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Comment by ryandrake | Hacker News Reader

I didn't down vote, but the comment would be better if it were expanded with some details about why he thinks people who are good at their jobs should avoid open salary workplaces. I would think nearly all employees benefit from open salaries. For most companies, the salary information asymmetry is an effective way to keep the salaries of high performers DOWN. If you don't know that the mediocre guy who sits next to you makes $40K more than you, you're less likely to complain or look elsewhere.

The people who have the most to lose from open salaries are the dopes who somehow are making top-of-market salaries.

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> I didn't down vote, but the comment would be better if it were expanded with some details about why he thinks people who are good at their jobs should avoid open salary workplaces.

I've tried a handful of different ways to explain this (before backspacing out this comment box and trying again), but here's the best I can come up with:

You always have the ability to negotiate for higher pay. If you've spent much of your life in different workplaces, you'll probably know that people (generally) think they deserve raises for reasons other than those that make sense. Those can include:

* Poor personal money management

* Poor life decisions leading to more money needed

* Number of years spent with the company

* Number of hours worked each week

* How busy they appear to be

* How much they think they get done

* How much more work they think they do than they did last year

* How much more work they think they do than their peers

* and more

None of those things really matter, though. Factors that actually matter include:

* How much other employers will pay for your skillset

* How likely you are to leave

* How much it would cost to replace you

This is important because the people actually running the business have to understand this, but the rest of the employees don't. As a high performer, you'll be negotiating a raise based on those factors that actually matter and your boss (hopefully) understands that. You don't want to put him in a situation where he can (or has to) fall back on how the rest of the company will feel about your pay, because they don't necessarily weigh the correct factors in deciding whether or not you "deserve" it.

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

My response was relating to an open salary company in general, but the process in the article takes it even further by having the employees themselves play a significant role in the decision-making.

If I consider myself a high performer, I don't want to have to justify my request relative to others at the company, or what they received, or what they used to win over other people to vote to give them more money that isn't theirs. That's going to put me in a position where I need to win a popularity contest, be around a while (to comment positively on others' raises), or wait a few more months so I don't look pushy and selfish to the entire company.

...because none of that matters if I just do an interview elsewhere and get what I want!

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

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

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

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

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

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

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

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

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

> Why would having more transparency reduce your leverage?

Because of jealousy.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Think of all the useless architects on much higher salaries.

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

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

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

> unless your job role actually involves negotiation.

Every job involves some level of negotiation.

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

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

> but not the transparency part.

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

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

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

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

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

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

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

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

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

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

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

  Why would having more transparency reduce your leverage?

You: "I've gone above and beyond, and produced $X of value. I'd like a raise of $0.1X please"

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

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

Have you actually tried asking coworkers for their salaries?

My experience is that this is a taboo topic.

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

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

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

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