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Introducing Open Salaries at Buffer (bufferapp.com)
527 points by jliechti1 on Dec 19, 2013 | hide | past | favorite | 337 comments

I've always felt the culture of hiding salaries was doing a significant disservice to employees. It creates a significant and largely artificial information disparity, giving a major market advantage to the employer. In turn, this makes the entire labor market less efficient for the employee.

This also makes the employer less accountable to the employees. The employer can easily pay somebody significantly more or less than they contribute, and the rest of the team cannot really say anything about this.

Now, there are some cultural reasons to do this--preventing jealousy, hiding inequality. But it really feels like a social band-aid, a temporary solution hiding the symptoms but not the underlying problem. Besides, everyone ends up having a reasonable guess as to who makes more and who makes less anyhow! The same dynamics develop, just with more uncertainty.

On the other hand, making salaries public takes these problems head-on. Inequality isn't bad in and of itself; some is basically necessary. But hiding that fact doesn't really help anyone. Instead, forcing people to see it head-on, deal with it and talk about it is probably a better solution.

I really applaud Buffer and the general movement towards transparency. I think it's a very healthy cultural progression and hope it catches on more widely, so that people stop having knee-jerk reactions to salary information.

EDIT: As an interesting additional note, all salaries (beyond a token minimum) at Berkeley (and the whole UC system) are publicly available at http://ucpay.globl.org/.

I've looked up various professors at the ParLab (where I did some undergraduate research). The fact that their salaries range from ~120k to ~350k did not change my perspective of anyone and did not seem to affect the lab's culture at all.

Essentially, I'd be perfectly happy to see this outside of public universities.

> It creates a significant and largely artificial information disparity, giving a major market advantage to the employer.


Having employees not discuss salary is all about the employer having more power/control, and the employees having less.

I've always thought it's a little like an adult giving candy to a child and then say "Now, don't tell anyone I gave you this!".

Why doesn't the adult want anyone to know about the candy exchange? Because they benefit from keeping in concealed.

EDIT: I also think this is a generational thing. Everyone I know over 40 wouldn't dare talk about their salary, or how much they paid for their house, etc. Everyone I know under 30 will happily talk about it to anyone and everyone. Give it a few more decades, and this will be the norm.

I suppose it is true that when we turn 40 our brains rot. All we care about is keeping kids off of our lawn and catching the early-bird special.

Many people don't like to share their salary - not because they wouldn't "dare" as if they are cowardly or not as enlightened as you. Some people find talking about personal salary or wealth to be distasteful - like a braggart yammering on about his expensive possessions. If you have no economic diversity in your group of friends then it's probably no big deal, but otherwise you likely are making people feel ashamed and unsuccessful. Some people might feel it's rude and unnecessary to discuss your salary unless there is some reason to do so.

I don't personally have a problem with a fair and consistent formula for salaries within a company, and people within my company may be able to deduce what I make. It's not a power trip thing. But I don't really want my salary mandatorily posted on the web for every random friend or stranger to investigate. Unless I'm working in the public sector it's my own choice and my own business.

My apologies, I wasn't trying to imply people are cowardly or I'm more enlightened, or anything like that.

The word I was looking for is taboo. I believe that the baby boomers find talking about money to be a social taboo, while younger generations do not.

It's not about any group or generation being better, I think it's just a change in what society finds acceptable.

(To be honest, I'm not sure Gen Y'ers find anything to be socially taboo. I wouldn't be surprised if that word stops having meaning)

Hehe, no worries. It probably is somewhat due to our generations, but it may also be that as you age your salaries naturally will begin to diverge. And with a certain amount of success it's not exactly smart to go around broadcasting your wealth. I personally am self conscious about coming off as a rich jackass when I go to my hometown and visit my high school friends who are working for minimum wage.

For a venture funded start-up, over-sharing finances seems somewhat ill-advised to me. I guess maybe I am old and I just don't get it!? According to their blog they have a payroll burn rate approaching $2 million per year. Maybe they are grizzled veterans who have been in startups that run low on money and they have tricks up their sleeve. Maybe not - maybe they're just a bunch of kids who have never done this before and think that the money will keep flowing no matter what happens. Maybe their over-sharing will not put them at a serious disadvantage when negotiating because everybody will know their level of desperation for cash. Maybe their employees will not become very nervous and start leaving when the funding situation becomes scary? I only just took a really quick look that them and I don't know the answer to these things, but it doesn't seem like it really benefits them that much to share their corporate finances.

>I personally am self conscious about coming off as a rich jackass when I go to my hometown and visit my high school friends who are working for minimum wage.

I agree 100%. There is a fine line to be walked between "sharing" your salary and "bragging" about your salary.

For me, I find it easy to share with people in a similar-ish scenario/career/position in life. It's not so easy to share with someone in a very different life situation, like working a minimum wage job, as you say.

> It probably is somewhat due to our generations, but it may also be that as you age your salaries naturally will begin to diverge.

That right there. I'm nearer forty than 20, and I remember a time when I freely discussed my salary, or the price of anything I'd purchased with anyone who'd asked. Now, not so much.

>> The word I was looking for is taboo. I believe that the baby boomers find talking about money to be a social taboo, while younger generations do not.

I'm the tail end of Gen X. Talking about your income is gauche, it inevitably leads to comparisons between peers (even unspoken ones) and can sow discord in a group.

It might just be that the next generation grows up knowing about this incredible range of renumeration that exists and has less personal self esteem caught up in that number. A grocery bagger knows his doctor neighbor makes more than him. But perhaps his personal self worth is less tied into that and doesn't really care. I think such information is much more transparent than it's been historically.

> Having employees not discuss salary is all about the employer having more power/control, and the employees having less.

You seem to imply that just because the employees know all the salaries, they have more control. This is not accurate.

They have more knowledge but certainly not more control.

If anything, the fact that the salaries are the result of a simple equation means that the employees have close to no control over the money they make. Also, a lot of factors contribute to the productivity of an employee, most of which cannot be accounted for in a simplistic equation, things such as working long hours, working on weekends, good attitude, willing to take on unpopular tasks, etc...

>They have more knowledge but certainly not more control.

Knowledge is power, as they say.

Industry wide wage negotiation is basically a collective action problem; publicizing your wages lowers the barriers/cost for negotiating for higher wages. Most people are, by definition, paid less than their marginal value and thus have some leeway for a raise to begin with.

Besides, it works for CEOs: http://www.newyorker.com/talk/financial/2013/10/21/131021ta_...

This isn't true. In the posted numbers, there aren't any major discrepancies between people doing the same job. But imagine if you saw two programmers with roughly the same background and experience with a $20k+ difference in salary. The reason you don't see that is precisely because the salaries are public.

Your error is assuming that the same formula would be used if the salaries weren't public. The employer is forced to use a simple, consistent formula. They would be under no such pressure if all salaries were secret.

I disagree they don't have more control. If the salaries are out in the open, then pay disparages would need to get addressed. Those who are severely underpaid would look for another job, so the company would need to give them a raise and fix the situation. I've known plenty of very good employees who were severely underpaid simply because they didn't know any better.

> You seem to imply that just because the employees know all the salaries, they have more control. This is not accurate.

No. I'm saying that because the employees know all the salaries, the employer has less control.

The employer can no longer dictate terms and make secret differing deals with different parties.

> No. I'm saying that because the employees know all the salaries, the employer has less control.

How does the employer have less control when he is unilaterally deciding what the formula is and he can stonewall any request to discuss salary by hiding behind that formula?

"You know what, Dave, I know you want more money but I just decided to add a negative 'is disrepectful of superiors' factor' and your salary just went down $5k. Isn't transparency great?".

> How does the employer have less control when he is unilaterally deciding what the formula is and he can stonewall any request to discuss salary by hiding behind that formula?

Once everyone knows the employer is doing that kind of BS, they will go elsewhere, and the employer will be left with no employees.

Employment is not some kind of privilege we should be thankful for. Remember that.

> Employment is not some kind of privilege we should be thankful for. Remember that.

So someone is compelled to provide me with employment? By what force and why? Am I automatically entitled to employment at any company of my choosing? Can I decide that you, Grecy, are responsible for employing me?


The employment contract is a business arrangement. Describing it in such value-laden terms does a disservice to all parties.

One is employed presumably because the arrangement is mutually beneficial; if it stops being mutually beneficial the arrangement is renegotiated or terminated.

Though I think that's why this is a good solution: it still provides the company with wage control while creating transparency for the employees.

It is not beneficial to the company over individual wage negotiation. Suppose V_i is the amount of value the ith employee contributes to the business (V_i = revenue from employee i, minus non-salary costs). For the business, the hire makes sense if the salary is anything in (-inf, V_i) - but with the lower the better.

Presumably, the company believes that their computed salary (call it S_{f,i}) is such that S_{f,i} < V_i for all employees.

However, there are things that the formula doesn't take into account - for example, an employee might be bad at negotiating, and be willing to accept a salary below S_{f,i}, or they might have something in their history (e.g. a conviction) that means that it is hard for them to find alternative work and they are willing to work for less if told to take it or leave.

Similarly, a very good prospective employee might be currently paid S_{c,i} in (S_{f,i}, V_i), or an existing employee might have received a counter offer S_{c,i} in (S_{f,i}, V_i) - it is rational for the business to offer S_{c,i} (or another number between S_{c,i} and V_i) to gain / keep that employee, but it isn't in their interest to give every employee the same pay rise.

This post might be better without the mathematical abstraction.

> An employer wants to pay their employee as little as they can get away with, as long as it is less then the value that employee provides. Presumably, this company set such salaries.

> However, there are things that the formula doesn't take into account - they lose the ability to screw bad negotiators and convicts out of money.

> Similarly, if people are offered higher salaries elsewhere, it might be worth it for the company to counter-offer with something still less then the employees value to them to keep that employee, but they don't want to do the same for everyone.

"Everyone I know over 40 wouldn't dare talk about their salary, or how much they paid for their house, etc. Everyone I know under 30 will happily talk about it to anyone and everyone"

That's because they (the <30's) grew up with FB and are used to sharing everything with the world.

Some things you just don't share with anyone. That's one of the reasons we still wear clothes.

I wear clothes largely for the benefit of others, personally. And because it gets cold.

That's the same reason why many people don't share their salaries: for the benefit of others (who might get jealous).

I usually hide my pay these days. Last time I shared with someone I worked with, who it turned out made a fair bit less than I did, the guy got mad at me. I stopped sharing.

I disagree completely. You should, as the potential employee, be well aware of the market pay and what you are willing to be paid to perform the job that you're applying for. Not to mention their job postings actually list a salary window ($88-110k for Backend/Frontend). What the person sitting next to you is paid should bear absolutely no impact on your life or your work ethic. If you're happy to make $88k and the guy doing the same job next to you is making $110k, I don't see any problem. Maybe he has a few more years of experience than you, maybe he's a better negotiator, maybe his suit looked nicer. The point is that you accepted it and were willing to take that salary for that position.

I can't fathom what being aware of your coworkers salaries could possibly do for positive team building. Somebody is going to be upset, egos will be triggered. Yes, in day to day business we're typically aware of the fact that an engineer or programmer makes more than a customer support or cashier. But here it's thrown in the employees face. "John sits next to me, he takes 3 hour lunches and he's paid $110k! I can't believe it. Screw John!"

Show up to work in a new Porsche sometime and while some people will think it's the coolest thing ever and give you a pat on the back, jealously may rear its ugly head with others.

I just don't see how this is a positive thing in the least.

>If you're happy to make $88k and the guy doing the same job next to you is making $110k, I don't see any problem

One problem is that the first person is often female, not white or foreign.

Another is the demotivational effect when the first person eventually does find out they are underpaid versus colleagues or the market - and they generally do. And then they will leave.

It gets worse when the lower paid person is clearly outperforming the higher paid person, or where the higher paid person is clearly under performing.

And finally it's just not the right thing to treat people unfairly versus their peers. If the lower paid person is being underpaid then quietly fix the issue.

100% agreed.

I absolutely hate salary systems that give an advantage to people who are pushy, jerky, entitled, or privileged. Some of the best developers I know are pleasant, friendly, modest, don't like confrontation, and pay more attention to the work and the team than how much they're pocketing. Those people shouldn't be paid less.

Is asking for what you want pushy? I'm not sure we want to be praising people for being good little doormats.

Learn to defend your work and ask for what you deserve.

There is so, so much more to this story that I don't even know where to begin. People "asking for what they want" takes on completely different contexts depending on their situation, background, gender. The system you are advocating will always pay more to the privileged, encourage a competitive, low-trust culture, and disadvantage many skilled people for reasons out of their control. Ultimately, it's the company that will miss out on the best talent.

Yes, exactly.

Asking for what you want isn't necessarily pushy. And yes, people should learn to ask for what they deserve.

But knowing what you deserve is a complicated art that involves measuring yourself against your coworkers and your industry, and having a good working knowledge of the current market. For the people who don't know what they want, some of them are going to err on the side of asking for too little, and some will ask for too much. I would much rather spend my time bringing the shy up than battering the arrogant down to something reasonable.

"And then they will leave."

Surely that's a risk that a company takes knowingly and can adjust if they wish?

"I can't fathom what being aware of your coworkers salaries could possibly do for positive team building."

Everyone knows what each other makes in the Army. When I was in, we never talked about relative pay at all. We didn't need to.

Oh, and we had tons of positive team building. :)

I was in the Army as well and have worked as GS. That has absolutely no bearing on this conversation. Why? Because you don't negotiate your salary in the Army. You're an E1, you make E1 pay. You're in combat? You make E1 + hazard. You didn't go in and negotiate for an extra $30k because you attended MIT over FSU.

>> You should, as the potential employee, be well aware of the market pay and what you are willing to be paid to perform the job that you're applying for.

Yeah, well, not easy when everyone is hiding it. All info I can get is too generalized.

How can you determine market pay when salaries are private?

You end up with what we have now: looking at what companies post publicly for salary offers. Some companies don't publish those numbers publicly, and that's only 'new hire' salaries. So it's inaccurate.

You as the employee with that skill DETERMINE the market value. If every IOS developer refuses to work for $40k and want $80k the market will start having to pay $80k. Yeah there will be outliers, maybe someone desperate for a chance to prove themselves, or someone who was unemployed will take that $40k but that is not the market value.

It's not some vooodoo a company makes up, you yourself have a direct affect on the market value by turning down and taking positions. If I can't find anybody to hire at $40k I might start offering $60k and more until I get the amount and quality of applicants I desire.

Right, but it'd be easier, for example, for every iOS developer to not take $40k if they knew that other developers are being paid more.

Basically, keeping information private gives an advantage to the people who know the private info versus people who don't. If no information is private, that edge is lost, aka, a more level playing field.

Resarch firms buy and sell salary data in bulk.

There are plenty of people already aware of their coworker's salaries; government employees, including military. It isn't like you don't know some salary info, you know your boss gets paid more for example.

>You should, as the potential employee, be well aware of the market pay and what you are willing to be paid to perform the job that you're applying for.

And when you know what everyone makes you have a much better grasp of the market pay, and if what you were offered was fair. If they tell you "we only pay x" you can only take their word on it if they are keeping their salary data private. If not you have more room for negotiations.

And your example of unfair pay doesn't jive well with me. It is still wrong to take advantage of someone just because they let you take advantage of them. I think a lot of cases of grossly unfair pay fall into that category.

We are dealing with adults here.




I have you ever thought that maybe human beings are not computer programs that you have written and so therefore there may be a reason someone may be unhappy someone sitting next them makes 20% more for the same work? You act as if it is some logical fallacy because you were naive enough to accept the smaller amount or something. I'm not surprised. This kind of reasoning is very common on here.

Exactly. I know precisely what I'm worth because I poll the market frequently. I don't need my employer to push mandatory transparency to know what I'm worth; in fact, I feel the informational asymmetry actually benefits me, because my employer doesn't know how much it'd cost to replace me (unless they're interviewing potential replacements as often as I'm speaking with recruiters / getting inbound interest from other companies, which they're probably not, because it's expensive and time consuming) yet I know exactly how much I can fetch elsewhere. So when I negotiate for a salary increase, the employer assumes all the risk in the transaction.

This can only be true in a mom&pop company size. Any company with a decent staff management know a lot more than any employee: they make constant offers that get accepted or reject, and see more candidates than you ever will, even if you are in 100% of the interviews.

The information asymmetry you think benefits you is only protecting you , at best, from getting something worse than other employees. Thats not a success. A transparent system would mean everybody gets the benefits of that.

If you dont have a problem with someone making more or less money than you in the same company as you, why would you ever mind to make it public.

Is it because you fear people will resent you if they know your salary? Are you getting bullied by your HR department because of it? I doubt so. If someone makes a decision because of he has more accurate information, i have to believe its going to be a better decision.

This is a very basic case of information asymmetry and it always benefits the one with more information.

Do I agree with showing salary by name? I dont, so directly. But the mindset on the policy is healthy and can only sin from being naive.

I had a boss bully his employees with fellow employee salary information. (i.e. bill took a pay cut because of the recessions, so should you...)

As far as I'm concerned, salary is a completely private matter that is no one elses business, and no good could possibly come from sharing it.

I see this openness at buffer essentially being a tool for management to deny raise requests, etc... with... If we do it for you, we have to do it for everybody... which is a just a BS excuse to not face the reality that every persons value and work situation is different, and should be treated differently.

I had a boss bully his employees with fellow employee salary information. (i.e. bill took a pay cut because of the recessions, so should you...)

If you see this, it is time to run. Fast. Very fast. Unless salaries are completely open, they should be confidential.

Edit (add quote for clarity) > I see this openness at buffer essentially being a tool for management to deny raise requests, etc... with... If we do it for you, we have to do it for everybody...

More likely, the response would be along the lines of: "You'll get a raise when you qualify based on the criteria that have been clearly explained to you and the rest of the world."

Oh really? And what makes one

Senior? Lead? VP? C-level? COO? CEO?

Master? Advanced? Intermediate? Junior?

Who decides that? What makes it objective? Can you dispute it if your boss happens to be a bitter idiot who is completely detached from reality? What happens if your boss and their boss have different views? What happens if you are a perfect employee, but you were a bit of dick at the last Christmas party? And what happens if you are very nice and social and everyone likes you, but you are not really much of a programmer?

This whole thing is BS. The only model that can possibly work is the scaffolder model - you get a worker for a job. If they're shit they get sacked the net day. If they're good, you have to pay them more to keep them from running away...

Interesting... I never said that they would apply the rules fairly, I just said that the excuse would not be "If I do it for you I'd have to do it for x" but rather "I'll do it when you qualify according to standard y." I certainly never said that I agreed or thought it was objective.

I agree that the "seniority" and "experience" sections are unclear in OP. For true openness, they need to provide an objective scale for these two items.

I don't think that this ever gets to (or approaches) perfect fairness, but neither has any compensation strategy anyone has ever devised [citation needed]. Still, I think it's a good faith effort, and the real world ramifications will be interesting and potentially useful in answering the questions relating to objectivity in determining salary.

Perhaps... but this relies on an awfully idealistic view of real life. What goes into a salary decision is much more personal than a universal formula can dictate.

This is a classic excuse to put different people into the same box.

I believe it to be completely inappropriate and unprofessional to be transparent with something as personal as salaries...and saying that were all in the same boat just doesnt excuse this behavior.

Something which doesn't seem clear to me is whether the team is able to properly evaluate the pay of their colleagues. Surely the people that are most friendly and fit most of the in-group traits of the group will benefit most? What about the creative and non socially-correct members that don't fit in - should they move to different companies?

In general, I cast doubt on the idea that employees really know what's important because of principle-agent problems and culture.

Of course, that leaves little room for merit pay within grades.

Sure, but what does that have to do with salary openness?

Nothing, it was a direct response to the parent. I edited to clarify. Thanks.

Private salaries are a benefit for those who know how to take advantage of them and push the boundary on their pay. They are a disadvantage to those who don't or don't want to. So it really depends on which type you are. Buffer will likely attract those who don't like to play this game, and just want fair pay for good work. It could even have the effect of attracting people who truly like and want to be at the company.

Neither approach (public or private salaries) is perfect.

> I see this openness at buffer essentially being a tool for management to deny raise requests, etc... with... If we do it for you, we have to do it for everybody... which is a just a BS excuse to not face the reality that every persons value and work situation is different, and should be treated differently.

Their salary formula accounts for experience, company performance, and role. Having the openness and formula makes it easy to say no to arbitrary salary-increase requests and also makes it easy to have a fair raise in place "automatically". Sure, the formula is not perfect, but as the zen of python goes, explicit is better than implicit. Changing the formula or the parameters to it may be a wise thing for the company to do at some point, but it will likely be clear what the change is and why is it beneficial to the company. That sounds a lot better than the way that salaries are typically negotiated.

"Having the openness and formula makes it easy to say no to arbitrary salary-increase requests"

It more likely makes arbitrary excuses to deny legitimate salary increase requests.

I think this forces unnecessary arbitrary restrictions on an already difficult process. I highly suspect this is simply an excuse for management to avoid uncomfortable conversations and very difficult decisions...

I can foresee about a dozen likely HR nightmares that can surface from this transparency.

Personally, I would never want to work at a place where everyone in the room knows how much I make...especially if many can't appreciate or quantify the value I create.

>EDIT: As an interesting additional note, all salaries (beyond a token minimum) at Berkeley (and the whole UC system) are publicly available at http://ucpay.globl.org/.

Fascinating, I had no idea this was public. Looking briefly at the results, it reveals a curious data point:

UC's highest paid employee is not, as one might expect, the chancellor or dean, but in fact the sports coach ($2,884,880 gross)

The highest paid public employee in something like 49/50 states is a sports coach.

See e.g. http://deadspin.com/infographic-is-your-states-highest-paid-... which shows: five college presidents, five heads of particular faculties (medicine, law), one plastic surgeon, and everyone else a football or basketball coach.

It also breeds malcontent and unethical behavior. My last employer gave me a very hefty raise while (unethically) telling everyone else that there was a pay freeze.

Unfortunately, the payroll person was a gossip - the incident undermined my leadership and put me in an extremely awkward position. I'm happy to have left that shady startup.

At my company discussing salary is grounds for instant termination. It's specified in our contracts. People still talk though.

> Now, there are some cultural reasons to do this--preventing jealousy, hiding inequality. But it really feels like a social band-aid, a temporary solution hiding the symptoms but not the underlying problem.

The underlying problem is that our brains evolved in the Stone Age, and many of our instincts - particularly those to do with status-seeking, envy, thinking of life as a zero-sum game - are destructive and maladaptive in the present day.

This is a problem beyond our power to fix. We don't get to debug our DNA. All we can hope for is social band-aids, temporary solutions hiding the symptoms but not the underlying problem, so the fact that hiding salaries falls into this category is not a valid criticism thereof.

A slight problem with that thesis is that employees are generally not forbidden from discussing their salary.

Rather they choose not to. Some consider it personal info. Maybe they shouldn't, but they do.

From that perspective, this could feel like the company forcing a decision on their employees that they would rather make for themselves. I would be a little concerned about injecting a culture with that.. it's a bit paternalistic.

Employees are generally forbidden from discussing their salary. Most places I've worked, it has been told to me at promotion and raise time not to disclose my salary to other employees. It probably isn't enforceable however, just the goons trying to keep that info private that they want private.

The places where I have worked (all in India), the offer/joining letter specifically mentions that "You will not disclose your salary to any inside or outside person. If you do so then you could be/will be asked to leave the organisation."

Let's say I'm a competitor, and I find that Niel (randomly picked) is someone I want to hire. All else being equal, I offer him $100k (website says he's making $88k). He comes to his boss to say "I like it here, can you match it?"

What does his boss do? Especially, if he's valuable to the company...

What if I have a very specialized skill that doesn't fit nicely into your matrix? Let's say market pay for my skill is $200k. Do you create a new category for me? Do I get dirty looks from all of my co-workers because I have a valuable skillset that most people don't?

I'd hate it, as an employee, as a boss or as an investor. But that could just be me.

> Let's say I'm a competitor, and I find that Niel (randomly picked) is someone I want to hire. All else being equal, I offer him $100k (website says he's making $88k). He comes to his boss to say "I like it here, can you match it?

This happens all the time anyways, hiding the salary of the employee isn't going to make any difference in most cases.

And is it so hard to guess what some (say iOS engineer) earns? The salaries that Buffer pays are in the range of what I expected them to be anyways.

> What if I have a very specialized skill that doesn't fit nicely into your matrix? Let's say market pay for my skill is $200k. Do you create a new category for me? Do I get dirty looks from all of my co-workers because I have a valuable skillset that most people don't?

I'd expect the founder of the company should be able to justify paying someone $200k to his employees when he can justify this to himself and his investors.

I mean it's not like anyone will be blown away by the fact that there are people (VPs, managers) that earn 3x to 100x of what they earn themselves.

What is your fear? That the employees will seize the property of the company and turn it into a communist collective?

Of course on the other hand it could mean your salary haunts you during future interviews and at future jobs. Salary Negotiation 101 is, don't tell them what your old salary was, right? But now the cards are all on the table, and they'll try to say "Well, I see you made $X, we'll beat that by 4%"

There's a difference between salary history and salary expectations.

And if they had the nerve to Google your past salary, then I think you could turn that around and ask for a similar matrix to what you had at your last, more transparent company.

If they refuse, and you can't justify the salary to yourself given the situation, you're probably better off staying at the transparent company. There's more to a job than money, after all.

You can try this or that tactic, and you can say "If they googled your salary, don't work for them", but best I can tell there's no angle where this is better for the prospective job seeker. The seeker can always elect to divulge his previous compensation if he likes; in this situation that option is removed. He now has fewer options, fewer plays.

I think the fear is that it will create animosity by making the information so accessible. On some level, the junior-level dev knows he's not making as much as the guy with the PhD in an esoteric mission critical topic, but he has a kind of plausible deniability that lets him avoid thinking about it. If everyone's making 80k and everyone knows that Jane The Expert is making 300k, there's going to be friction. "Hey Jane, why don't you pay for the dinner."

Worked as an intern once, had one of the full-timers complimenting my work and saying I was just as sharp/skilled as him at the job. I knew he was getting paid a lot more than me. The multiplier was probably a whole number. Yes, he was on-call and I wasn't. Yes, there are always other good reasons too. But it still rankled to be doing close to the same work, and paid so much less. As you say I made sure to stay ignorant of the exact number to help ignore it.

I think you are trying to say that he made at least 2x what you were making. I would be very surprised to find an intern making more than half of what the person they are interning under makes and normally I'd expect it to be much less.

Typically you aren't working at an internship because you have a proven track record of skills in a certain area. That is kind of the point of doing an internship. And having a proven track record is something employers are willing to pay a lot more money for.

At least 2x, possibly 3x, possibly more.

You don't have to justify it, I understand all the bullet points. I'm just corroborating the parent's statement that willful ignorance of someone else's wages can be a useful coping mechanism. Because no matter how many justifications there are, it still stung.

Do you think you would if you knew exactly why the other person was paid more, and how you could get to that level? I find the public table a lot fairer than not knowing how much the others make and why.

Oh, I knew how to get to that level and I knew for sure at least some of the specific reasons there was the discrepancy.

That doesn't stop unbidden thoughts from creeping into my head at 4AM when the two of us are working side-by-side doing the exact same thing.

They'll already know that the expert is making more. If she deserves it and the company pay structure is fair, then no good employee will complain.

... and she's already expected to pay for dinner. ;-)

No, the fear would be that employees look at someone with a 3x salary differently than they would if they didn't know what his salary was. It's just a distraction. I don't know how much my boss makes. It could be half what I make, it could be triple. I don't really care. If I found out suddenly that it's triple what I make, then maybe I'd look at him differently. Does he bring in 3x value to the company compared to me? Maybe in my opinion he doesn't--do I talk to the CEO to say "hey, we can replace this guy cheaply"? It just seems like pandora's box at that point.

Perhaps this is a good thing? One of the leading factors in wage disparity between men and women (other than outright sexism) is a difference in negotiating style. Men ask for more, more aggressively, and more often. If a female employee sees that her direct counterpart is making 15% more than her for some reason, perhaps this would cause her to ask for parity. Or, better yet, by making salaries a function rather than the outcome of a negotiation (as much as one can) perhaps the disparity never arises.

I had the same thought. I think approaches like this would go a long way to closing gender disparity gaps. The bottom line is that this is simply more information.

Another side benefit of this approach is recruiting. I've always felt that "salary negotiable depending on experience" is such a waste of ink. Being transparent let's individuals who have expectations way out of alignment opt-out entirely. Then you get a nice clean signal for when your pay is out of alignment with the market...good candidates don't apply.

I remember hearing about a Brazilian company where employees could pick their own salary, and everything was totally transparent. The catch, of course, is that you have to continue to show you're "worth" that salary. And if you don't hit deliverables, well, maybe your salary or expectations should change.

Why is a Senior iOS engineer (Andy) on a "Intermediate: 1.1X" multiplier? - you can't be Senior and be intermediate in my book. Seems he needs his multiplier upped to the proper level. $107k is low for a iOS Dev in the Bay Area.

Could be seniority relates to breadth and tenure of experience whereas experience is related to skill at the particular position.

So an ios dev who spent the last 10 years elbow-deep in the innards of some database code or something would arguably be "senior" but not "experienced".

Just one way this could fall out, I don't know how buffer defines the terms.

That's the first thing I noticed too. Senior iOS Dev making 1k more than a CHO? Only their employees know the culture and value everyone provides but that sort of thing would make me uncomfortable.

He may have taken more equity for a lower salary. I might be wrong but publishing everyone's information like this seems so dumb....focus on your startup not on gimmicky unproven hr practices

Why's that? The iOS Dev probably does more actual, real work.

In negotiation, typically the party with the most information has a better negotiating position. Posting salaries is a significant piece of information that will almost certainly help a competitor since it greatly reduces the cost of them acquiring the knowledge.

I think a big part of the problem is that people generally aren't good at judging the value of other's contributions unless they are working directly with them or managing them (and even then, hit or miss).

Having salaries be completely open invites comparison even when there is a lack of information. Bob the Developer in XYZ team makes 20k more than me, is that fair? Maybe, but I don't really know, and I can see that creating friction with the right (wrong?) personalities.

With closed salaries, you don't have to justify anything to your employees. They are called employees for a reason.

Let's say I'm a competitor, and I find that Niel (randomly picked) is someone I want to hire. All else being equal, I offer him $100k (website says he's making $88k). He comes to his boss to say "I like it here, can you match it?"

This sets a terrible precedent. I've been in places where people knew they had to get a better offer to get a raise, so the entire office was job-hunting. Much better to figure out some benchmark ("To get the best folks we pay in the top quintile and insist on no OT" or "We pay modest base salaries, but give double the usual equity to share upside and incent people to act like owners") and then stick to it. Top people will rarely leave for a small raise, though they will leave over disrespect or boredom.

>What if I have a very specialized skill that doesn't fit nicely into your matrix?

Oooh, or what if there's a dragon[1], and I need to be paid extra money so I can spend it on dragon-slaying gear? If you really deserve extra money, the conversation goes like this:

"Why do you make more than me?" "Because my job is harder."

Fun fact: you're not that special. Wage secrecy is good for skilled negotiators and bad for everyone else; being a skilled negotiator does not, however, ethically or morally entitle you to make more than other people. It just allows you to get away with it, and it's trivially unfair.

[1]: http://www.imdb.com/title/tt2207833/

Dunno, if person A goes to gets a PHD in distributed systems and spends 40 hours a week furthering their knowledge of computing topics, while person B spends 6 years after university uninstalling viruses from windows computers, and spends their time after work watching cartoons, it seems very plausible there would be a significant difference in their worth to a company due to a significant difference in skills, even if they are both hired on as "developers".

To add on top of that, who says that this kind of transparency breeds trust? Transparency is great in some areas, terrible in others. Take away bathroom stalls to find an area where this isn't as true (extreme example).

I trust co-workers when they do what they say they will, when they are respectful & smart, when they show up on time, when they tell me when I screwed up in a nice way, etc. I could care less what they make--to me it would be a distraction.

>I could care less what they make--to me it would be a distraction.

Are you 100% sure that you've valued yourself accurately?

I played "show me yours and I'll show you mine" with a coworker once and he discovered that we were both working the same position but he was paid $8K less than me. The difference was that I negotiated my salary like crazy and he didn't.

Information asymmetry is the best way for companies to ensure their employees are underpaid. While it could cause a bit of awkwardness between peers, at the end of the day I think it's better to know what others are making & let them know what I make, because it strengthens everyone's position.

If I am one on a team of 20 engineers and I want an extra $10,000 p.a. for all my colleagues, I need to persuade the company to spend $200,000 p.a.

If I negotiate for myself, I only need to persuade the company to spend $10,000.

A proven ability to keep your mouth shut could strengthen your negotiating position if you're using a quantifiable value-based approach.

How did your coworker _feel_ when he got that information? Was he happier?

As a boss I'd love this.

It's my job making sure everybody is paid fairly. If Niel came to me and told me about a competitive offer, I'd say, "well, let's look at the market; maybe we've fallen behind." And then we'd sit down and refresh the data that drove our current pay levels. If things had changed significantly, then it would be time for raises. If not, then we'd talk about why a company might be paying well above market, and whether it's the right choice for Niel to go there.

For specialized skills, yeah, a new matrix category's the obvious fix. If co-workers are the kind of people that freak out at market economics, then it means we're not educating them well, so that's something worth fixing.

I think it's important to remember that secret salaries rarely stay secret, so the choice isn't between full knowledge and zero knowledge; it's between full knowledge and half knowledge plus substantial speculation.

I don't think that many bosses think like that.

What if the company is not that profitable, can you still stay competitive? Are you willing to risk the future of the company?

You're giving me a choice between risking the company's failure and rooking some of the employees out of pay they could get if they were more self-serving?

I deny the choice. I think most companies that make a habit out of underpaying good people to stay barely in the black don't survive in the long haul. If I were faced with that choice, I'd be honest with everybody about the financials and we'd work something out. Either we're pursing something pretty lucrative, in which case it's a temporary deviation from market rates, or we're barking up the wrong tree, in which case the company isn't worth doing.

You know, you're making a good case for techies publishing their current salary/day rate. In a sellers' market disclosure should drive prices up.

That would only work if everyone discloses. Prisoner's dilemma.

s/everyone/a critical mass/

"All else being equal" is a huge assumption. Will your company offer the same environment, flexibility, openness, remote work? You should first assume that Buffer keeps their employees very happy to be able to openly publish their salaries.

That's great, but what if Niel has a kid? Suddenly priorities are shuffled in a big way. Maybe he needs a 5% raise to afford <whatever it is that the kid needs>? Is it worth it to the company to lose the employee over 5% of salary?

I think the point of the transparency is that they'd discuss a situation like this as a company.

Three things:

First, most recruiters/hiring managers ask for current comp (or at least a salary range) early in the discussion, so it should be easy for them to offer well over someone's current pay. This simply removes one bargaining tools (lying about current comp) for an employee considering a move elsewhere.

Second, matching outside offers very quickly becomes a slippery slope. Anyone who figures out that such a policy exists will quickly come to the realization that the easiest way to get a raise is to put themselves onto the market. That's toxic, not to mention unsustainable.

Finally, equity. The one-year cliff exists for a reason, and if you're playing for keeps with an early-stage startup, you're probably expecting (or at least hoping) for your ownership stake to be worth a lot more in the long run than your salary.

>First, most recruiters/hiring managers ask for current comp (or at least a salary range) early in the discussion, so it should be easy for them to offer well over someone's current pay. This simply removes one bargaining tools (lying about current comp) for an employee considering a move elsewhere.

Currently this screws "Niel" (to stick with the example). He wants to move someplace else and is convinced that he is worth $140k. He's convinced he's underpaid right now. He interviews at, say, Google (random example), who does a bit of research and hey, he's only making $88k. Suddenly they don't have to offer him market rate, they only have to offer him a raise on what he makes now.

Obviously this only works if one company (Google in this example) isn't as open about their salaries.

> First, most recruiters/hiring managers ask for current comp (or at least a salary range) early in the discussion, so it should be easy for them to offer well over someone's current pay. This simply removes one bargaining tools (lying about current comp) for an employee considering a move elsewhere.

"Lying about current comp" is not the only tool for an employee considering a move elsewhere. Nor is it, in my opinion, the best tool for that.

You can get pretty good results by refusing to disclose your current comp and it has an added benefit of keeping you honest. Open salaries would ruin that negotiation tool.

Also, matching outside offers is not necessarily a slippery slope. Not everyone who gets an outside offer and considers it is motivated by pure greed. Sometimes people's situation changes and they would prefer to stay at the same company, but the company needs an additional incentive to meet their new requirements.

For example, if you really like working at company Foo, but you just had a kid and you're noticing that your budget is too tight for your peace of mind, you might need a raise. Now, you might be an asset to your company and your boss genuinely understands your situation, but he or she simply doesn't have enough leverage to give you a raise outside the regular process. If you have an outside offer, that gives your boss the leverage and you might be able to negotiate a raise that would allow you to stay. And if they truly can't afford it, you have the choice of accepting the outside offer.

Serious question: I've never quite understood the "what if you have a kid" argument. Is it the company's fault you had a kid? Why are they obligated to pay you more because you had a kid? If you were worth $100K and you negotiated for that, then that's what you make -- a kid has nothing to do with it.

Put another way, let's say we both make 100K in salary, and then, all other things being equal, you have a kid. Do you get a raise to 120K just because you had a kid? I didn't have a kid. Don't I get a raise too?

I think you're looking at this wrong. The kid is an example for why the budget gets tight, it could be anything (buying a house, deciding to pay off your credit card), you're correct the company has no obligation. Hence why you're asking, not informing that they'll pay you $20k more.

"If you were worth $100K and you negotiated for that, then that's what you make" was true at the time of the initial negotiation. This is a separate negotiation, with a source "hey, company X will pay me 20% more"

No, you don't deserve $20k more as you didn't ask for it, you might if you reopened negotiations.

No, you don't get a raise, because you didn't ask for it. The difference you should be focusing on, in your scenario, is not that I had a kid. It's that, for whatever reason, I renegotiated my salary. If you can do the same, then you get the same results.

See, whereas you never quite understood the "what if you have a kid" argument, I never quite understood the "don't I deserve the same as that other guy" argument. The way I see it, the magical answer is always the same: maybe you do. Do something about it and you might be surprised.

Fair enough. :)

I don't disclose current comp unless/until it benefits me in the negotiations.

This matrix makes sense if you hire your team to be of roughly equal performers (within the seniority range) who value honesty. I doubt they will ever hire a 200K person, because they made a business decision that they don't need one. Even if they need one, they can always review the matrix and add flexibility. It takes a specific approach to hiring when using this structure.

There are some significant advantages in building an open team like this. People know what's their pay-grade and what part of the company they actually represent. If they don't think their cut is fair they can signal it. Many companies have confidential salaries so even when you know you are underpaid you can't argue it without throwing peers under the bus for revealing their salary to you.

I would assume your real reason for objecting is that you employ people and like the information asymmetry that lets you pay someone less than they could get

Another way would be to look at it from the perspective that I don't want to be backed into a corner. One of the things that I hated about working at a big company was the "compensation matrix"--you plug your factors into a matrix and the formula told you what you were worth. To a company, some people are worth more than others: "work ethic" is a tough one to plug into a matrix.

I don't find that there's a lot of information asymmetry, at least as an engineer. Beyond a first job, is there really that much? I know what I made at my last job, I know approximately what I'm worth, and I argue from there. If a company won't pay me what I think I'm worth, I look elsewhere.

Every situation is unique: how desperate is the company, how desperate is the employee, how many roles will a person fill, how many intangibles does the person come with (i.e. work ethic, contacts, what-have-you)...

Equity is still off the table.

Yes because that works out profitably for more than 0.001% of participants.

A possible approach by the boss would be to 1) see if there is flexibility to provide more within the current system (maybe Niel is more "senior" than we had recognized?), and 2) see about tweaking the formulae so everyone (or at least everyone with overlap with Niel) gets more. You may not be able to make up the whole difference, but you might not have to, and I expect very different social results than "we're paying him more to stay".

I've no particular confidence this would work well, but it seems a consistent approach that has some potential.

I don't really care for it myself but I think one thing is that they are creating a culture that is disinclined to acting as you describe (ie, salary pumping).

When you run a company, you just assume that your competitors know the pay structure. It's trivially easy information to discover (through interviews).

Excellent concept - but one major Caveat. Why in the world would you publish it for all the world to see?

Keep it internal to the company - you have an expectation of privacy from your employer and this post just ruined it completely.

I hope they got written signed releases from every one of those folks whose private info they broadcast to the world.

Seconded. Hard to imagine all employees signing off on this release for the sake of a HN article. But I hope that they did. I would be very upset if my salary were published unbeknownst to me.

You would only be upset because you currently work in a company with a culture that doesn't value transparency as a core value.

If you worked in a company like Buffer or GrantTree, you'd be wondering why others are so secretive about their salaries, and find yourself more and more disliking the idea of working for a company which is not transparent.

Habit is a powerful thing. Change your surroundings and you'll change your habits.

If you've never understood the idea of "privilege" before, your attitude of "oh what, this doesn't work for everyone else? It works for me!" is something that gets discussed a lot. Some examples of the many, many situations people can find themselves in where public salary disclosure would be a major problem:

- You have family members who have substance abuse issues. It's common for addicts to steal from family members who they rationalise can afford it.

- You're in an abusive relationship, and your spouse steals your money. Hiding part of your salary may help you feel independent enough to get out.

- Your kids' friends find out how much you earn, and bully them.

- All the rest of your family are part of a religious organisation that demands a tithe. You've lost your faith, but it would tear your family apart to leave.

- You have family who live in a country with a much, much lower standard of living. You support them financially, which is known in their community. Now their neighbours know _just how much_ you're worth, exposing your family to the possibility of kidnapping or extortion.

- Your name is Google-unique, and identifies you as part of a group that is stigmatised on the internet. If your identity leaks into your internet activities (e.g. via Google's real name policy), another major vector of harassment is exposed.

Just a couple of things off the top of my head.

I understand your concerns, however there are so many people who already have their salary info public. For example government employees including military. There is already some idea if you know what someone does. If I work fast food, everyone knows I am going to earn around minium wage. Most people know a ballpark figure for most jobs, I have a doctor friend an administrative assistant friend, nurse friend, police friend, and someone who works in retail. I know about what they all make income wise and they know about what I make as well.

does that make it right?

"Why don't you borrow money for a car from Cousin Ricky? I read online that he has a fancy job in San Francisco paying him $98,433, he can't say no."

"Why don't we break into this guy's apartment? I read online that he makes $98,433 and he should have some expensive stuff in there."

"Hello Sir, sorry to call at dinnertime but I'd like to offer you a once-in-a-lifetime opportunity to buy the timeshare of your dreams. You should be able to easily afford it on your $98,433 salary."

Why would you use salary to determine if someone is a big spender or not? Look at their car / home and see if it's worth the risk.

What a bunch of HacknerNews groupthink nonsense or at the very best, hippy dribble. You think it is just some sort of cultural problem for someone that they may not really want the whole world to know what they make? It's one thing for the echo chamber here to be way outside of reality ... it's another to think it is normal.

Perhaps you've got this backwards? People who are attracted to transparency go to companies like Buffer.

It's perfectly legitimate for people not to want to share their salaries on a public website.

> "You would only be upset because you currently work in a company with a culture that doesn't value transparency as a core value."

You don't have anywhere near the information necessary to make that claim. Honestly that came across as pretty arrogant.

I'd also argue that a company can be transparent and still understand that some people more private than others. Whether YOU would share your salary with the world isn't material - your employer shouldn't do it unless you've signed off (and I'm sure these people have if anyone involved has a shred of common sense).

I wouldn't want all my love letters and emails published. I wouldn't want my thoughts tapped and broadcast to the world. There's a line somewhere where transparency for the sake of it is either not helpful to the company or a simple invasion of privacy.

I work at a pretty conservative company, and even I wish salaries were open, at least internally. I don't believe that salary should be determined by how effective of a negotiator you are, but rather what your skills are worth to the company. If you knew they were low-balling you compared to your coworkers, how would you feel?

I wish job postings more often had salary information, too. How am I supposed to know if an interview is worth my time when I don't know if the pay will be higher or even competitive with what I'm making now?

How much do you get paid? I don't see a blog post on GrantTree publishing employee's salaries. (I didn't spend a ton of time looking though, so apologies if I did miss it)

There are some posts describing our pay scale in my commenting history, and everyone in the company knows exactly how much everyone else is paid - though I'll grant you we haven't gone as far as writing a blog post about our pay scale, but perhaps we will some day!

As for me, my cofounder and I both take out the maximum we can without paying lots of unnecessary tax in the UK, which adds up to about £30k per person per year, net.

"You would only be upset because you currently work in a company with a culture that doesn't value transparency as a core value."

So you are saying that when buffer hires someone they are aware that transparency = "we may publish your salary some day"? And that everything is an open book?

Hard to believe that is the case. Or that people didn't feel under pressure to go along with (as some research has show) what they previous may have loosely agreed to (See Cialdini "consistency" principle).

"You would only be upset because you currently work in a company with a culture that doesn't value transparency as a core value."

This isn't the case (at least for me). The reason I wouldn't want my salary published publicly because people may treat me differently based on how much I get paid. The same problems may be true in a company, but at least internally you can control (through hiring) that people are mature enough to handle that information.

More importantly, I don't want other corporations (specifically their marketing and sales departments) to know how much I make.

I may want some people in my life (including corporations, perhaps) to know how much I make, but I want that to be my choice, not my employers.

Agreed. I think this should have been anonymized outside of Buffer.

There are so many possibly repercussions with family, friends, and outsiders, in addition to the things brought up by other posters re: poaching, etc.

I personally wouldn't want my salary revealed publicly because my family would treat me differently as a result (I know this from experience).

If this idea spreads, it wouldn't be long before someone comes up with a way to API this data into something like LinkedIN or Monster. "Joe makes $100k at CompanyX - is it time for a change?"

Internally to the business though, this seems to have a lot of positives. I'll be interested to see how this evolves at Buffer.

I think it's bad that they are essentially publishing whether an employee opted for additional stock or additional cash. Should it be a red flag that the CTO turned down stock in favor of more cash?

Why should it be a red flag?

Statistically speaking, you're more likely to make more money by getting a bigger salary now instead of a big payday that may never happen. Statistically, very very few companies will be large enough for employees to cash out.

Federal Government employees have their pay publicly visible, at least many of them. Some Universities do the same. I'm not sure why this is so mind-blowing for some.

Also, keep in mind that they clearly set the opposite expectation about privacy with their employees and (from what they say), cleared it with everyone first.

Given the fact that federal employees are paid by tax payers (the employer) then the tax payers should know how much they are paying them.


(wait for it to load and take you to the specifically linked comment)

They might as well force the employees to disclose what they spend the money on.

It's not hard to guess what a software developer is making these days (hint: a lot).

Yes, but $120K, $240K, and $360K are all "a lot" to different people, are all plausible software dev total compensation numbers, and yet people would still perhaps think differently if they knew their friend made 1x, 2x or 3x $120K.

Seems unwise to have a CEO co-founder be the highest salaried employee at a startup.

That person's equity position is probably at least an order of magnitude higher than the other employees. As an investor or employee, I'd find this alarming.


Call me old fashioned, but I think co-founders should be paid living expenses + 25%, even in a series-A funded startup.

Joel here. This is a really interesting point, I've thought about it a lot.

From the linked article:

"In Startupland, everybody should be working towards the same goal: that big juicy exit. That’s the only payday any CEO should be worried about (even though more than half of them will never get it)."

I can't agree with that, and this is a key reason I spoke with others in the team and we decided that my salary as well as other c-level salaries should be quite high at this point. We're not planning an exit anytime soon.

Until a day ago, my salary was $118,000. In the first year, my salary was zero and in the second year it ranged from $55,000 to $75,000.

We're at a point with Buffer where there's a massive opportunity, and I'm going into my 4th year now. At $2.3M ARR and being cashflow positive (revenues cover the salaries) we're in growth mode and this isn't investor money we're using to fund these salary levels.

I completely agree that in the early years this would be a big red flag. I think the further you go, the more that notion reverses. I've heard that it can be a red flag if the CEO is not paid enough.

Would love to hear any other thoughts here, it definitely was a tough decision to make and I'm glad that by putting this out there we get all this valuable feedback.

Hi Joel- thanks for being open to the feedback.

Like you said, you are in growth mode. To me, growth mode means reinvesting as much of the profits as possible back into the company. Paying yourself a large salary during this time is the same as taking money off the table.

There are some good reasons to take money off the table, like paying back personal debt or supporting family members. But paying yourself more because you're the CEO doesn't seem like a good one, because your equity position is so significant.

If you don't have a good reason to take money off the table, it signals to employees and investors that "Joel thinks the money is better spent going into his personal bank account vs. making the company's equity grow in value." That sort of logic doesn't work in a startup that is targeting high growth, where employees are hoping to receive some sort of payoff from their equity. Moreover, it casts doubt on your judgment in capital allocation, which is one of the most important responsibilities of a founder / CEO. *

Obviously, all of this logic falls apart if you're not working on a startup. Low growth businesses that have achieved much of their potential are a totally different story. But you aren't starting a restaurant. Even Uber, at its $4B valuation, is giving compensation packages that are weighted towards options vs. salary.

* http://www.amazon.com/The-Outsiders-Unconventional-Radically...

Thanks for the detailed comment, that makes a lot of sense to me. Also, what an awesome book that looks like. I've just grabbed it. Thanks.

We're not planning an exit any time soon, and are in growth mode, and we, the founders, take salaries slightly below the company average.

Why? Fairness. Our employees produce value, and we pay them justly for it. Excess value is retained in the company, and used for growth. The company, whether or not we choose to exit, is an asset owned by us, the founders. It's not a liquid asset, no, but it can be used for secured debt (i.e. borrowing against the value in the company), should we choose (we haven't).

We've been cashflow positive since day one and have revenues somewhat higher than yours. We've never taken investment.

For the first three years, my salary was £6k. Just enough to afford to eat and live in a squat. For the next three years, it was £22k. For the last two, it's been £30k. Our highest paid engineer is at about £60k basic - and we're not in London or a big city.

I guess at the end of the day it's a cultural call, and a personal one, but from my corner, I wouldn't be comfortable earning more than the folks who're doing the on-the-ground production, as we're not here to earn salaries, we're here to grow value.

>> co-founders should be paid living expenses + 25%, even in a series-A funded startup

It's risky to comment without knowing the specifics of Joel's situation. But it seems that his $158k salary isn't outside those bounds if he lives in e.g. San Francisco or NYC. Hard to know someone's living expenses without drilling way into their personal financials, and again this is not unreasonably high.

Thiel, from the link you posted:

>> What’s the average salary for CEOs from funded startups? Thiel was hesitant to answer, but eventually said “$100-125k.”

That was in 2008. Adjust for rent inflation, and that should square the numbers for you.

Sure, that's a generalization. There are tons of exceptions where my generalization doesn't apply. But that isn't the core of my argument- its a postscript.

The math the company has laid out says that CEOs should be paid more than any employee in a company, even if they are founders and have a controlling equity stake. I'm simply saying that if I were an investor or employee, I would find that concerning.

I worked in finance and made less than that in salary.

It's enough for a luxurious existence in NYC provided you don't have children. I'm not sure whether or not they have children, but that's a lot.

$150k is middle class in NYC. If you work in Manhattan, it's a small place with a short commute or a normal-size place (by national standards) with a long commute.

If you don't work in Manhattan or can work from home most of the time, you can have a pretty luxurious lifestyle, yes.

Also, being single with no one to support isn't the average case. I'd argue we should assume that each working person supports one other person. That lines up with American demographics much better.

$150k is only middle class in NYC in the weakest possible sense of the phrase “middle class”. Even if we restrict to manhattan, $150k puts you in the top ~20% of household income (which often includes two wage-earners). Median income in Manhattan is right around $70k. I know that nearly everyone in America (except maybe for Bill Gates) believes that they are middle class, but at some stage one needs to accept that if you make whole-number multiples above the median wage, you are at the very least “upper middle class” or “well off”. To pretend otherwise is frankly a bit insulting to the actual middle class.

Yes, there are people making vastly more than $150k, but that doesn’t change the fact that it puts one solidly in the upper quartile.

Yep. For less than that amount I had a floor of a brownstone in Brooklyn, 20-30 minute commute via subway, paid off 10 year student loans in < 1 year, took my entire family on a vacation, and went out to dinner at a variety of nice restaurants on a fairly regular interval. I also saved up 30K in liquid assets (Although that includes some cash from 1-2 years before).

It's that's "only" middle class, the world is in serious trouble.

Sounds middle class to me. Having a few months expenses in the bank and a 30 minute commute. Checks out modulo crime rate and quality of local public schools, both of which vary a lot in Brooklyn.

How long have you lived in New York?

What does the term of a loan have to do with anything? It's a meaningless metric in your context.

That's just what we call the loan where I'm from.

It's the loan I took out to pay for my 4 year undergraduate university education in it's entirety.

Is that better?

Fair enough, but that's beside the point.

I was referring to what that salary gets you in terms of standard of living and so on. Cost of living in all of New York, Manhattan especially, is high. $70k doesn't get you very far in Manhattan, especially if you don't have multiple roommates (which you wouldn't if you had a family).

Contrast that to what a family can do with $70k in Cleveland, San Antonio, or Raleigh. It looks closer to what $150k looks like in Manhattan, which is my point.

This is so laughable. The median salary in NYC is $50,000 per household. This includes tons of people who work in Manhattan (I've met more people who work in Manhattan and live in other boroughs than otherwise - the daily commute numbers back that up.) As another poster mentioned, even just Manhattanites make $70,000 a year for the household. I personally know many people living in Manhattan making far less.

$150k is most definitely upper middle class. I grew up in Queens my whole life and until I started working professionally, never met someone who made more than $150,000 a year.

Sure, upper middle class. What's wrong with a CEO making upper middle class wages? The point is it's respectable wages for a professional, but hardly as high-on-the-hog as $150k in Kansas City.

In the context of discussing a company that lets employees work remotely, it is precisely as high-on-the-hog as $150k in KC. Remote employees in NYC choose to live there, because they think it’s a good tradeoff. If employees A and B both make $150k in Kansas City, but A cooks all his meals and B goes out to eat all the time, that doesn’t make A high-on-the-hog and B middle class; it just means that they value different things. Ditto for remote workers who choose to live in NYC.

And a net worth of $500M is lower class when you restrict your population to that of all people with net worths >= $500M (there are many thousands of such people).

In SF, close to 50% in taxes, cost of living in SOMA, assuming you want to live right by your office (what is it, 3k for a studio?) and those 160k will not get you very far.

> In SF, close to 50% in taxes

When I moved to SF from Alabama, I lost ~1->5% more of my paycheck to taxes. Note that Alabama is a dirt cheap place to live, and that I get so much more from that tax money in SF.

Yes, the taxes here are bad if you compare them to Washington or some other low-tax haven... but they're really not that bad here.

Also, yes, rent is insane in the city. More apartments must be built!

I came here to say this. A founding CEO should never have the highest salary in the company. Value your own equity more!

What if the company is profitable? Should CEO co-founders still be paid the bare minimum to live? (living expenses + 25% works out to living expenses after taxes) If they are burning investor money and will require 2-3 more rounds to become profitable, then it would be a pretty big negative.

$100-150k for chief officers at a startup is a completely reasonable salary.

similar salaries at established, larger companies run into the 250-500k range.

I would agree that founders of a startup should be taking a relatively low salary. However, Buffer is no longer a startup (using Steve Blank's definition: http://steveblank.com/2010/01/25/whats-a-startup-first-princ...). It's generating significant revenue and is break-even from a cash-flow perspective.

Investors don't necessarily want founders to pay themselves the absolute minimum because they want the founders to be happy and focused on building the company, instead of being distracted by money worries.

Wow...the engineering salaries are significantly lower than I would've expected for a well known startup in the Bay Area...at least compared to the perceived range for such things.

Note: a less cynical take is this: GodDAMN buffer employees must be happy working there if they tolerated transparency to this level...which, really, is the best win-win for all kinds of transparency scenarios.

> the engineering salaries are significantly lower than I would've expected for a well known startup in the Bay Area.

While some of them do work overseas, Buffer employees should note they're drastically underpaid for Silicon Valley, NYC, or even LA salaries. If they didn't know this before, they should now. Any mid-level dev with decent skills would start around 110-120k before benefits in a highly competitive job market. I know because I hire and offer these salaries right now.

Anyone heading customer service would be in a tier within the rest of customer service, capped at around 90k. This is especially true for a small startup where their duties aren't managing a huge customer service team but rather playing the role of basically another customer service rep.

They have engineers in the UK, Taiwan, Ireland and Colorado. If they all lived in SF the salaries would be above $100k.

I'm one of maybe 10-12 architects at some stupid company and I make more than everyone at Buffer including the CEO.

I know, this seems like an anti-recruiting blog post. Working at Buffer not only means you have to be a part of a hippy groupthink ideology that you have to share your salaries with the whole world (this is not a government institution) and it will be posted on a popular website in your field, you will also earn much less than expected.

I like this idea, but with a few modifications:

* Names should be anonymous. Everyone knows where they are within the group and can determine if its fair without knowing exactly who makes what.

* It should include options and bonuses. In some companies non-salary compensation dwarfs salaries, and it's dishonest to point to a CEO salary and say "Look, he only makes 1.something X what regular people do."

* Keep it internal to the company. No point in giving the competition an exact target or requiring whole company buy in before you do it.

* Allow people to redact their own information, but display it as having been redacted. If enough people do that, or just management does it, everyone will sense that things are unfair.

> The vast majority of compensation in software companies is tied up in options...

That's absolutely not true. Most companies never have a liquidity event, a significant number of stock options never vest (employees leaving before they're fully vested is very, very common at startups) and even when a company delivers an exit, the vast majority of employees with equity will, at best, walk away with what amounts to a modest "bonus." Facebook and Twitter-like outcomes in which hundreds of rank-and-file employees become millionaires are the exception, not the rule.

You are correct, I was being SV-centric. Edited.

Even in Silicon Valley, the "vast majority of compensation" is not tied up in options because again, statistically, most employees will never realize significant gains from their options.

Take a senior engineer at a startup with a $125,000/year salary. He has options that are fully vested after four years. Let's say his options represent a .5% equity interest in the startup after dilution and there are no liquidity preferences to deal with (a highly unlikely scenario). His company would need to have a $100 million exit for him to walk away with a pre-tax amount equivalent to his gross salary over those four years ($500,000). In 2012, according to CB Insights, over half of startup exits were less than $50 million, and more than 80% were less than $200 million.

Are you OK with "In some companies"?

And my point isn't about average engineers. My (corrected, I admit I was overstating things with the original phrasing) point is that, in some companies, the really huge comp differentials come from non-salary compensation. So just looking at salaries is not, in those cases, a complete or honest picture.

I'm not sure I understand the point you're trying to make.

If you're not a founder or in executive management, there is rarely any value in looking at equity "compensation" at an early-stage startup. Again, as can be seen in my example, when you're dealing with sub-1% equity amounts post dilution and liquidity preferences, as most employees are, the numbers simply don't work in your favor. To walk away with a meaningful windfall that is substantially higher than the cash salary earned over your vesting period, you will need an exit that is statistically very unlikely.

Any employee who expects his or her equity stake to be on par with founders and executive management is wet behind the ears, and any individual who has dreams of becoming fabulously wealthy is far more likely to realize those dreams by starting a company than going to work for one.

Not so sure I bet most (85-90%) UK medium to large companies have share save schemes which are v popular - share options in large companies can be quite lucrative.

And what equity do you get for giving up 10k - Whats the cap table look like

I know that one FTSE 100 co's basic share option scheme is going to turn out >£60k tax free next year (its a 5 year scheme so say 10k pa) so it had better beat that.

Aren't share save scheme's more like employee stock option programs? Most large companies offer them and they are usually pure profit for the employee since you buy the stock at a discount.

If its like equity/option grants in tech companies, I assume it can vary significantly on how much you are given and is pretty customized to your compensation package? i.e. junior dev only gets $10K in shares (over 4 years) vs a senior dev that gets $50K.

You get options at a 20% discount - its fixed anyone can participate at the same level AC to PCGS its the same deal

But yes it is a one way bet the BT 5 year one due next year is on course to pay out £60k tax free - the UK has also just doubled the max amount you can put in to an approved scheme to £500/month.

Things I learned today:

* Buffer is not somebody's weekend project

* It needs 16 (yes, SIXTEEN) people to run that thing

* They actually have revenue. In millions. $2.3 Millions!

* Their company values are based on How to win friends and influence people.

Aside from that, open salaries are pretty naive idea, if not completely dumb and dangerous. The lives you live everyday is in effect a game (as in "game theory" game). When you are talking to person, selling goods or buying one you are in the game. Like in any game, information is your advantage and your opponents weakness. This is exactly why privacy matters. If insurance company knows you eat too much pizza, they would want to get a higher premium from you. Similarly if a car dealer can look you up and figure out your salary, he can adjust his negotiation tactics. A plumber making half the money you do would want to charge you more than others. And so on. When all these people would look for their next jobs, their next employer would know how much salary to offer them.

> Aside from that, open salaries are pretty naive idea, if not completely dumb and dangerous.

In Sweden all salaries are public, look how awful they are doing.

How does that work if you are a consultant for example? Or, not sure how common they are in Sweden, a salesperson paid only on commission?

I guess I'm curious how it deals with extremely variable salaries or is it just last year's that's public?

They just make your income tax form public.

In Norway too!

I have a feeling you will regret this soon. There are certain benefits in having a firm salary structure sponsored by a transparent system, but the loss of flexibility will hurt in ways you haven't experienced. Also, letting everyone know what their peers make can cause disgruntled employees.

My company, GrantTree, is also run with open salaries (internally, though I posted the salary scale in an HN comment before). There was some disgruntlement when everyone was underpaid, but there's been remarkably little disgruntlement from individuals asking for more money for just themselves. This had been so for over a year now, so not conclusive, but starting to accumulate some data.

So, for example, in case of competitor offering your valuable worker +10-15% to their salary, will you have any means to match that offer?

No, and if all they care about is the salary, they should probably go and take the larger offer.

what if the salary is the only differentiator, and you really value them? What is your recourse to deal with compelling offers? (honest question, not trolling)

I've worked under open salary formulas and closed salary formulas. I'd rather work under an open salary formula any day.


1) No stress from "am I getting paid more/less than my co-workers"

2) No stress from "how much will I make in 5 years if I stay here"

On net, it let me focus more on doing my job well and less on politics.

You mean it can cause employees asking for comparable pay

I work at a firm with a similar salary structure. Like every other thing, it's a tradeoff. Sure, I concede there are ways it hurts, but they are offset in my case by the ways it helps.

It’s one thing to have a transparent salary policy, it’s a whole another world to publicly blog about people’s salary with a link to their Twitter account.

I hope all employees agreed to have their salary published on the buffer blog.

Kudos to them for trying something different.

Yeah, I think it would have been more than enough to simply explain the formula and provide some anonymized examples.

On another note, I am quite surprised at how underpaid some of their positions seem. Senior iOS engineer barely cracking 100k in a very expensive market...

Yeah, that's pretty ballsy. Seems like they're exposing themselves to unnecessary poaching risk. And what do they do in that situation? What if someone has a competing offer and they want to keep them around? Offer a bonus?

It seems like they're ok with the poaching risk. I would assume most of their employees are happy enough, or they'd leave. I'm not sure having the salary posted is a big change from that perspective.

People don't work that way. There is quite a bit of discontent or discomfort people will put up with until they are sufficiently motivated to take action. The number of people who are underpaid by 30% and unwilling to look for another job is far greater than the number who would accept that offer once its in front of them.

Nope, you talk about transparency, fairness, etc. If you're sticking to that salary structure you're not going to win on price in this market.

Warm fuzzies are important to a lot of people, look at how non-profits retain people. Also, there are a lot of people who don't know how to negotiate that would probably benefit from something like this.

I know a few devs who stick around at places because they like the people, etc, despite having had multiple offers for more money. Not my style, but it takes all sorts.

> I know a lot of devs who stick around at places because they like the people, etc, despite having had multiple offers for more money.

Sure, but that's not the only consideration here. Employees don't always have the option of sticking around at a company. Not all startups make it, and people are terminated or laid off from jobs they love all the time.

If and when the time comes to find another job, a public record of your previous salary may not benefit you in your negotiations with prospective employers.

If you're not employed you have a very poor BATNA.

If they are paying well then they are actually discouraging poaching

The thing is that Buffer does not pay well... I will say that they pay on the lower side of acceptable.

It seems like the bonuses for Senior and Lead are too small. The highest paid engineer is only making 20k more than the lowest paid, and 16k of that difference is because of location.

I never understood the hypocrisy about hiding your salary.

In general, it's seen as bragging if your salary is high, and mortifying if your salary is low, so it's usually just better to keep your mouth shut about it.

I've told a number of people my salary and regretted it every time. They seem to take a vicarious pleasure in telling other people how much money I make. "Oh, you should listen to delluminatus, he makes $xx thousand a year." Ugh.

Companies (especially large ones) don't like it as it limits their negotiation position it can also disclose indirect discrimination e.g. "oops all the females seem to be under paid by 10/20%" which can get expensive.

And it also limits employees when they want to move as the new employer knows how much they make now.

Yes, I understand why companies do it. They don't want people to know when they are under/overpaid.

What I don't understand is why people don't talk about it. If you tell and you learn you are overpaid then you feel good. If you learn you are underpaid, well, time to go negotiate/look elsewhere.

Do people think they ARE their salary? It's simply money that some people arbitrary decided to pay you...

Well employees are funny about money in general any HR professional will tell you that :-)

Having a potential employer know exactly what you where paid before puts you at a big disadvantage when it comes to negotiating a new salary /package.

Seems to be more of an American thing than a European thing. Not everyone will hide their salary here. Some will some won't.

I never saw someone disclose his/her salary in France. There seems to be an expectation that doing so would produce jealousy and bitterness. So it's not only an American thing.

If discussing salary in the workplace weren't taboo there'd be people unionizing left and right.

Asymmetrical information = leverage

Back when I was a really dumb undergrad, I did some work for a company & they asked me where to mail the cheque. I gave them the University address. So I was chatting with my professor & we walk by the mailboxes, and by pure reflex, I reach out into my mailbox & grab my mail & he does the same & we say our goodbyes & go home.

Now, I open the mail at home & am staring at my professor's salary! You see, the secretary had switched our mails by mistake because our last names began with the same letter. I was quite stunned by the number - it was a measly sum, and I did the math & worked out that the Professor's salary was about 60K. Now, I knew my Professor was an important CS scholar & had tons of papers to his name, but that low number irked me. After the PhD and all these papers, just 60K...why..?

At the same time, my Professor had also gone home & opened his mail & was staring at my salary! So much money for some dumb undergrad who was basically an average student & had no major publications or research! He was quite bothered.

The next day, we had a very awkward exchange of mails. But from then on, the student-teacher dynamic completely changed. I suddenly began getting B's instead of C's & even occasional A-. He probably felt, hey if this guy can get so much money in the market, he probably knows his shit. otoh, I began to respect him & the CS program less & less. So I still have to spend 3 more years & take 45 more credits & do the qualifiers to get the PhD & then write all these papers & for what..60K ? That was my attitude at the time.

Needless to say, I dropped out of the PhD pgm with a Masters & went to work full-time. That was the stupidest thing I ever did, but I just didn't know it then. Now, I look back & think...hey if I hadn't known about his salary, I'd have slogged it through & actually gotten my PhD instead of half-assing it out here :(

Props for admitting your mistake.

Our reaction to academic salaries should really be the opposite. It's sad that we undervalue education so much in the US.

Yeah, that's a pretty shameful and classist thing you did. Glad you seem to have learnt your lesson.

Can't say a lot of good things about a company that pays a "Chief Happiness Officer" more than most of its engineers. I know plenty of startups that seem to be doing alright in the customer service department without an overpaid exec heading it.

Does she really contribute more to the bottom line than any of the other 4 underpaid engineers?

A Chief Anything Officer should probably be paid more than engineers, or they shouldn't have the words Chief and Officer in their title.

And that seems like a very developer-centric viewpoint. Yes, good customer service can add a lot to a company's bottom line. Some companies have huge engineering issues and need engineers to solve them. Some companies have huge sales issues and need sales people to solve them. Some companies have huge customer service issues and need customer service agents to solve them.

I upvoted you, but now I regret it. Not because this was a bad comment, but because I realize now that I disagree.

"Chief" and "highly compensated" are not necessarily joined at the hip. It should be possible to have a C-level exec with most of their compensation variable and dependent on company performance or certain metrics, rather than a whopping base salary.

Disagree. The founders of my company (including me) are paid less than almost everyone else that works with us.

I know few rigorous investors that would stand to pay their CEO/founders more than ~80k a year, at least until it's clear the company is maturing. Also, as a founder with significant equity, I'd much rather put as much of my salary that I can spare (My wife and I need to eat, pay rent, etc.) to go towards bringing in (and keeping) top sales or technical talent. If you believe in my company, the math works out very well.

I also do the occasional angel investment, and frankly, I'd be pissed to see a business I invested in run like this. Two annual international offsite trips? What?! You're building an app to schedule tweets. This is not rocket science. Get to work!

Buffer is posting $2M annual revenue this year, if I recall correctly. Their paychecks aren't being signed by investors -- they're being signed by customers.

Given that the listed salaries total 1.7M, which ignores payroll taxes and benefits, and they presumably have at least some expenses beyond payroll, at least part of their paychecks are likely coming from investment.

Never mind the two international off-site trips they take everyone on each year.

Look, not saying they can't do it.. just saying as an investor, I'd wouldn't support it. Money is after-all fungible. It doesn't matter if sales are paying for 100% of the salaries or not... if there's money being left on the table that can be reinvested into the company by either bringing in new/better talent or retaining your top talent, I would be angry. The founders already have high incentive to stay as long as they can satisfy basic needs on their salary. Employees with little equity do not unless they are paid competitively.

I'm not sure you really understand what is involved in support positions. I make more than their "Chief Happiness Officer" and I'm nowhere near the top end of the pay scale for support at my employer.

Who is your employer?

I coincidentally signed up for Buffer today in part because the customer service has been excellent during my trial. So she earned my business.

Very humbling that no one at Buffer would call themselves a "Master", indeed many would probably but Joel at that level but he sits there on a 1.2x multiplier.

I once had a conversation with an old hat who said "If you call yourself a python master you better be fucking Guido."

Hmmm... that's an unfortunately worded quote.

The truly great programmers are not going to work for Buffer. Their product has no hard technical challenges and they're paying very low salaries.

One result from behavioral economics is that people care more about their relative standing to others than the absolute value of the salary. This is why transparency can be a double edged sword. If I think I deserve to be paid more than Joe, as long as I don't actually know how much he's paid I can believe that I'm being paid more. However, once you have transparency and I can see Joe is getting paid more than myself this will probably have a negative impact on my morale and performance.

One example I've heard discussed (I think by Dan Arieli) is how transparency in CEO pay has failed to bring CEO salaries down. One problem is now CEOs can see what other CEOs are getting paid and naturally every CEO will want to be paid higher than his peers.

I used to think open salaries would be a good thing but lately I'm not so sure. You definitely want to tread very carefully there as there are many implications and unexpected consequences.

i was thinking the same thing - i read about that in Dan Arieli's book Predictably Irrational. I suspect open salaries probably increases them on average.

I found one thing interesting is that only 4 out of 17 people choose equity over $10k salary. Even CTO chooses salary.

I am curious if this is common in startup companies, since I have never worked in startups.

Paying those salaries in San Francisco, there better be a giant pile of equity either way.

Wow, these salaries seem to be pretty low. I mean a senior IOS engineer making $107K in SF? Id expect them to easily increase their salary by 30% by jumping ship.

I was thinking that they seem disproportionately high for some of the other locations (45k$/year in hanoi is a _lot_ of money)

I wonder in five years looking back whether Buffer getting hacked or their 'transparency' will have hurt them more. I am betting the latter.

Do they really think they can ban private emails between engineers? it would have been much easier to simply load eavesdropping software on their computer if management doesn't trust them.

I really like Buffer but I'm a little worried about them.

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