Comment by corry | Hacker News Reader

Comment by corry | Hacker News Reader

1) Salary surveys for local or national startup scenes have been a staple for decades. Here in Waterloo (Canada), there was a dominant local survey that all tech companies participated in annually with results being shared. Then, as you get bigger, you come across larger versions of the same thing.

2) VCs are often the vector by which this all happens. They ask their portfolio companies to pull together the info for their employees, presumably submit it into the companies aggregating everything, and then the startup gets a copy of the recent data.

3) Even done the old way (Excel), the data was incredibly detailed. You can slice and dice by startup stage (series A vs series B vs seed), employee count, region, sector, etc to determine if you're paying market rates or not. This is particularly useful for growing startups, where the founders have no idea what to pay, say, a VP Marketing at their pre-revenue mobile gaming startup in Helsinki.

4) Obviously whether or not this is bad for employees themselves is debatable, but I think people are missing the point that these surveys are ALWAYS skewed UPWARDS due to the much higher volume of data from the large tech companies (because they have far more employees and tend to be offering significantly higher comp). So in practice, the impact is likely to RAISE wages at earlier stage startups who are competing for the same talent as later stage tech.

An interesting artifact of the information disparity between the startup executives (who have access to this benchmark data) and the employees (who don't) is that the employee is often wildly off the mark in their expectations, either too low or too high.

There are so many variables at play too that it turns into a negotiation like everything else. Say an employee wants a big raise because they are having their first child are heading towards a higher cost base at home. Say the employer simply says "the salary data shows that your current pay is at the market average".

Well, is the employee truly "average"? Perhaps they're a high performer. Does the average number take into account not only the company dynamics (stage, domain, funding, revenue level, etc)? Not perfectly.

But then on the other side, just because an employee wants a higher salary due to a higher cost structure at home doesn't mean they are automatically entitled to it, right?

Then on the startup side again, the manager is looking at the data and thinking about all the time and cost of replacing this person and realizing it's likely more than the cost of just granting the raise.

Then the HR person comes in and says the salary grid -- whose whole purpose is to provide in theory tight constraints on these conversations -- rules this all out, there's no budget or wiggle room. When the Manager suggests the grid hasn't been updated in a few years, HR takes it personally and tells the person to take it up with the CEO.

So then the CEO gets involved. She knows the employee has a unique view on the technology and market direction and considers them Tier 1 can't-lose-them. She knows the grid is out of date. She looks at the data and thinks that she can justify to herself and the financial plan that it'll be OK to do it, with fingers crossed that this doesn't happen across the board because then their runway will shorten considerably.

So the raise happens.

My point is just that the salary information asymmetry is just one relatively minor aspect to this whole negotiation and in the end I'm not sure it advantages the company all that much.

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