a profit. Sometimes only the CEO has a true mental image of reality.

Here's an example out of my own life. True story.

I closed a $2.5 million dollar sale. This is for a hardware product. We are to
be paid in four $625K installments, with the fourth one being against
delivery. Walked away from the meeting with a PO and a $625K check.

Fantastic, right? No. I was actually very concerned. This was early 2009. The
economy was in bad shape. Banks were not lending. Everyone was bleeding money
in one way or another. Most people would see a $2.5M sale as a huge win. I saw
it as a potential mine field. Of course I was happy to have won the business.
The reality of a CEO is to have a larger mental map from which to operate.
This larger mental map told me that, while this was a nice win any number of
things could go wrong and hurt us.

Here's a reality in the electronics manufacturing business: Lead times can be
horrible. It isn't unusual to have to wait twelve to twenty weeks for
components. In addition to that, a lot of orders are tagged with the "NCNR"
acronym: Non-Cancellable, Non-Returnable. In other words: You can't back away
from an order.

What does this mean when you need to deliver $2.5 million in product in four
months. Well, it means you have to write a huge pile of purchase orders as
soon as possible. The profit margin on this sale, if everything went
perfectly, was approximately 25%.

There are two ways to see this. The immature/adolescent way to see it is:
"Man, you are going to make $625K!". Reality means "We have to spend $1.875
million to get this done. The latter is where the minefield lives.

Employees are not in tune with these realities. They want a reliable paycheck
every week and they want security. And, yes, they want to make as much money
as possible. None of this is meant to be pejorative, it's just a reality.

So, what happened? Well, within a week of receiving that first $625K I find
myself writing nearly $1.5 million dollars in purchase orders. I had to. If I
did not pull the trigger right away we could not deliver on time. Most of the
PO's were for NCNR items.

The next twelve months would send me to the hospital at least once from the
stress I had to endure. The bank that was financing this deal for my customer
decided to pull back. Our second installment didn't arrive for several months.
When it did, it bounced. In the meantime the warehouse was filling-up with
components we had to pay for. I had to use a combination of all of my credit
cards as well as the full available equity in my home to pay salaries, bills
and keep the business afloat. I did not fire anyone.

It was a nightmare of unthinkable proportions. The proverbial kiss of death.
At least one person actually died as a result of this business transaction.
No, not in my company. The CEO of an associated company had a massive stroke
and heart attack. The stress was just too much for him to handle and he could
not take a break to look after his health. Sad.

The story is far more complex than the short version above and far more
nuanced, don't try to dissect it because you don't have enough information. I
am simply using a simplified version as an example of business reality. It's a
contact sport and sometimes you get bloody.

During this time most of my employees were not aware of the mess I was
juggling. Why not? Are you kidding me? The easiest way to destroy a company is
from within. People want sausage, they don't want to see it made. Most
employees at a multidisciplinary business don't have enough information to
understand what's going on. You'd have to spend a ridiculous amount of time
educating everyone in order to ensure that they get it. That's an
irresponsible misuse of time. Your testing technician needs to be in the shop
testing boards, not looking over balance sheets. Same applies to your shipping
clerks, receptionist, marketing manager and graphic designer.

So, yeah, I am coming off a bit harsh on this one. And rightly so. I think
this CEO isn't a CEO at all. He wants to be buddies with his presumably
homogeneous team. This decision is bad on many fronts. It sets up a bad
situation. You will have to veto or flat-out take this "right" away at some
point and, when you do, it will be hell.

The other item is this idea of the CEO choosing to get paid the same or less
than everyone else. OK, well, five buddies start a business together, fine,
that makes sense. In most other situations this makes no sense whatsoever.
Most businesses outside the reality distortion field that is the SCV/Venture-
Capital world are self-funded efforts with huge financial and time investments
from the CEO/Owner. A lot of them require slaving away in your garage for
years before you can scale. There is almost no way any employee can match the
level of investment, effort or sacrifice this class of CEO put into the
business before the first employee was hired. No way. CEO pay and employee pay
have no correlation whatsoever. One is responsible for a very narrow domain.
The other is responsible for everything, often at a personal level.

Pay your employees fairly, treat them well, be generous about vacations, be
considerate, help them if they run into tough times (sick kid, parent,
financial problem, etc.), pay for conferences and training courses, take them
out on morale building trips and, if finances allow, be generous with bonuses
and your recognition of their contribution to the enterprise. You are running
a business, not a hippie commune.

~~~
nekopa
Up-voted as I like to be reminded from time to time that 18th century
mentality is still prevalent in the world. I don't think you're being the
grown-up, you are just talking from your world view. You sound similar to the
people who railed against Ford's 5 day work week - "The workers will all be
drunken and fighting and murdering and and and and..." But it worked out fine
in the end. The 'hippie commune like' extra day off didn't destroy the fabric
of society. In fact, productivity and profits went up.

I think in the new millennium we should be experimenting with different models
of running business. Why do you feel that a model that has worked well for the
past 100 years is the final form of _all_ business? Why say that it is a
'hippie commune' in such a derogatory manner? Not all businesses can use this
model and not all CEOs should operate the way _you_ feel. It is a
multi0faceted world out there, and I believe businesses should reflect this.

Should your company run like this? No, its not in your mentality and probably
not possible for your industry. But... Semco has proven that this type of
model can work even for a large hardware manufacturer (marine pumps was their
original line of business, but with innovation to their business format came
lots of innovation in their product line).

All I see in your well though out post is anecdotal data wrapped in an
inherent pessimism towards people and a 'hard-ball' mentality towards
business. You are coming off harsh, but I don't think it is quite as righteous
as you want it to be. You know what is best - _for you_ \- why not let others
experiment and see if we can't create something different for business in the
future. Some will fail, some will thrive, but it is the experimentation which
is vital. And this post is a great example of someone who is in a position to
do it, and may well be very successful. If they go bankrupt then come to HN
and boast about how change is never good and your way is the only way to run a
business. And I will still call you out on it even then.

One question for you: If you knew your employers finances (Semco gives all
staff a 2 week course on understanding the books), and could see that if you
didn't take a pay cut now, you would lose your job in 3 months as the company
would go bankrupt, would you vote for a pay decrease or say fuck it, I'm
keeping my salary the same and damn the consequences?

~~~
consz
>One question for you: If you knew your employers finances (Semco gives all
staff a 2 week course on understanding the books), and could see that if you
didn't take a pay cut now, you would lose your job in 3 months as the company
would go bankrupt, would you vote for a pay decrease or say fuck it, I'm
keeping my salary the same and damn the consequences?

Really depends. If I felt the company would take a long time or have a low
probability of pivoting and recovering, I would probably vote myself the
highest salary I could and ride it down/start looking for another job. I
assume quite a few others would feel the same way.

~~~
nekopa
Fair enough.

When this situation happened at Semco (Brazil has had a lot of problems with
its economy over the last 20 years) management put forward keeping salaries
the same, but letting people go. The employees countered with _everyone_
getting salary cuts to see them through the down turn, with the hike back to
normal levels agreed on beforehand.

I don't know if it was about wether or not the company the company would turn
around, but it seemed a lot more based on loyalty to the company (plus all
staff, even assemblyline workers set their own work hours) and no one really
wanted to go back to working at a 'traditional' company. I think that in
software dev a lot of the jobs are fairly the same work environment-wise, so
your take probably could work if you are only at work for the money (and I
know, everyone has bills to pay, I have a family so it would be a tough call
for me to make as well but I don't think I would just try to hike my salary
and hasten the doom of the company if they've treated me awesomely over the
years)

------
OldSchool
Hmm, this outcome should be interesting.

As a rational person it's natural to gravitate toward purely objective.. well
anything.

Generally people on the receiving side don't seem to handle this well;
everyone gets bent out of shape because they think they have a special case.

Seriously I never quite understood why the whole world is full of conflict and
claims and counter-claims until I became a parent of small children. Then it
made sense.

~~~
300bps
_Hmm, this outcome should be interesting._

Probably a headline similar to the following some time in 2014.

 _Unbelievable Mistakes I Made in My Last Startup (figure54.com)_

 _139 points by ry0ohki 5 hours ago | flag | 78 comments_

~~~
bornhuetter
I think this is the first time I've laughed out loud when reading a HN
comment. I have a suspicion that you're right.

------
StandardFuture
>The fun (and terrifying) thing about running a company is that you're allowed
to do... anything.

When you stop and think about it, that is one really powerful statement.

Which must be why it's so easy to mess up running a company, because
channeling that power is no easy thing to do. It takes a lot of self-control
and even more control in general.

I think a lot of hackers/startups underestimate this by thinking that because
they can control machines then that automatically implies that they can handle
a petty company.

------
fela
Maybe the median would be better than the mean? Any number lower than the
median and more then 50% of the employees would want it higher, any number
bigger and more than 50% would want it lower. It also protects from strategic
voting: if you use the mean a person could strategically give a higher value
that his ideal result, if he things the others will on average vote too low.

~~~
waqf
Agreed. It protects from strategic voting (or incompetence or malice) of a
small number of participants, because it's a _robust statistic_ :
[https://en.wikipedia.org/wiki/Robust_statistics#Examples](https://en.wikipedia.org/wiki/Robust_statistics#Examples).

------
jtc331
So what you're saying is that you read Atlas Shrugged and decided to put
Rand's conception of the worst possible way to run a company into actual
practice?

~~~
innguest
I think what he's saying is he read this [1] instead and then decided to put
it in practice... again.

[1] [http://www.amazon.com/Maverick-Success-Behind-Unusual-
Workpl...](http://www.amazon.com/Maverick-Success-Behind-Unusual-
Workplace/dp/0446670553)

------
count
I wonder what kind of scale or 'type' of organization this would work with.

It's effectively a re-worked version of what partnerships (law/CPA/etc) do for
the partners themselves (vote on how much of the profit to take, vs. paying
employee bonuses/etc.).

My gut assumption is that this will work up until the point where you have
more than 2 'layers' of employees, or in any organization where all of the
players involved are not highly skilled individual contributors (what would
your secretary or janitor vote their salary to be, in an office of
coders/etc?).

------
lettergram
I believe the author is right, this would not be right for every company.
However, for small companies with a diverse skill set it is likely warranted
or at least fair that everyone is paid the same. I also like the idea of
letting the employees vote, because it gives them (A) more connection,
emotionally and financially to the companies success (B) enables employees to
imagine their self-worth which in turn makes them strive to be better.

One comment I must make is that I do not believe this will work in the long
term. I am guessing when the company goes onto hard times there would likely
be a unionization to force to keep from a pay cut (which is bad). However,
there are cases where because everyone is in it together they are willing to
not be paid for a period of time.

An example of this would be an interesting conversation I had with a founding
member of Molex (they make connectors in every computer pretty much in the
world
[http://en.wikipedia.org/wiki/Molex](http://en.wikipedia.org/wiki/Molex)) who
claimed that the owner came in one day and said there was no way to pay any of
them, but if they stuck with him they would have a job for life and the pay
would be based on company profits. The old man I was talking to was the
janitor from 1940 and was still the janitor in 2005 and was one of the highest
paid in the company (ironic huh!).

Anyways, the point is even a billion dollar corporation starts off this way
and it seems reasonable enough and good enough to get loyal and hard working
employees. There will be a time for change, but for now it is an interesting
experiment and will likely work.

~~~
Chris_Ashworth
We've discussed the long term, and we all agree: it's not something that will
stay like this forever. In the long term I don't think it would be fair to
maintain a perfectly flat pay structure; we won't always hire people with the
same set of skills or experience or responsibilities.

I don't expect to keep this system forever, but it's a good fit for us at this
particular moment in time. I expect it will change as we change.

------
chiph
Sales are up, so everyone gets raises.

What happens when sales decline? By giving everyone an increase in salary,
you're committing to pay that amount for the foreseeable future. If you can't
... then layoffs will happen.

So what if you used a salary + bonus structure? The problem is that firms have
been abusing this for years, and employees are wise to it now. "Bonus? Never
seen anyone pay on it, so doesn't matter."

~~~
Ellahn
Without the numbers, you're supposing too much.

From reading, I believe he had too much money in the bank, and too much
getting in. So, yeah, we can't keep this stored forever, since the cart's
still going up, and we have a lot to spare, let's raaise salaries to something
we can keep in our current situation, possibly still storing a little.

If he was dumb enough to just raise to infinite and beyond (The sky is the
limit!), I don't believe he would have been so successful until now.

------
hartator
I really do like experiments, but I think humbly that's a terrible idea. It
seems to me that's a way to flee decisions and responsibilities for the OP but
it can also be unfair for good and talented people shy and introverted. (We
have a lot of that in our industry!). It reminds me of John Galt, Ayn Rand
character who flee a company just like that.

------
brianberns
Wait, so every employee at the company makes exactly the same salary?

~~~
Chris_Ashworth
Correct. (At the moment.) (We're not saying we have to keep it that way
forever, and don't expect to.)

------
ronaldx
This is a curious idea but I don't know if this solves any existing problem.

The motivation of the employees is to choose the red dot (employees' choice)
not so high that you have to overrule their choice, but otherwise higher than
the blue dot (employer's preference) and the white dot (current salary). Looks
like they were successful this time :)

This would be more interesting article if employees were willing to reduce
their own salary in lean times, or to relinquish a raise in good times.

I think a low red dot would illustrate a healthy company where employees have
great buy-in to the success of the company - to the point that they are
willing to protect the company's cashflow at their own expense - but this
technique is going to create that situation.

I'd be interested to come back to this experiment in 5 years time, let's say.
Good luck!

~~~
thomaslangston
I'm not sure it was intended to solve a problem, but I think it does provide
benefits of increased employee autonomy and mental investment.

That may move the needle on employee hiring, retention, or performance. Or it
may just make the owner happy, specifically in the example the author appeared
to value shared ownership as a goal in itself.

The author also appeared to appreciate the vote on pay as a metric to
determine how the employees viewed the state of the company (i.e. how big the
communication gap was between himself and the employees given the company's
promotion of internal transparency).

------
Bjoern
Doesn't this open model proposed by Joel Spolsky make much more sense?

[http://www.joelonsoftware.com/articles/fog0000000038.html](http://www.joelonsoftware.com/articles/fog0000000038.html)

~~~
philliphaydon
No, anything he has to say is not really worth reading now-a-days.

------
jblok
"What does it represent? Does it mean, given the opportunity, I'd lean low,
and they'd lean high, in an effort to pull the numbers in a selfish direction?
Maybe."

Not maybe. Obviously. Obviously, no matter how close knit the team is, and how
well you know everybody, people still love the almighty dollar, and if they
can will get more of them for doing the same amount of work. The boss on the
other hand, as much as he loves transparency and communication and won't admit
to it, also loves the almighty dollar, and subconsciously leant low.

------
sthommes
At a very early stage but well-funded startup, where everyone is relatively
equal in age, capability or experience, I think the idea of everyone making
the same 'monthly nut' money, like $100K per annum could be appealing. In the
Bay Area, I actually think $100K after taxes/medical/401K deductions would be
reasonable, high side. Cash/Stock bonuses could then be variable based on
contribution. Equality, transparency and trust would be key

------
sdas7
Hmmm, this is a neat idea. But salaries tend to be sticky downward. What
happens if your revenue drops back down to standard levels, such that the
newly selected salary is no longer sustainable?

Perhaps a democratically selected bonus would be a safer option.

------
anonymouz
The second graph is a perfect example for a shiny but utterly useless graph. I
get that he doesn't want to share the exact figures, but without at least
putting a zero point somewhere there is no sense of proportion at all.

~~~
Chris_Ashworth
Fair point, I may revise the graph if I have time in the coming week.

------
releod
Looks like the OP is not Chris Ashworth.

I would also be curious to see some actual numbers behind this topic.
Especially the number of employees + founders, and the skill sets of that
combined team.

~~~
Chris_Ashworth
1 founder, less than 10 employees:
[http://figure53.com/company/](http://figure53.com/company/)

------
dk8996
Have you thought about linking the salary to the performance of the company.
Other industries operate this way... I want our industry to operate this way
as well.

------
marcamillion
Definitely interesting...but the obvious downside is the years when revenue
goes down (if it ever does) are going to suck...HARD!!!!

~~~
Morendil
And that doesn't happen elsewhere?

------
luke-stanley
Holacracy have been voting on salaries and many other things for a while now.
I'm surprised nobody has mentioned it yet.

------
croisillon
\- Welcome as a new addition to our company, btw here you can name your salary

\- Oh yeah? Wow!

\- Yes, please go ahead, for instance mine is Bob

------
dysruption
Hasn't anyone read Atlas Shrugged?

~~~
thomaslangston
I have.

The correlation to the novel is limited however in our example. We're not
talking about industrial complexes full of employees with vastly different
market rates; we're discussing a 5 person team.

To abusively stretch a definition, "Communist" policies like this seem to have
some success in very limited scope, such as family households. The other
comments indicate it is apparent to everyone that as presented such a system
would not scale to a larger organization. Such policies could be used as
inspiration or a baseline to build scalable compensation plans that recognize
individuals (or teams) that provide varying market value.

------
HoochTHX
This sounds like 20th Century Motors all over again.

------
mililani
I set my salary at 1 MILLION dollars.

~~~
jeanbebe
This is where Dr. Evil's colleagues snicker and he counters his demands with
"100 BILLION Dollars", right?

Seems a bit much to have people set their own salary. What happens if you have
an engineer who decides their worth $190k when in reality they're worth $100k
at best?

I prefer the idea of providing other benefits like flexibility to work from
anywhere and a sane vacation policy (take as much or as little as you want,
but make sure your shit gets done).

~~~
aphelion
What happens? They get fired.

I'm all for workplace policies that give a greater amount of discretion to
employees as to how, when, and where to work. But "set your own salary" is a
bit like "set your own hours". Your decision ends up being highly constrained
by existing norms, and by the fear of being terminated if you fail to choose
the answer intended by management.

