Our Open and Autonomous Salary System

> We made the compensation revision system democratic. Everyone chooses their preferred salary and then tries to get enough support from the rest of our team to justify their expectation.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

This is a truly terrible idea on every level.

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

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

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

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

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

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

and

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

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

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

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

What a terrible idea. I feel for everyone involved.

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

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

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

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

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

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

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

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

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

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

See, e.g. http://www.businessinsider.com/google-hiring-data-reveals-tw...

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

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

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

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

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

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

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

Those job titles are literally nauseating.

so the bucket of crabs approach to salary negotiation.

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