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

Seems like this is something transparent salary policies might change.

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

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

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

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

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

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

I didn't read it as a moral judgement.

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

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

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

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

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

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

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

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

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

> an underpaid person is a time-bomb

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

Money isn't the only motivator.

Love their job, or love their role?

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

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

Which is exactly why it won't catch on.

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

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

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

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

Throwaway4job wrote:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

>This changed the team dynamics in a fundamental, toxic way. It engendered bitterness from them not only toward the company but to me as well, which ultimately led to all of us leaving the company for greener pastures but with lots of bad feelings all around.

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

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

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

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

no two employees with the exact same job title should have more than 10% difference in pay. If someone is making 40% more than others with same title then they should be promoted to higher title and if they dont deserve that title then why is the company paying them so much. It is one thing to want to minimize salary costs but another to disrespect employees with absurdly low salary.

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

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

Doesn't the Peter Principle come into play here? What if we do the same job but I do it twice as fast? That doesn't mean I'd be a good fit for the next level up, it might just mean I'm really good at doing this specific job very quickly.

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

Or a 20 hour work-week with full salary.

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

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

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

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

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

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

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

Why should these buckets be necessarily tied in size?

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

There is nothing necessarily wrong with this.

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

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

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

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

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

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

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

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

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

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

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

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