Think you would find this post we wrote pretty interesting looking into this - http://bit.ly/2WeA8pj
Basing the salary on the role rather than person doing it seems like a really good idea to me.
It also avoids hard conversations. Now they do not have to tell Joe that he makes less than Suzy because Suzy is a better performer.
But, maybe that's a good thing. Since we all lie to ourselves and think we are better than we are, Joe probably thinks he's killing it. And, since many people lose whatever maturity they have when talking about their performance vs. someone else particularly when there is money involved, that whole conversation can be skipped.
The problem as you say though is what happens to Suzy. She will not be happy making the same as Joe since she will also think (and be correct) that she is a better performer. So either they only hire the same level performers (which is possible in a small company), or they start inventing job title/levels.
At the end, it's trading one set of problems for another. I applaud them for trying out new ways to structure company wide compensation though.
I'm going to start coming across as a weird Basecamp fanboy/stalker soon, but on this particular point people don't seem to ever leave Basecamp. It's very rare for they to be hiring, which wouldn't be the case if they had a high level of staff turnover. What you've found is not applicable to them for some reason.
Either way, it's a good reason to not give two shits about what your co-worker makes.
This is not quite as bad as two people doing the exact same job being paid differently, but it can still lead to a pay gap, and some of those factors are worth being conscious of and addressing.
Let's say we have a pay scale that pays you ~15% raise yoy + years of experience.
We have 2 people for this example - one male and one female.
Both join in at 5 yrs of experience and make 100k (example numbers) as intermediate engineers.
A year later both are making 115k.
Now the female engineer goes on maternity leave for 16 months - she get paid at the rate of 115k/yr for that period.
The male on the other hand - makes a little over 130k. On top of that he's at 7 years of experience so he's now a senior engineer - that promotion beings his salary to 150k.
The female engineer is at 115k with 6 yrs of real experience while her colleague is making 150k.
On the face this looks super unfair, but is it really?
She's getting paid based on years of working experience and those 16 months can't count towards it of course
Is my train of thought wrong?
If the job hasn't changed and each of the two people can still do what's required of them equally well, why should one earn less than the other? The man shouldn't be earning more because he's got more years at the job. He should have been promoted in to a higher paying and more responsible role. That's what experience should count towards. If he hasn't been promoted and he's still doing the same work then there's no reason for him to be earning more than the woman.
People should be paid for doing a particular job, not for being more experienced, or older, or 'better'. Promote the people who are better and more experienced.
This is the beauty of the Basecamp pay model. What the job pays increases even when someone isn't doing it, so when they come back to work they'll be on the higher salary because the market values that job more.
Your train of thought is not necessarily right or wrong, it's simply logical based on your assumption salary is a function of working experience.
Few companies truly pay on working experience, many pay on favoritism, sexism, productivity, luck, loyalty and other things.
But in a world where companies pay, promote, and reward on experience, let's further examine the disparity of men v. women.
Few would argue that in a world enthralled with grow, women producing offspring is a necessity for the human race.
If a woman is participating in required activities for the furthering of overall society, why should they be penalized for that?
So, I think your train of thought is wrong, but because I disagree with your premise that people should be paid on experience.
This is basically an arbitrary choice, you're still paying their salary so why not continue everything else? Similarly a male engineer might want to take 16 months paternity leave.
Allowing 16 month long full-paid leave for new parents would be an amazing policy though. This also seems like an issue with this example as IME there are very, very few companies this generous.
With that in mind, why should those 16 months count to experience?
Work was not done by said engineer, and experience was not gained.
The other engineer worked, gained experience that's valuable to the company -> hence the raise + promotion.
You could also make an argument about the gain in experience due to motherhood and being able to take an extended break from work. I believe I'm a stronger developer for having two children for example.
The problem often arises because it makes more sense for the mother of a baby to take a longer leave than the father (e.g. breast feeding).
Therefore, that time shouldn't count as missed work experience (although it factually is).
One can discuss if 16 months is the right time frame (or maybe say for 6 months it doesn't count as missed work experience, anything above that does). That's a different discussion.
It would be better in all kinds of ways, more equitable, better for the mother and child, better for the company, if the father got just as much time off as the mother.
Assuming (big assumption) that they started at exactly equal skill, and learn at the same pace...well, practice makes perfect. One will be better than the other.
Ive taken sabbaticals in the past, and it sure as hell affected by skills vs someone who didn't.
But the reality is that when raising a family almost always the female takes more time off work than the male. So, governments and companies should incentivize that both take equal time off and that it has the same effect on their respective future careers.
Totally agree that the only viable solution is for men and women to share the burden more equally and that starts with near equal leave, as you said.
Won't change the advantage that people with no kids will have, but they are giving up on "the most wonderful thing in the world" to get it, after all.
I recovered a bit since I was working on side projects during sabbatical and could talk for them in interviews, so switching companies helped a tad (though finding someone who would hire someone with a big hole on their resume wasn't easy).
There's also just stuff that you only learn on the job and can improve on indefinitely, like managing people, projects, etc that obviously was behind by the amount of time I was off work and meant I wasn't up to snuff for some opportunities.
If you were to hire them and me for a role where that difference is relevant (as it often is), we shouldn't be in the same seniority of job and shouldn't receive the same salary.
I'm arguing about this with the above mentioned model
Are you advocating ignoring those factors in how to compensate or internally promote, considering them only in the decisions of whether to hire into / fire from a given role?
If so that's not very common in the software industry and didn't seem to be what you were saying (I might have misunderstood).
I did once work at a startup with formula-based comp. However the "level" they used in that formula was intended to consider all of the above factors and was not a strict mapping to length of career.
The downside is of course that mandatory leave sounds weird.
That said, it's absolutely a good thing to offer good paternity leave and encourage fathers to share the burden.
Social structures can help make this more possible than a small startup could otherwise afford.
For example, in Quebec where I currently live, there's a provincially run parental insurance plan which funds a benefit of partially paid parental leave by a payroll deduction, which employers sometimes augment further but the provincial part still goes a long way.
It's mandatory for employers and self-employed people to fund the system; use of benefits, and the choice between different benefit packages, is at the option of the new-parent worker.
As I understand it that's amazing compared to most American companies. It's roughly equivalent to what you get in progressive European countries.