Hacker News Reader

I really love the concept. This is something I'd like to do myself.

My biggest worry/concern is with people who would take that information and use it against you. In particular the whole "lies and statistics" thing.

For example, what if someone ran the numbers and found that across your entire company women got paid on average 10% less than men. Then tried to start a class action suit or otherwise create a huge hassle about it.

Even if your procedures are entirely fair and transparent, there are a great many people, I have found, who will intentionally ignore facts that go against their preconceived notions (like the media for one example).

Does this kind of thing worry you? Would you change the policy if someone did make a huge stink about it?

That kind of bullshit doesn't happen in the UK. Not to say that bullshit doesn't happen in the UK, or there isn't bullshit that is unique to the UK, but bullshit lawsuits are very very rare.

I'm not sure how that could happen, since the entire system is transparent and entirely objective. There is no management discretion in how the system works. If you achieve objective X, you get a bonus. If you complete your monthly tasks for the month for 3 months, you get a pay raise.

Ok, perhaps there is some management discretion in setting the goals, but it'd be pretty obvious to the whole company if someone is being set harder/more goals than someone else, so I think this sort of stuff would be dealt with pretty quickly.

There's always a chance that someone will try and sue you for random reasons, even in the UK. This is the kind of thing I'm not going to worry about until it actually becomes a problem, though. Hopefully I will not hire the kind of person who would pull that sort of shit... interesting point though.

A few questions.

Doesn't this create a culture of constant value fixation and envy? People think in terms of comparisons rather than absolutes, doesn't this encourage comparison thinking?

Doesn't this create an odd culture setup where you can't promote superstars without getting clearance from everyone else (or at least creating drama), even those who are in no place to judge, or even understand what the superstar does for the company?

Does this work as a sort of mob-justice system for keeping employees from asking for more money... because now they have to do it in public and get labelled / deal with the politics of it?

> Doesn't this create a culture of constant value fixation and envy? People think in terms of comparisons rather than absolutes, doesn't this encourage comparison thinking?

The way this manifested itself is that after the first salesperson earned their first bonus (pretty substantial), there was certainly a bit of envy. The solution to that was to create a relevant bonus scheme for the operations/client management side that enables them to earn bonuses as well. For client management, instead of being based on new sales, the commissions are based on client retention and getting referrals. This way, client managers know they can earn good money too - they just need to do stuff that brings income to the company.

> Doesn't this create an odd culture setup where you can't promote superstars without getting clearance from everyone else (or at least create drama), even those who are in no place to judge, or even understand what the superstar does for the company?

Bearing in mind we're a relatively young company, this problem hasn't occurred and I don't see it occurring any time soon, for two simple reasons: 1) the "superstars" can see what the benefits of this open, transparent system are, and they want it to continue, so they don't want to break it for their own personal benefit, and 2) if they're superstars, then they're already earning a good bit of money in commissions.

> Does this work as a sort of mob-justice system for keeping employees from asking for more money... because now they have to do it in public and get labelled / deal with the politics of it?

I guess you can see it that way. The way I look at it is not that anyone is afraid to ask for more money - in fact, I would hope everyone wants more money. But they know what the answer will be. There's a known, proven way to increase their base salary quite substantially every 3 months if they put in the effort, and there are known, proven ways for them to earn commissions. So if someone wants more money, it's there for the taking. Why break the system by asking for an exception, when there's ways to achieve the same result relatively quickly within the system, that don't break the transparency culture?

So, is the structure of your company such that you are able to constantly adjust these carrots (commission, bonus and pay) on an as-needed basis?

Would an adjustment down be possible (sorry sales, had to move 1% of your commission to ops to stave off a revolt!)?

Do you find the "boil the frog" method to help with this transparent structure? Giving someone 5x 2k raises over 15 months is far less of an event than giving someone a 10k raise after a yearly performance review. Was this something you guys thought of intentionally, or just the way you wanted to run the company regardless of the transparent structure?

> So, is the structure of your company such that you are able to constantly adjust these carrots (commission, bonus and pay) on an as-needed basis?

It is privately owned, by me and my cofounder, with no external funding, so we can do whatever we want. Bearing in mind the company is less than 3 years old, there will still be a lot of adjustment to do before we arrive at a configuration that I would call "final" (though I suspect it will continue evolving... after all, it's made of people!)...

> Would an adjustment down be possible (sorry sales, had to move 1% of your commission to ops to stave off a revolt!)?

We could, but I wouldn't... that would seem unfair. Sales do give up part of their commission but only when the sale is heavily dependent on ops, for example when it's a referred client (they were presumably referred because they got great service) or when it's an "enhancement" client where we go in and increase their claim size (there's a lot of technical work in that).

> Do you find the "boil the frog" method to help with this transparent structure? Giving someone 5x 2k raises over 15 months is far less of an event than giving someone a 10k raise after a yearly performance review. Was this something you guys thought of intentionally, or just the way you wanted to run the company regardless of the transparent structure?

I hadn't thought of it that way. From talking to our team, I think they're happier being able to earn smaller pay raises regularly, rather than having to wait a whole year to find out if they "made it". That was intentional - I don't like the way many companies wait a whole year to tell you whether you're doing well enough to deserve a pay raise, and right from the get go I decided it would be a six-monthly process, and then made it quarterly.

All in all -- sounds really good, short turn around times and raises also keep people really focused.

Sadly, it seems like this would only work in a specific "flavor" of industry. For example, wouldn't work for a software product that takes 3 years to develop and then is funded by ads. But, if you are in a sales-focused industry with short customer turn around, sound great.

Well, guilty as charged. I've only solved this problem in my own context, and that's what I'm talking about. GrantTree is a fairly sales-driven business with relatively short customer turnaround.

When I start a software business, I'll solve the problem in that context too... you might have to wait a few years before I can talk about it though ;-)

>It does mean that there's some people you won't be able to hire, if they demand a higher salary than their peers and won't budge on it - but then again, I'm of the view that I'm better off not hiring those anyway.

So what you are saying is that you are perfectly happy hiring average people and you won't hire people who are better than those already in your employ?

Not at all. You're assuming there's a correlation between demanding a high starting salary and being "better". That's a load of crap.

There are a lot of benefits to working in a company like GrantTree that are worth more than the money - and you can get the money eventually, anyway, you just have to earn it. At this stage, though, if your main concern is getting a high initial base salary, don't work with us. In my experience, concern about initial base pay is entirely uncorrelated to how good you are.

Edit: another way to look at it, is that what you're describing is someone who is both exceptional and an asshole. My view is, if you interview someone who is like that, don't hire them. Hire only people who are exceptional but not assholes.

Wanting to maintain a salary consistent with what you've been earning before you join a company does not make you an asshole. This "asshole" label comes off as a strong-arm negotiation tactic on your part. (I may be wrong, but that's how it appears. If I am wrong, please enlighten me).

And there is at least decent correlation between ability and the compensation you've received over the past several years.

Wanting to maintain a salary consistent with what you've been earning before you join a company does not make you an asshole.

Agreed. But we're talking about desires, not actions, then.

This "asshole" label comes off as a strong-arm negotiation tactic on your part. (I may be wrong, but that's how it appears. If I am wrong, please enlighten me).

Not at all... However, if/when on the end of a conversation with someone we're hiring, they say "But I need more money", then I explain the system to them. If they then say "I really like your company, but I'm afraid I won't be able to take the offer because it's too low" that's fine. That's not being an asshole, that's just being realistic about what kind of role is a good fit for you. After all, if you have a massive mortgage and 3 kids, getting a massive pay cut - however short-term it may be - is simply not an option, no matter how much you want the role.

If, on the other hand, having all the stuff in this discussion basically explained to them, including why I can't give them extra pay initially because it will damage the company culture, they then proceed to insist that they want to get some extra money somehow "because they're worth it", and start explaining to me why they're worth the extra money, and so on, then either they just don't get it (and then they're a bit stupid), or they just don't care about the company they're thinking of joining, and in that case I would be happy to declare them an asshole.

And there is at least decent correlation between ability and the compensation you've received over the past several years.

Agreed, but I didn't talk about "earning a higher salary", I talked about demanding a higher starting salary in a context where it has been explained that that's not possible.

The crux of it is that you have designed a system which you feel can objectively quantify each individual's level of contribution, and then you are willing to directly reward people based on that contribution.

And I agree -- if you pull that off, and if you follow through with the reward, then it allows someone to take a lower starting salary, knowing that it is just a matter of time until things get back on the right track.

But for many kinds of work, including software development, I've never seen anyone figure out how to quantify individual contributions directly (as Paul Graham talks about [1]). Maybe your company has fewer of those kinds of jobs.

[1] http://www.paulgraham.com/wealth.html

> But for many kinds of work, including software development, I've never seen anyone figure out how to quantify individual contributions directly (as Paul Graham talks about [1]). Maybe your company has fewer of those kinds of jobs.

That is true and a fair criticism. I'm only talking about the example of my company, not declaring universal rules. :-)

Legitimately good employees are in demand, therefore there are potential employers willing to pay top dollar for them that you have to compete with. You may think there are aspects of your company worth more than salary, but so do most employers. You want your employees to think of themselves as equals and all worth the same amount, but you refuse to apply the same logic to your competitors? I have nothing against having transparent salaries (in fact I think, implemented correctly, it is a grand idea). But if it makes you unable to hire top talent because you are unwilling to justify a discrepancy of pay to those less skilled, it's going to be more trouble than it is worth.

That old saying "A's hire A's and B's hire C's..."

It's a hard lesson to learn (everyone believes they know this, until they find themselves under pressure to hire and they hire a B, and end up regretting it), but I believe we've learned it.

It depends on what the base salary is. If it's at the 95th percentile mark, I think a lot of devs would be ok with that, especially if all the other working conditions are good.

I really love this philosophy as well, but if this is in place, you need to be very clear as to why someone makes more money than another. There needs to be standards in place, time limitations etc. Transparency is great, but often times one person makes more money than another because of a combination of skill set, negotiating power, gender and relationship status, not to mention relationships with other people in the company and the word we hate (favoritism).

So while I am 100% on board with transparency, I also believe it can have a backlash. There's no way to predict it, but creating path for someone to increase their salary and letting it be known before they sign the contract is a good idea.

There needs to be standards in place, time limitations etc.

Absolutely. You can't have transparency and no way for people to raise their salary.

Transparency is great, but often times one person makes more money than another because of a combination of skill set, negotiating power, gender and relationship status, not to mention relationships with other people in the company and the word we hate (favoritism).

There's a way to sidestep all those. First of all, negotiating power does not enter into the equation at all, since the pay is all public. It's (rightly) illegal to discriminate on gender (and I'll go headbutt a wall quite hard if the thought "we can pay her less because she's a woman" ever dares to enter my head). Skill set is measured by the results you bring to the company, not by some vague abstract measure. As for nepotism or favouritism, that just takes some minimal self-discipline, imho...

So while I am 100% on board with transparency, I also believe it can have a backlash. There's no way to predict it, but creating path for someone to increase their salary and letting it be known before they sign the contract is a good idea.

Too many people, entrepreneurs and others, seem to be afraid of paying more money to employees... I find this whole fear ridiculous. I want to have a good reason to pay someone more, because that means they're bringing a multiple of that extra value to the company. If I pay someone £16k a year, it means they're bringing relatively little value to the company. If I pay someone £50k a year, that means they're bringing several times that value to the company.

In short, being afraid of offering ways for people to earn more seems silly to me.

Not all industries have a very straight line between what the average employee does and how the company makes money.

Google makes 96% of all revenue from advertising, yet obviously they don't channel all 40+ billion dollars into the adwords group -- because the companies value / trust / products / features are way more complex than that simple (but accurate) number.

Curious, what kind of software do you guys use internally to track financials which is also accessable to the rest of the employees ?