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Open Salaries: Outcomes (lunarlogic.io)
244 points by fridek on Oct 27, 2016 | hide | past | web | favorite | 217 comments

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.

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

Seems like this is something transparent salary policies might change.

Exactly--open salaries might cause some companies to crash and burn, but these are companies that /should/ crash and burn.

I'm not arguing one way or the other about open salaries, but should a company really crash and burn for hiring someone who was willing to work for some price $X, even if it is lower than their peer? I mean the person did accept the job knowing $X, right?

If the "willing to work for $X" was based on flawed or incomplete information, and X would be higher if more complete information was accessible, then yes, I would say they should crash and burn. OTOH, if two people with access to the same information were willing to work for different salaries, that would be fine. IMO, information asymmetry that is enforced and not the result of research costs is a form of rent-seeking and should be abolished.

From some of the management training I've sat through money is a poor motivator but a really powerful demotivator. If I give you a pay rise you very quickly come to see yourself as "worth" that amount of money and so any boost is short lived. If you feel that you are underpaid that leads to a long running and very powerful effect as described above.

There are plenty of other things that are much more powerful motivators than money, and a good company to work for is probably not the one paying you the most. Otherwise everyone would be in finance working 100 hour weeks and loving it. The issue isn't that someone was paid $X is that they felt they were worth $Y and the other incentives and motivators weren't sufficient to overcome that. If they were paid less than they could command elsewhere but doing work that mattered to them and challenged them, felt valued by the company, were part of a good team, had flexibility in work life balance, were given opportunities to develop and learn, had prospects for advancement and the myriad other things that different people value (and sometimes value very differently) then the situation may have been very different.

That's a bad move on the part of the company, because an underpaid person is a time-bomb.

From what I've seen, the problem often arise not with people hired at a low pay because they didn't know better, but hired at a low pay because that was the market price at the time. They end up having less pay than people with the same experience (or even less) who were hired later when the market salary was higher.

> an underpaid person is a time-bomb

I disagree. There may be some instances of this, but there are also instances of people who love their job and would not change it for more money.

Money isn't the only motivator.

Love their job, or love their role?

Yes. And then more data becomes available, which changes perspective. Then employees leave for better opportunity

No disagreement here; I just don't know how "companies might crash and burn because they pay their employees lower than market rate" equates to "companies that pay their employees lower than market rate should crash and burn".

One doesn't follow from the other, and I don't agree that there's inherent evil just because the salary was lower than elsewhere.

It doesn't, what he is saying is that the companies that do crash and burn after revealing salary information to their employees are the ones that should crash and burn. There is not an inherent evil in paying a lower salary. On the other hand,if the only reason they are able to pay a lower salary is because their employees do not know any better, they are more likely to be negatively affected by opening their salary information.

I didn't read it as a moral judgement.

The important characteristics of the companies he's talking about is that they're in an unstable equilibrium dependent on wage ignorance. Meaning that wage info itself would destabilize them rather than any of the mentioned toxicity.

I think he's excluded "companies that underpay but are stable in the presence of wage info" from the class that "should [be expected to] crash and burn".

If that were true, these companies would have no reason to fear opening up. After all, each of their employees made conscious decisions to be underpaid, so why would they leave?

No they didn't. Most likely their employees have no clue what they could get elsewhere, or they better take that job here first than wait 2 months for another offer elsewhere, or they needed to be in city X before moving to a better company, or...

Random number: 50% of employees consider their employment as a stepping stone.

That's my point. "the person did accept the job knowing $X, right?" is not a valid assumption.

Which is exactly why it won't catch on.

As a manager, I've always felt that I have zero incentive to pay anyone under a fair market rate. I also have always managed salaries in such a way so that if we had open salaries, there wouldn't be any surprises and no one would feel they weren't being paid fairly.

Most people I know in similar roles to mine act in a similar way. So I'm not so sure that most companies are really out there trying to underpay their employees. In terms of running the business, I want to pay people fairly for a good day's work.

"As a manager, I've always felt that I have zero incentive to pay anyone under a fair market rate."

But are you a line manager or is part of your performance KPI's the profit of your unit? Or are you an owner in a small business whose own income is directly influenced by salary expenditure, like when you're running a (small) body shop or sell hours? Those are all very different situations to be in.

Throwaway4job wrote:

> open salaries would be problematic for me, because I've made some bad bets on new hires who are overpaid compared to what they deliver, but where it's not reasonable to fire them either.

Open salaries would give you precisely the leverage you need to reduce those employees' salaries. "Your initial salary was X, expecting better-than-average performance. Your performance has been comparable to Amy and Ben, so your salary now matches theirs." They would either accept the reduction or would leave, without you having to fire them.

The bigger problem would be it would tend to reduce the variance in salaries (why does Carl get 50% more than I do?), which may result in under-paying top performers, reducing their incentive to stay.

What you are saying generally rings true for an opaque-salary workplace (which is all I've ever worked at).

In the end, though, the dissatisfaction is an edge-triggered phenomenon, not a level-triggered phenomenon. The introduction of an open-salary model to an opaque-salary environment seems tough for everyone, especially if there is a large disconnect between people's perception of their peer's performance vs. their actual salary. But in an open-salary environment, especially one with a feedback loop, it seems like it would be difficult to get into that state in the first place.

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

By definition, if most companies are underpaying their workers, they're actually paying market rate.

Not necessarily. Employees aren't always aware of how much other companies pay.

I define underpaying as "other companies in the market would gladly poach these employees". But just because there are tons of companies willing to poach them, doesn't mean that the employees know this information.

That definition breaks down big time though depending on the nature of the business.

I know one of my senior engineers could get more but I know he'd 1) work more hours, 2) have less freedom, 3) have less flexibility.

I can't pay him what others would pay because it's a consulting business and it's getting harder and harder to get the high rates for the work we usually close.

I'm not screwing him. I make it up in other areas which is why he's still with me.

But he's suggested his market rate is like 30% more when I know the hours he'd have to put in for that are at least 30% more.

So other companies would gladly poach him but it's not apples to apples, and I'm not going to play the game of "high salary" and then squeeze my people to make it make sense.

Great, but he's talking about fairness and not "market rate," which are two distinct concepts.

I had a similar issue back in 2000. I was a new grad making the princely sum of $50k as a DBA. The woman who trained me and was incredibly capable made $27k -- literally less than she would make running a Gap.

It got out, people got pissed, which they should have been.

didnt even know you could live in sf with 27k in 2000

Wasn't sf, still, don't know how she lived.

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

Well, we're lucky enough to be in an industry where there are more jobs than qualified candidate. So if you know your market value, make clear what you want when interviewing, you can find a job that will pay you what you're worth.

Anytime two people compare salaries, at least one person gets angry. Sometimes two.

So true. Most people can't handle it. It's all relative to them and it's not usually logical.

I worked for a small startup some time ago where the owner was paying me more than she paid herself but eventually we only had 2 employees left and everything became transparent. My friend (in sales) became all upset about his salary in relation to mine and they gave him a bump. I was eventually the last one left though.

That was my first professional job and it's ironic my buddy in sales couldn't negotiate a rate he thought was fair. He's actually quite good.

People are perfectly fine working for YEARS with their own valuation and then all of a sudden they think they're worth more because someone else is making more.

And then they don't even offer a compelling reason for why they think they are worth more, which is really why they weren't being paid what they think they should have gotten in the first place.

It's every employee's responsibility to know their value and to be able to articulate it. That's a very important dynamic of the workforce whether people like it or not.

My favorite collegiate course of all time had only one agenda - to teach us to think differently in a way to be compelling and persuade. Every project was related to that premise. We don't have enough of these types of courses and that shifts more power to the employers.

> People are perfectly fine working for YEARS with their own valuation and then all of a sudden they think they're worth more because someone else is making more.

Is that an argument? If yes, I don't see it. If people believe that they couldn't earn more they are probably "perfectly fine" due to this missing information. Then they learn what their peers make and think - rightfully* - "just a moment, I do the same job, to the same quality, why is my peer earning more than I am?" which in itself is already a compelling reason (so, your next point usually does not apply).

> It's every employee's responsibility to know their value and to be able to articulate it. That's a very important dynamic of the workforce whether people like it or not.

And open-salary makes this easier and harder to screw people over using information-asymmetry.

* Yes, there are some people who just don't work as good as their peers and that's the reason they don't earn as much. From all I've seen over the years I am absolutely sure that this doesn't count for a significant part of the workforce compared to the part of the workforce that does a job comparable to their peers but still earns less income.

Every time someone I know professionally has uttered something like "I do the same job to the same quality", it simply wasn't true.

I'd rather say that the main discomfort coming from salary discussions is not caused by money, but about having some people acknowledge that they're not as "good" or valuable (in that setting) as they'd like to think. Social status and "saving face" is very important, and open salaries essentially force some people to be publicly downranked - either by having salaries reflecting their worth (showing some people as not equal to others) or by having mostly salaries (downplaying people who do deserve more).

Often, ignorance actually is bliss; as the lower paid people can keep believing that they're equally valued - opening the salaries can't make them equally valued, they're still be low-paid, but now they'll be angry about it.

> I'd rather say that the main discomfort coming from salary discussions is not caused by money, but about having some people acknowledge that they're not as "good" or valuable (in that setting) as they'd like to think.

So true. I actually had to have a very candid conversation with my business partner and explain to him that my time is more valuable than his based on how and where I contribute and market value, I can't put in time in direct proportion to the time he puts in.

It was a tough thing to discuss but he understood and it was a very good conversation to have so we could move forward with a better understanding. This wasn't a salary conversation but a value conversation which forced him to really think of both of us and the company.

There are also intangibles that people overlook. If someone is more pleasant to collaborate with and adds more value culturally, that could be why they are paid more. Most companies aren't running an assembly line where doing the same job may be more likely.

When salary "discrepancies" are found out, employees won't learn a lesson and take ownership for their situation. They'll spend time investing in their skill-set but they won't spend a little time here and there to do market research or go interview a few times each year or every other year. There's also specialists who can tell you what market rate is for your position if you need help. If you don't accept this as part of the workforce, be prepared to be earn less. That's on you.

Performance is also very hard to measure quantitatively, so everyone allows bias to creep in. There are fields where this is less true (Sales) but even then a lot is based on the hand you're dealt.

> Every time someone I know professionally has uttered something like "I do the same job to the same quality", it simply wasn't true.

Then our experiences differ (which is sad but okay) - I have seen, multiple times, the situation that not only the person who uttered it thought it was true but the better paid peers agreed (and yes, they agreed in private, not only in public where they had to fear to be judged if they said "well no, he is not as good as he thinks").

>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.

The dynamics weren't changed, you were all just able to finally see the reality of your situation: you were being taken advantage of and no one told you.

Another way to look at it is: Before salaries were revealed, the company managed to get their "good team dynamic" without paying for it.

But they didn't. One of their employees was already concerned about their low salary.

If anything this changed the situation from a developer leaving without notice for a higher paying role at a different company into a situation where the company could have retained them.

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.

"no two employees with the exact same job title should have more than 10% difference in pay"

Meh, job titles are just buckets. Comp is also a bunch of buckets.

Why should these buckets be necessarily tied in size?

Lots of flatter organizations have a smaller number of titles but larger comp buckets.

There is nothing necessarily wrong with this.

This is true even for bigger companies. As an example, let's say we classify engineers as SDE I,II and III and then have at least three sublevels within these which are not reflected in the titles. Engineers can negotiate on what level they think they should be based on their performance - as opposed to how much you should be making. Everybody at a sublevel makes the exact dollar amount +/- a performance bonus. I worked at a company that did that and I found it much less awkward to negotiate during performance reviews (aka pay-hike talks).

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.

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

Or a 20 hour work-week with full salary.

I suppose it's ambiguous but generally I feel like "senior" means "responsible for more pieces or higher level pieces" not just "faster at the simple stuff".

Where I work, there are 4 levels of my job, none of which are management. That is to say that someone can work an entire career as a research associate and take on more responsibility, but not be forced up the org chart. This is very important because I look to the people in the higher levels for a lot of help (both organizational and technical), but we can do much of the same lab work.

No. An employee should make the salary he or she is willing to accept and an employer is willing to pay.

What if they do different jobs? Is the title so important?

Agreed. Title doesn't really mean much, unless you force a ton of different titles.

That only works if you come up with lots of different job titles, which is probably a good idea. It's just pretty hard to implement for many companies: most non-tech companies don't have 10 different levels of software engineers.

I've had plenty of experiences where people in equivalent job titles had vastly different productivity (and, justifiably, vastly different titles).

A job title is not an accurate reflection of an individual employee's value to the company. It would be insane to require that a 10x developer gets paid the same as colleagues just because they shared a job title.

He is arguing that this 10x developer should get promoted to "senior principal engineer" or something like that.

But titles are just arbitrary anyway. If you're saying that two people with the same role shouldn't have more than 10% difference in pay, that makes a bit more sense, although it's still quite difficult to define "role."

Are titles really that meaningful? I've never worked at a place that cared much about them.

Also, on a practical note, that would require 17 different titles for the same type of job if you have a 5x variation in compensation. That seems kinda crazy.

Employees care about them because getting a new title is an official recognition of their accomplishments to themselves and their coworkers, it looks good on a resume, and can definitely be meaningful for optics with clients.

I really don't care that much about them myself. I do use a few different titles depending on the client however.

LOL, genuinely laughed. A developer with a title a level below mine makes more than me - I was recently promoted but the raise I got with the promotion didn't match his salary without the promotion!

OK, next thing there's 9000 job titles. Where's a win in this? If it just salary levels, then why bother with titles? Call it just "salary level N+1" and that's it.

The worst bit about this is how they held it against you as well. I've had a similar experience (over much smaller amounts of money) and it caused nothing but trouble for me. Revealing your salary to your co-workers is just a good way to get them pissed off at you, or, possibly, you pissed off at them.

It seems to me like this was a positive outcome for those two people you spoke to.

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 http://www.freibergs.com/resources/articles/leadership/semco... https://hbr.org/1989/09/managing-without-managers

That's eerily similar to a scene from Atlas Shrugged.

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.

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.

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.

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.

By being transparent, you force yourself to be less irrational.

Irrationality is the square root of all evil.

I see what you did there

>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?

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.

That suggests either a very like-minded company (with 25 people very likely, with larger sizes less so) or tremendous amount of peer pressure. After all, if out of 25 people 24 decide to share, and 25th wants to work in this company, they don't really have a choice, do they? That person has to work with all these people after it.

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.

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.

These people may not have access to the document, but surely in a small company they would figure out some of the salaries either through the grapevine or shoulder surfing?

There are three companion articles to this one which answer questions like this. The answer to your question from the "how" article: "Not joining would mean that others won’t know about that person’s salary and that person wouldn’t have access to the salary list."

I work at a public university in Michigan as a Java developer. All of our salaries are open to the public. It has actually caused more friction that what I expected. Maybe it is just the people I work with, but once raises were announced people got very upset. It was mostly why is person A paid THAT much, they don't do anything.

I work for a consultant company with transparent salaries. Everyone know what everyone's making on each level. I for one have leveled twice now in a year and my salary have been raised 32%. It feels very natural, and actually it would have it feels weird not knowing the other ppls salaries.

I too work at an open salary company. One great thing that happened was that other people noticed I was being underpaid compared to my actual duties before I did and spoke up for me (I just didn't bother to look at it much) Minorities can keep tabs and see that all is well... Or that adjustments need to be made before it becomes a bigger issue. We have a superstar or two, and everybody knows who they are, and they make more. People are fine with that. One thing that really makes all this work is that we hire not only for technical skill, but especially for low jealousy and defensiveness. This helps from client meetings to code reviews, and of course, to honest discussions about open salaries.

I work for a state government with open salaries to the public. It causes lots of friction due to a couple of factors: 1) De-facto lifetime employment 2) No raises without a new position 3) Vastly differing levels of compensation

I make something like 50% more than the guy sitting next to me, but I manage an interdepartmental project and have a different employment category. It's hard for people to honestly evaluate themselves so it becomes a pride issue.

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

[1] https://open.buffer.com/introducing-open-salaries-at-buffer-...

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.

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.

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)?

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?

Imagine that there is a distribution of valuable output from employees. That not every employee contributes an equal amount to the bottom line, when you measure everything that you can possibly think of, every externality and intangible.

If you believe that there are those differences, that you can judge those correctly (but elect to not act on it), and that other employers can also judge that well enough to offer differentiated higher salaries to the most valuable employees, then you will be left holding an adversely selected set of employees. (Other employers will cream off the most valuable by being able to offer higher compensation, and you will see more of the left side of the distribution applying to your company once it becomes known that "everyone is paid the same".)

Not in every case (maybe a high-value-creating individual believes in your company and mission enough to forgo a higher salary they could command elsewhere), but in aggregate, I believe you signal to the highest performers that they should look elsewhere and your lowest performers should stay, because you are more interested in equality than fairness.

Mediocrity can be mitigated by making expectations clear for advancing to the next level in the organization, and the compensation increase one gets.

For example, master these 5 skills at level I, and we then meet to set up a process for learning the next 5 skills needed to advance to level II. Once you advance, you get +20% salary.

I think that seems like a good way of incentivizing performance and continued learning.

and then you have no way to compensate someone who has a 6th, incredibly valuable skill, but not the other 5 you wanted.

Or you can start doing super complicated things like "have 5 out of those 10 skills", but are they as valuable?

Yeah, that's a pain. And then another company may value the skill differently, and you then have to just lose your employee to them because they'll pay them more but you won't because of your rigid structure.

There's so many variables, uniformity here won't get you the best teams.

If a company has removed its own ability to reward me for putting in extra effort, busting my ass to produce extra value would make me kind of a sucker, don't you think?

Every scheme I've heard of to get around that has had had some major flaw or other. Usually by failing to capture some important area of endeavour; or by relying on some combination of easily gamed metrics (like tickets closed or evaluations by co-workers); or requiring employees to capture excruciatingly detailed metrics; or by having incentives too small to be worth pursuing; or by including a large management fudge factor that makes the rest of the system pointless.

Busting your ass WHILE expecting a reward, is a sucker.

The reward usually never materializes. You shouldn't do overwork in the first place.

The situation for salarymen of the same year in big corps. at Japan is kind of similar. Wages are only from tenure, so two people who have been at the a corp. for 10 years have the same salary, even if one's a total duffer and the other is super important for the company. The reasons for this are historical, but don't really matter to this discussion. Almost everyone at these big co.s are hired right out of college in yearly "classes" and then stay their until retirement (ideally, obviously things are more complicated). The system isn't as strong today, so I'm describing something that existed more in the '80s.

What end's up happening is people in the same year are sorted by many other things. Better more interesting tasks are given to higher status workers, they avoid more grunt work, get nice perks (at top levels, things like a company car, etc.), and more respect.

It's hard to separate the effects of this on the company from all the other things Japanese companies do which are different from USA/Europe. But you might look into that.

Shipping, delivery of a product/useful labor, is my definition of value far more than experience. If you're a nobody but I can trust you to Get Shit Done (tm), you are more valuable to me than a greater number of "Steve Jobs" who I can't rely on as much. As such, the last thing I want to do is remove a hugely meaningful incentive someone has to push hard and differentiate themselves.

Now this certainly has moral pitfalls, if you use it as a carrot to get people to keep upping the ante on each other, but at some point we have to trust the autonomy of our workers to be able to say no. (I believe that management can help with this as well concurrent with keeping salary-based differentiation, by things such as enforcing not working outside of work hours, mandated vacation time, salary transparency and clear metrics for what achieving more/success means, etc)

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?

> everyone contributes equally in their own way

In my experience, this has never been true. People have different motivations, skills etc.

Although if we can assume that its true, it would be easier to implement govt mandates like Paycheck fairness act.

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.

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.


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.

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

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)

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.

> 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.

This is my experience too. This sort of open company (from appearances in the original article) is pushing the salary negotiation as part of broader openness. Once you have buy in with the broader financials the negotiation can take place within a consensus and many of the arguments about what someone personally believes can be brushed aside by the majority views and the actual financials. From my experience, people who really deliver things end up reaping a lot more because they can argue from what they are actually worth on the bottom line and their value as multipliers.

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

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!

Perhaps the people you think are dopes are actually high performers?

I certainly don't want my salary dictated by the personal prejudices of my coworkers, especially when so many of them have no real idea of how much market value they're creating. I'm sure many of them think I'm a "dope" but my results manage to convince employers that my demands are worth paying.

In theory if you are a top performer, you can go walk down the street for a raise. and keep going it until you can't get more raises.

Not that all top performers do this. Being good at a job has little relation to being good at getting paid a lot. But you can be both a top performer AND top paid, if you play the right cards.

If you're a top performer, you can also see that the company is not paying you at the top of people they're paying.

But I am not sure you need transparency for this? Can usually get close to ranges if you ask a few coworker friends and/or interview around.

> Can usually get close to ranges if you ask a few coworker friends and/or interview around.

Isn't that transparency, although in a very biased and limited form? Why would having more transparency reduce your leverage? It's easier to play the right cards when you know what cards are in play.

> Why would having more transparency reduce your leverage?

Because of jealousy.

There have to be a good 10-20 software companies with this Open Salary thing. From them, find one where for two people with the same # of years of experience, person A makes 2x what person B makes. From what I see, they all more or less settle on a (base pay) + (# of years * multiplier) + (maybe a location bonus) = Salary. I don't see variables in there for (he is awesome)

For a counter example, I can point you to wallstreet or finance in Chicago, and show you 100s of people where people at the same level make as much as a 2x pay difference.

> For a counter example, I can point you to wallstreet or finance in Chicago, and show you 100s of people where people at the same level make as much as a 2x pay difference.

If you think people in finance don't know what their peers are getting paid you are fooling yourself.

They are overall much more mature and transparent about pay than we are.

I agree with the maturity part, but not the transparency part.

If you told a trader their salary was going to be posted publicly, decided by the rest of the employees (including junior employees), and that they couldn't negotiate it then they'd laugh in your face.

Giving up the ability to negotiate your salary is giving up your whole leverage. It's a ruse played by smart entrepreneurs to sucker engineers into taking lower salaries and feeling good about it.

Currently "salary negotiation skill" is one of the primary drivers of one's salary, whether or not negotiation is a necessary skill for the actual job. In other words, you end up rewarding people who are good negotiators, not necessarily people who are good at their job. Of course you may coincidentally reward people good at their jobs if they happen to also be good at negotiating.

Give that up, and people who are good at their jobs but bad negotiators will tend to do better, and people who are not good at their jobs but good negotiators will tend to do worse. I'd be fine with that trade-off.

In practice people who are good at negotiating will just negotiate a different title. It happens all the time in tech.

Think of all the useless architects on much higher salaries.

As an ex-manager if I wanted to hire a mid level dev who was too expensive I would just hire them as a senior dev.

Edit: or even worse you lock people in based upon a rigid system like years of experience and end up like teaching where an amazing teacher who gets great results will get paid far less than a shitty teacher who has stopped trying simply because the shitty teacher has been around longer.

Ideally, we could have a magical box that you could feed the sum of all of an employee's achievements and out would pop their objectively-determined market-competitive title and salary. Things like negotiation and seniority and popularity contests and office politics and whether your manager likes you would have nothing to do with it. I'll concede we don't have such a box, so companies have to make due with a combination of these other imperfect systems. I argue that "individual negotiation skill" is a pretty terrible choice among those systems--unless your job role actually involves negotiation.

> unless your job role actually involves negotiation.

Every job involves some level of negotiation.

Even as a junior you have to negotiate with senior devs to give you time of day. Even as a junior you have to negotiate on features and estimates.

As you move up the chain it becomes more and more important.

> but not the transparency part.

I think most people in finance have a good idea of what their peers are being paid and a good idea of what they need to do if they want to earn more. People are paid fairly objectively and managers are upfront about what they value (at least within a firm).

That doesn't mean employees know exact percentages or bonuses and it certainly doesn't mean they know total comp in $.

When I moved into software development my first manager was shocked that I wanted to plan exactly how to get to the senior level, what I would need to demonstrate, and what kind of pay they offer at the next level up.

He couldn't answer any of my questions and it was like I was the first person who had talked about concrete career goals with him.

I agree with your anecdotes, but I think it's not because tech is less transparent but because most developers have no mind for career or salary optimization and treat their jobs like games rather than business propositions.

I totally agree. I think we are just using the term transparent differently.

Telling people to go on a random walk for a few years and maybe they will move from mid to senior is the kind of transparency you get in tech.

Real transparency would be: If you deliver project X and can demonstrate you got Joe and Raj up to speed on Y then we will promote you/increase your salary/give you a big bonus/put you on the project you really want etc.

I agree with you too. I've never seen a job in tech where it was clear what it took to get to the next level (either salary-wise, responsibility-wise, move-into-management-wise, etc.). It's always hand-wavey "do better and who knows!" or "you'll be senior engineer after a few years!" type guidance. Sometimes I'm jealous of folks like salespeople who have clear metrics. Pull in $X in sales and your bonus is $Y. Bam! That would be awesome.

The simplest explanation of your finding is that salary differentials are endogenous to industry, not to salary transparency. Did you sample software companies without salary transparency? Did you differentiate between finance companies with and without salary transparency?

I'd argue that in companies where salaries are not transparent, there is also not a (he is awesome) variable. Salaries among the same title/level are dependent more on how good of a negotiator you are or how good your relationship is with your manager, than whether or not you are awesome.

EDIT: In theory they should be based on what the employee could get elsewhere in the market, but if that were always true there would be no job hopping.

I would think that if your writing code I can't maintain, but if you leave I have to maintain it or get fired, I have a strong incentive to pay you well. Remember all of these have a feedback component too. What I think it will help with is Bullshit. If person A takes a lot of credit has better access to higher ups and they're in the spotlight a lot, maybe that kind of opportunity should be spread around.

> I would think that if your writing code I can't maintain, but if you leave I have to maintain it or get fired, I have a strong incentive to pay you well.

If you're writing code I can't maintain, my preference is to pay you less. Writing code that is easier to maintain is one sign of a good developer.

I don't want to pay you more because its too painful to lose you. I want to pay you more because its wonderful to have you.

I assume the people making 2x everyone else are maintaining complex financial models no one else understands.

Basically, you're arguing that it's fine for companies to undercut their employees?

  Why would having more transparency reduce your leverage?
You: "I've gone above and beyond, and produced $X of value. I'd like a raise of $0.1X please"

Boss: "If I did that, I'd have to give your 20 peers the same raise. You'll need to produce at least $20X value if you want a raise of $0.1X. I can give you a raise of $0.005X if you like"

I think a few people in this thread seem to be confusing salary transparency with "everyone makes the same salary". Don't think anyone is arguing for the latter.

Have you actually tried asking coworkers for their salaries?

My experience is that this is a taboo topic.

Yes. Several times I have participated in a "throw salary facedown on the table, and we flip them all up together".

Companies hate it, as it gives you more bargaining power.

Has to be with people you at least sorta like though, can't go demand it from some 12 cubes over.

>What happens to the guy in open salary co who is legit 50% better than everyone else?

The GP is right in that, that person doesn't have much choice but to move on.

I don't have experience with open salaries but I do have experience with collective agreements and seniority. They aren't meant to take into consideration the "super stars". That's not what they are meant to do. Seniority and collective agreements do suck if you're a "super star".

I don't think there's a system where everyone is a winner.

It depends on how you define winner. Does it really matter how much someone else earns as long as you're happy with your pay?

I have taken a lower paying job because of my preference for that job and workplace. Money is not my principal driver (nor is it most people's).

I also agree that an open pay system could encourage super stars to leave. I once hired a woman who earned almost 50% more than her peers because she was amazing (it's the one time I recall paying a premium for anyone). If her peers knew, it would have been a shit storm, especially her male boss (who earned well less than she did).

We are too obsessed about comparing ourselves to others. I would most probably pick a culture where there wasn't transparency because I don't think someone else's income is anyone else's business and the emphasis on money is unhealthy.

Is that "50 better than everyone else" measurable? If it is, then the higher salary along with the criteria and specific performance measures could be a good incentive for the rest of the employees to improve.

It's a false dichotomy. The reason is "legit 50% better" is not something we currently know how to measure.

So yes, it trends towards more coarse grained measures (years of work doesn't have to be one) at the expense of the "best" performers.

If you see lots of your best performers leaving for more money elsewhere you have 2 options, raise everyone up, or come up with better coarse grained measures.

I'm of the opinion that if you can come up with good objective measures for performance of software devs, you should immediately stop doing whatever made up business problem you are currently working on, and switch to judging software devs. You could literally charge whatever you want.

Good point: "objective measures for performance of software devs" is a hard problem that is in a high demand.

While union workers often have less salary disparity, their salaries also tend to be higher overall. The only downside to this is if the "best performers" derive value from their "worse performer" peers being paid less than them.

> While union workers often have less salary disparity, their salaries also tend to be higher overall. The only downside to this is if the "best performers" derive value from their "worse performer" peers being paid less than them.

Or if you're in your twenties or thirties and pretty good at something and want to be paid based on how valuable you are in the market instead of based on your number of years clocking in.

Decreasing variance while increasing median pay is obviously a pretty big downside for everyone who is paid above median.

Your post reads like a very bleak argument against the minimum wage. Increasing the median should mean that those above the median also see an increase through economics. If the price something is $X then the price of a premium something is still going to be greater than $X.

Not really. Increasing the median by itself does not bring down the pay for top performers. The problem is decreasing variance, which does and fixed formula or transparent salaries are both designed to limit variance.

Personally, I'd never want to work somewhere where my salary is set by a formula of my "experience" level.

> the price of a premium something is still going to be greater than $X

Yes, but how much greater than $X is the question. If median salary goes up, high performers have to come down a lot in order to not run out of money.

Sadly, this appears to be half of it. People are more interested in looking in other people's bowl to make sure they're being paid more, rather than seeing that others are making enough.

As long as there is a legitimate way to measure this '50% better' and the resultant value, and everyone else has an opportunity to perform at this level, reject it or concede they are unable I suspect few will have an issue.

On the other hand if its an arbitary, political or a self appointed measure I can imagine collegues could have a problem.

Sales is one area where measures are somewhat possible. For instance if a salesperson is consistently doing 2 million while collegues do 1 he or she is better in that quarter and is automatically compensated better because of commissions. Collegues far from having have a problem celebrate the achievements and aspire themselves. Similarly if someone closes a deal in half the time of the typical deal cycle then they could be considered to be better. They will close more revenue and get more commissions.

But it is important to point out its not the people but the performance being measured that is better and if you can do this as clinically in other fields compensation can be designed to automatically reward performance.

Why should the guy that is the best negotiator get the highest salary? Does that actually have any correlation to performance?

Generally if you're not a good performer you don't have any ability to negotiate irrespective of negotiation skill, and if you are a top performer, you don't need any negotiation acumen to get a raise if people actually think you might not stay.

> 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?

Presumably, that's how it works.

Transparent doesn't have to mean homogeneous.

Okay so show me a company with both transparency and big differences in salary between workers at the same job.

Seriously. Every time I see an open salary list, their most senior developers make less than I do.

In my view, these are mostly the latest technique to try to sell employees on subpar compensation through "culture." Except they're even more dangerous than ping pong tables.

Yeah but 80% of the employees aren't in the top 20% and yet everyone is so arrogant as to believe they are. And that's really great, if you're the employer.

> If you're any good at your job, you should avoid these open companies like the plague

I think you mean if you're any good at negotiating salary since doing a good job does not equate with higher pay in most companies.

Also, even if that were true, there shouldn't be any issues because you would just get promoted to a higher position, in which case you'd be paid more anyway.

It seems like there's only an issue if you think you're that much better than everyone else but nobody else feels the same way.

I don't see why avoiding open companies would be the smartest move. I'd say just avoid all companies except the one that gives you the best deal (balancing salary, benefits, quality of life, enjoyment of the work, etc.). If that company has open salaries, fine, and if not, fine.

So, when a couple of thousand engineers at Google put their salaries in a spreadsheet, all the good people should have jumped ship?

You're also implying that salary is a function of performance. This is an incredible claim to make.

I'd argue it's not even how good you are but how good you negotiate. If you negotiate well transparency is not in your interest.

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

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.

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:


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.


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


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.

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?

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.

Most (all?) government jobs are like this. My wife is a GS something step something else (I would say, but I can never remember). You can find the public matrix and COLA adjustment based on location and know her exact salary. This is true for all federal employees that I know of.

Performance is how you move up GS and step levels.

Correct me if I'm wrong but aren't government positions paid the same across the board? Financial compensation is companies (particularly in tech) isn't standard across the board for a particular position, each employee can garner a different salary.

There's a complex social dynamic related to that feature in companies.

No, there's flexibility in the general schedule system. It both goes from $18K to $133K, and includes cost of living adjustments.


Just looked at the Locality Adjustments, and as a person who has/does live(d) in NYC and Houston, TX, for them to have pretty much the exact same adjustment doesn't make ANY sense.

My rent in Houston was $1100/mo for a 2 bed, 2 bath 1200 sqft luxury apartment in a nice development with hiking and biking trails. My rent in NYC for a 1 bed, 1 bath, 600sqft luxury apartment in a nice building with a doorman every other day (idk why) is $2300. More than 4 times the price per sqft.

Every day staples are 20-100% higher in NYC than Houston. Car insurance is almost triple. Parking which used to be free and assigned is now in a garage and $200-400/mo depending on where you are (thankfully mine is in the rent).

I think the government needs to re-evaluate their adjustments.

Locality ≠ COLA (Cost of Living Adjustment)

Locality is to make a job's salary competitive with other job salaries in the local market, whereas COLA is exactly what it sounds like.

Houston has a high locality rate because of all the high-paying jobs there that one could potentially get instead of the govt job.

I work for the govt and receive both locality and COLA, albeit the COLA is way too low in my opinion (Honolulu).

You also have GL (for law enforcement), WS (Wage Scale), WG (Wage Grade), and for contractors the Davis Bacon Act. They all also change depending on locality. I don't know what all goes into determining locality pay, but I can say with certainty it's not just the cost of living in the area.

In the WS scale the 3 highest paid is in KS, MI, and Atlanta. I think they consider what other positions in the same kind of fields are paying for the area.

Here's the US Government salary table for GS-schedule employees.[1] Pre-Internet, this was available on a wallet-sized card.

[1] https://www.opm.gov/policy-data-oversight/pay-leave/salaries...

True, but it seems like they have a system where everyone can share feedback on whether someone else gets a raise or not. That's certainly not the case in the US Govt.

But don't most governments have pretty rigid definitions of what your salary will be based on role and experience? This open salary implementation seems to have a lot more wiggle room for change, variance and dispute than a typical governmental role.

Governments are not Fortune 50 companies.

And how's that working out for them?

Pretty well? Seems to me there's a big problem in the public sector of extreme difficulty of terminating non- and even anti-performers, but that's orthogonal to relatively narrow and seniority-based compensation bands. But those are just my nth-hand impressions on both. Would love to read some good papers on either or both.

Sweden, Finland and Norway do it: http://usatoday30.usatoday.com/news/world/2008-06-18-salarie...

That's clearly one of the more disaster prone areas of the world.

I'm in Norway, and this is very misleading. Tax data is no longer available anonymously, but even when it was:

- you only seen tax return figures, and depending on your family situation, property ownership, tax class, benefits the spread in paid taxes can be easily 2x on same amount. Hardly usable for finding out if someone makes 20% over you.

- the data was available with 3 year delay.

And yet small companies often try to adopt "best practices" from megacorps 1000 times their size! One of the huge advantages of working in a small companies is that you can do all these things that don't scale.

Why? Certainly one would expect the form of the discussions to be a bit different - eg, as part of a performance eval tool, instead of a company-wide discussion - but I don't see why it would be a disaster.

In fact, given the number of people who said this would be a disaster for a company of 25 people two years ago, there's an even greater onus to provide real reasons transparent salaries couldn't work at other companies.

Big companies are not foolish. The information asymmetry exists because it is benefitial for them to keep it that way. Then again the asymmetry can work in your favor as well.

Don't companies with that size have budget-salaries which are equal for all employees on the same rank / position / experience level?

I doubt that BMW has an engineer that earns more than his / her colleague at the same position.

Perhaps that's the appropriate way to discriminate pay? If for whatever reason one engineer should earn more than the other, then make it explicit in the labeling.

Bob is Engineer, and Joe is Engineer+; it's clear to everyone that Joe is earning more, and if Bob feels underpaid then the explanation for the salary difference is explicit in that he's not (for whatever practical reasons) doing the work/quality/quantity/whatever of an Engineer+.

At one mega-corp I worked at we had job levels (say 20-35 or so) each with a corresponding salary range.

All they'd do was promote you to the next level and give you a salary in the next range.

Usually the pay for a job is within a range. This range can be quite large so you will have people with the same job making different money.

Let's take the BMW example. Most of their engineers in Germany are paid according to a collective agreement where the salary is determined by looking at a table based on your actual position, your background, and seniority. There is an additional salary based on some specified performance metrics but that usually accounts for a difference of 5% maximum.

Only few engineers in leading position and with larger responsibilty are paid based on an individually negotiated contract.

I have worked at German companies with union pay (IG Metall, same as BMW). You are right that there is a table, but where you are on the table is still very negotiable. Maybe people think this can't be negotiated but in reality it is. I got bumped up several levels after I complained that my colleagues were much higher while doing the same work.

Why would it be a disaster for a big company?


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.

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.

s/selfish/asshole/ please.

Assholes can game any system.

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.

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.

This requires a large amount of co-ordination, teamwork, and communication – exactly the qualities that 25 employees together are often most required to have in order to work efficiently.

I'd think the raise would be warranted :)

And then the company runs out of operating capital and you're all looking for jobs somewhere else?

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.

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?

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.

A manager may easily be given a goal which will result in profit for the company but in worse conditions/more work/downsizing/whatever for that team; and delaying or avoiding that goal would likely be easier for the team but worse for the rest of the company.

It would be appropriate to have the manager's pay depend on how they're executing according to the goals of the company and not the goals of the employees - thus, the boss' boss should get a say in that and the employees should not get a vote as their interests may easily be completely opposite e.g. in achieving cost savings for labor-dominated tasks.

That gives managers an additional incentive to fire those disgruntled employees, and contributes to a mono-culture of thought, which can be worse off for everyone.

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?

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?

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?

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

I read it Open Solaris (RIP)!


You don't need to be an asshole.

First, I apologize for the reddit style. I deserve the down votes, which I will happily pay. Using a position of power to force employees to divulge personal information really pisses me off.

There are three companion posts to this one that you might want to read because they'll fill in some assumptions you're making. Primarily, for existing employees the program was opt-in, such that "[n]ot joining would mean that others won’t know about that person’s salary and that person wouldn’t have access to the salary list."

So that person then is forbidden from attending these meetings?

There are two problems with that:

1. Even if employees get to opt out, others still know they opted out. And that can create mistrust on both sides. "Why did Bob opt out? What does he have to hide? Is he making more than everyone else? Is this transparent salaries thing just a way to keep the lower paid people thinking they're actually average?"

2. By excluding those people from the salary meetings, the company basically creates an "in club", the people that know more than everyone else. The opt-out people are now no longer just opting-out, they are literally being kept in the dark about things being shared with others. And like in scenario 1, that will breed mistrust.

Does it change your mind knowing that it was not imposed from a position of power?


Really? Or were some scared of being singled out? I have managed teams, asking 40 people a question will get you 40 different answers. But in this case they were all for it? Lies.

You'd make a good conspiracy theorist. You question & disbelieve everything even when faced with reasonable evidence.

Yes, maybe we don't actually know all the intricacies of what's going on, but you're just being a crank.

What personal information was divulged?

Salary does not necesarily map to skill. It is usually defined in terms of your last salary, that is usually disclosed as a part of your background check.

Then, offers for H-1B workers are available online. Some other information is on glassdoor.

> It is usually defined in terms of your last salary, that is usually disclosed as a part of your background check.

This contradicts the claims of US being such a free and free market country... Sounds Kafkaesque. How does this background check really happen? Can't you deny the disclosure of your previous salary?

Background checks are usually related to confirming your education and past employment history and if you have any criminal history. Sometimes they want to know your credit score too which can be a problem for those with a streak of bad luck financially.

Yes you can deny disclosing your previous salary. Usually they will not ask for any official proof anyway so you could make it up or give your expectations.

Some companies ask for employment confirmation from your former employer. That can include salary information.

It can, but it's very rare. US companies of sufficient size[1], being lawsuit averse, will generally only confirm employment dates.

[1] That size usually being "big enough to have a dedicated HR department"

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.

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.

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