Introducing Open Salaries at Buffer
open.bufferapp.com
open.bufferapp.com
This also makes the employer less accountable to the employees. The employer can easily pay somebody significantly more or less than they contribute, and the rest of the team cannot really say anything about this.
Now, there are some cultural reasons to do this--preventing jealousy, hiding inequality. But it really feels like a social band-aid, a temporary solution hiding the symptoms but not the underlying problem. Besides, everyone ends up having a reasonable guess as to who makes more and who makes less anyhow! The same dynamics develop, just with more uncertainty.
On the other hand, making salaries public takes these problems head-on. Inequality isn't bad in and of itself; some is basically necessary. But hiding that fact doesn't really help anyone. Instead, forcing people to see it head-on, deal with it and talk about it is probably a better solution.
I really applaud Buffer and the general movement towards transparency. I think it's a very healthy cultural progression and hope it catches on more widely, so that people stop having knee-jerk reactions to salary information.
EDIT: As an interesting additional note, all salaries (beyond a token minimum) at Berkeley (and the whole UC system) are publicly available at http://ucpay.globl.org/.
I've looked up various professors at the ParLab (where I did some undergraduate research). The fact that their salaries range from ~120k to ~350k did not change my perspective of anyone and did not seem to affect the lab's culture at all.
Essentially, I'd be perfectly happy to see this outside of public universities.
I can't fathom what being aware of your coworkers salaries could possibly do for positive team building. Somebody is going to be upset, egos will be triggered. Yes, in day to day business we're typically aware of the fact that an engineer or programmer makes more than a customer support or cashier. But here it's thrown in the employees face. "John sits next to me, he takes 3 hour lunches and he's paid $110k! I can't believe it. Screw John!"
Show up to work in a new Porsche sometime and while some people will think it's the coolest thing ever and give you a pat on the back, jealously may rear its ugly head with others.
I just don't see how this is a positive thing in the least.
You end up with what we have now: looking at what companies post publicly for salary offers. Some companies don't publish those numbers publicly, and that's only 'new hire' salaries. So it's inaccurate.
It's not some vooodoo a company makes up, you yourself have a direct affect on the market value by turning down and taking positions. If I can't find anybody to hire at $40k I might start offering $60k and more until I get the amount and quality of applicants I desire.
Basically, keeping information private gives an advantage to the people who know the private info versus people who don't. If no information is private, that edge is lost, aka, a more level playing field.
One problem is that the first person is often female, not white or foreign.
Another is the demotivational effect when the first person eventually does find out they are underpaid versus colleagues or the market - and they generally do. And then they will leave.
It gets worse when the lower paid person is clearly outperforming the higher paid person, or where the higher paid person is clearly under performing.
And finally it's just not the right thing to treat people unfairly versus their peers. If the lower paid person is being underpaid then quietly fix the issue.
I absolutely hate salary systems that give an advantage to people who are pushy, jerky, entitled, or privileged. Some of the best developers I know are pleasant, friendly, modest, don't like confrontation, and pay more attention to the work and the team than how much they're pocketing. Those people shouldn't be paid less.
Learn to defend your work and ask for what you deserve.
But knowing what you deserve is a complicated art that involves measuring yourself against your coworkers and your industry, and having a good working knowledge of the current market. For the people who don't know what they want, some of them are going to err on the side of asking for too little, and some will ask for too much. I would much rather spend my time bringing the shy up than battering the arrogant down to something reasonable.
Surely that's a risk that a company takes knowingly and can adjust if they wish?
Yeah, well, not easy when everyone is hiding it. All info I can get is too generalized.
Everyone knows what each other makes in the Army. When I was in, we never talked about relative pay at all. We didn't need to.
Oh, and we had tons of positive team building. :)
The information asymmetry you think benefits you is only protecting you , at best, from getting something worse than other employees. Thats not a success. A transparent system would mean everybody gets the benefits of that.
Is it because you fear people will resent you if they know your salary? Are you getting bullied by your HR department because of it? I doubt so. If someone makes a decision because of he has more accurate information, i have to believe its going to be a better decision.
This is a very basic case of information asymmetry and it always benefits the one with more information.
Do I agree with showing salary by name? I dont, so directly. But the mindset on the policy is healthy and can only sin from being naive.
>You should, as the potential employee, be well aware of the market pay and what you are willing to be paid to perform the job that you're applying for.
And when you know what everyone makes you have a much better grasp of the market pay, and if what you were offered was fair. If they tell you "we only pay x" you can only take their word on it if they are keeping their salary data private. If not you have more room for negotiations.
And your example of unfair pay doesn't jive well with me. It is still wrong to take advantage of someone just because they let you take advantage of them. I think a lot of cases of grossly unfair pay fall into that category.
We are dealing with adults here.
http://www.cbsnews.com/news/my-boss-revealed-everyones-salar...
http://www.cbsnews.com/news/what-if-you-knew-everyones-salar...
As far as I'm concerned, salary is a completely private matter that is no one elses business, and no good could possibly come from sharing it.
I see this openness at buffer essentially being a tool for management to deny raise requests, etc... with... If we do it for you, we have to do it for everybody... which is a just a BS excuse to not face the reality that every persons value and work situation is different, and should be treated differently.
More likely, the response would be along the lines of: "You'll get a raise when you qualify based on the criteria that have been clearly explained to you and the rest of the world."
In general, I cast doubt on the idea that employees really know what's important because of principle-agent problems and culture.
This is a classic excuse to put different people into the same box.
I believe it to be completely inappropriate and unprofessional to be transparent with something as personal as salaries...and saying that were all in the same boat just doesnt excuse this behavior.
Senior? Lead? VP? C-level? COO? CEO?
Master? Advanced? Intermediate? Junior?
Who decides that? What makes it objective? Can you dispute it if your boss happens to be a bitter idiot who is completely detached from reality? What happens if your boss and their boss have different views? What happens if you are a perfect employee, but you were a bit of dick at the last Christmas party? And what happens if you are very nice and social and everyone likes you, but you are not really much of a programmer?
This whole thing is BS. The only model that can possibly work is the scaffolder model - you get a worker for a job. If they're shit they get sacked the net day. If they're good, you have to pay them more to keep them from running away...
I agree that the "seniority" and "experience" sections are unclear in OP. For true openness, they need to provide an objective scale for these two items.
I don't think that this ever gets to (or approaches) perfect fairness, but neither has any compensation strategy anyone has ever devised [citation needed]. Still, I think it's a good faith effort, and the real world ramifications will be interesting and potentially useful in answering the questions relating to objectivity in determining salary.
If you see this, it is time to run. Fast. Very fast. Unless salaries are completely open, they should be confidential.
Neither approach (public or private salaries) is perfect.
Their salary formula accounts for experience, company performance, and role. Having the openness and formula makes it easy to say no to arbitrary salary-increase requests and also makes it easy to have a fair raise in place "automatically". Sure, the formula is not perfect, but as the zen of python goes, explicit is better than implicit. Changing the formula or the parameters to it may be a wise thing for the company to do at some point, but it will likely be clear what the change is and why is it beneficial to the company. That sounds a lot better than the way that salaries are typically negotiated.
It more likely makes arbitrary excuses to deny legitimate salary increase requests.
I think this forces unnecessary arbitrary restrictions on an already difficult process. I highly suspect this is simply an excuse for management to avoid uncomfortable conversations and very difficult decisions...
I can foresee about a dozen likely HR nightmares that can surface from this transparency.
Personally, I would never want to work at a place where everyone in the room knows how much I make...especially if many can't appreciate or quantify the value I create.
Absolutely.
Having employees not discuss salary is all about the employer having more power/control, and the employees having less.
I've always thought it's a little like an adult giving candy to a child and then say "Now, don't tell anyone I gave you this!".
Why doesn't the adult want anyone to know about the candy exchange? Because they benefit from keeping in concealed.
EDIT: I also think this is a generational thing. Everyone I know over 40 wouldn't dare talk about their salary, or how much they paid for their house, etc. Everyone I know under 30 will happily talk about it to anyone and everyone. Give it a few more decades, and this will be the norm.
You seem to imply that just because the employees know all the salaries, they have more control. This is not accurate.
They have more knowledge but certainly not more control.
If anything, the fact that the salaries are the result of a simple equation means that the employees have close to no control over the money they make. Also, a lot of factors contribute to the productivity of an employee, most of which cannot be accounted for in a simplistic equation, things such as working long hours, working on weekends, good attitude, willing to take on unpopular tasks, etc...
Knowledge is power, as they say.
Industry wide wage negotiation is basically a collective action problem; publicizing your wages lowers the barriers/cost for negotiating for higher wages. Most people are, by definition, paid less than their marginal value and thus have some leeway for a raise to begin with.
Besides, it works for CEOs: http://www.newyorker.com/talk/financial/2013/10/21/131021ta_...
Presumably, the company believes that their computed salary (call it S_{f,i}) is such that S_{f,i} < V_i for all employees.
However, there are things that the formula doesn't take into account - for example, an employee might be bad at negotiating, and be willing to accept a salary below S_{f,i}, or they might have something in their history (e.g. a conviction) that means that it is hard for them to find alternative work and they are willing to work for less if told to take it or leave.
Similarly, a very good prospective employee might be currently paid S_{c,i} in (S_{f,i}, V_i), or an existing employee might have received a counter offer S_{c,i} in (S_{f,i}, V_i) - it is rational for the business to offer S_{c,i} (or another number between S_{c,i} and V_i) to gain / keep that employee, but it isn't in their interest to give every employee the same pay rise.
> An employer wants to pay their employee as little as they can get away with, as long as it is less then the value that employee provides. Presumably, this company set such salaries.
> However, there are things that the formula doesn't take into account - they lose the ability to screw bad negotiators and convicts out of money.
> Similarly, if people are offered higher salaries elsewhere, it might be worth it for the company to counter-offer with something still less then the employees value to them to keep that employee, but they don't want to do the same for everyone.
No. I'm saying that because the employees know all the salaries, the employer has less control.
The employer can no longer dictate terms and make secret differing deals with different parties.
How does the employer have less control when he is unilaterally deciding what the formula is and he can stonewall any request to discuss salary by hiding behind that formula?
"You know what, Dave, I know you want more money but I just decided to add a negative 'is disrepectful of superiors' factor' and your salary just went down $5k. Isn't transparency great?".
Once everyone knows the employer is doing that kind of BS, they will go elsewhere, and the employer will be left with no employees.
Employment is not some kind of privilege we should be thankful for. Remember that.
So someone is compelled to provide me with employment? By what force and why? Am I automatically entitled to employment at any company of my choosing? Can I decide that you, Grecy, are responsible for employing me?
The employment contract is a business arrangement. Describing it in such value-laden terms does a disservice to all parties.
One is employed presumably because the arrangement is mutually beneficial; if it stops being mutually beneficial the arrangement is renegotiated or terminated.
Your error is assuming that the same formula would be used if the salaries weren't public. The employer is forced to use a simple, consistent formula. They would be under no such pressure if all salaries were secret.
Many people don't like to share their salary - not because they wouldn't "dare" as if they are cowardly or not as enlightened as you. Some people find talking about personal salary or wealth to be distasteful - like a braggart yammering on about his expensive possessions. If you have no economic diversity in your group of friends then it's probably no big deal, but otherwise you likely are making people feel ashamed and unsuccessful. Some people might feel it's rude and unnecessary to discuss your salary unless there is some reason to do so.
I don't personally have a problem with a fair and consistent formula for salaries within a company, and people within my company may be able to deduce what I make. It's not a power trip thing. But I don't really want my salary mandatorily posted on the web for every random friend or stranger to investigate. Unless I'm working in the public sector it's my own choice and my own business.
The word I was looking for is taboo. I believe that the baby boomers find talking about money to be a social taboo, while younger generations do not.
It's not about any group or generation being better, I think it's just a change in what society finds acceptable.
(To be honest, I'm not sure Gen Y'ers find anything to be socially taboo. I wouldn't be surprised if that word stops having meaning)
For a venture funded start-up, over-sharing finances seems somewhat ill-advised to me. I guess maybe I am old and I just don't get it!? According to their blog they have a payroll burn rate approaching $2 million per year. Maybe they are grizzled veterans who have been in startups that run low on money and they have tricks up their sleeve. Maybe not - maybe they're just a bunch of kids who have never done this before and think that the money will keep flowing no matter what happens. Maybe their over-sharing will not put them at a serious disadvantage when negotiating because everybody will know their level of desperation for cash. Maybe their employees will not become very nervous and start leaving when the funding situation becomes scary? I only just took a really quick look that them and I don't know the answer to these things, but it doesn't seem like it really benefits them that much to share their corporate finances.
I agree 100%. There is a fine line to be walked between "sharing" your salary and "bragging" about your salary.
For me, I find it easy to share with people in a similar-ish scenario/career/position in life. It's not so easy to share with someone in a very different life situation, like working a minimum wage job, as you say.
That right there. I'm nearer forty than 20, and I remember a time when I freely discussed my salary, or the price of anything I'd purchased with anyone who'd asked. Now, not so much.
I'm the tail end of Gen X. Talking about your income is gauche, it inevitably leads to comparisons between peers (even unspoken ones) and can sow discord in a group.
That's because they (the <30's) grew up with FB and are used to sharing everything with the world.
Unfortunately, the payroll person was a gossip - the incident undermined my leadership and put me in an extremely awkward position. I'm happy to have left that shady startup.
Rather they choose not to. Some consider it personal info. Maybe they shouldn't, but they do.
From that perspective, this could feel like the company forcing a decision on their employees that they would rather make for themselves. I would be a little concerned about injecting a culture with that.. it's a bit paternalistic.
Fascinating, I had no idea this was public. Looking briefly at the results, it reveals a curious data point:
UC's highest paid employee is not, as one might expect, the chancellor or dean, but in fact the sports coach ($2,884,880 gross)
The underlying problem is that our brains evolved in the Stone Age, and many of our instincts - particularly those to do with status-seeking, envy, thinking of life as a zero-sum game - are destructive and maladaptive in the present day.
This is a problem beyond our power to fix. We don't get to debug our DNA. All we can hope for is social band-aids, temporary solutions hiding the symptoms but not the underlying problem, so the fact that hiding salaries falls into this category is not a valid criticism thereof.
What does his boss do? Especially, if he's valuable to the company...
What if I have a very specialized skill that doesn't fit nicely into your matrix? Let's say market pay for my skill is $200k. Do you create a new category for me? Do I get dirty looks from all of my co-workers because I have a valuable skillset that most people don't?
I'd hate it, as an employee, as a boss or as an investor. But that could just be me.
I trust co-workers when they do what they say they will, when they are respectful & smart, when they show up on time, when they tell me when I screwed up in a nice way, etc. I could care less what they make--to me it would be a distraction.
Are you 100% sure that you've valued yourself accurately?
I played "show me yours and I'll show you mine" with a coworker once and he discovered that we were both working the same position but he was paid $8K less than me. The difference was that I negotiated my salary like crazy and he didn't.
Information asymmetry is the best way for companies to ensure their employees are underpaid. While it could cause a bit of awkwardness between peers, at the end of the day I think it's better to know what others are making & let them know what I make, because it strengthens everyone's position.
If I negotiate for myself, I only need to persuade the company to spend $10,000.
A proven ability to keep your mouth shut could strengthen your negotiating position if you're using a quantifiable value-based approach.
I don't find that there's a lot of information asymmetry, at least as an engineer. Beyond a first job, is there really that much? I know what I made at my last job, I know approximately what I'm worth, and I argue from there. If a company won't pay me what I think I'm worth, I look elsewhere.
Every situation is unique: how desperate is the company, how desperate is the employee, how many roles will a person fill, how many intangibles does the person come with (i.e. work ethic, contacts, what-have-you)...
First, most recruiters/hiring managers ask for current comp (or at least a salary range) early in the discussion, so it should be easy for them to offer well over someone's current pay. This simply removes one bargaining tools (lying about current comp) for an employee considering a move elsewhere.
Second, matching outside offers very quickly becomes a slippery slope. Anyone who figures out that such a policy exists will quickly come to the realization that the easiest way to get a raise is to put themselves onto the market. That's toxic, not to mention unsustainable.
Finally, equity. The one-year cliff exists for a reason, and if you're playing for keeps with an early-stage startup, you're probably expecting (or at least hoping) for your ownership stake to be worth a lot more in the long run than your salary.
Currently this screws "Niel" (to stick with the example). He wants to move someplace else and is convinced that he is worth $140k. He's convinced he's underpaid right now. He interviews at, say, Google (random example), who does a bit of research and hey, he's only making $88k. Suddenly they don't have to offer him market rate, they only have to offer him a raise on what he makes now.
Obviously this only works if one company (Google in this example) isn't as open about their salaries.
"Lying about current comp" is not the only tool for an employee considering a move elsewhere. Nor is it, in my opinion, the best tool for that.
You can get pretty good results by refusing to disclose your current comp and it has an added benefit of keeping you honest. Open salaries would ruin that negotiation tool.
Also, matching outside offers is not necessarily a slippery slope. Not everyone who gets an outside offer and considers it is motivated by pure greed. Sometimes people's situation changes and they would prefer to stay at the same company, but the company needs an additional incentive to meet their new requirements.
For example, if you really like working at company Foo, but you just had a kid and you're noticing that your budget is too tight for your peace of mind, you might need a raise. Now, you might be an asset to your company and your boss genuinely understands your situation, but he or she simply doesn't have enough leverage to give you a raise outside the regular process. If you have an outside offer, that gives your boss the leverage and you might be able to negotiate a raise that would allow you to stay. And if they truly can't afford it, you have the choice of accepting the outside offer.
Put another way, let's say we both make 100K in salary, and then, all other things being equal, you have a kid. Do you get a raise to 120K just because you had a kid? I didn't have a kid. Don't I get a raise too?
"If you were worth $100K and you negotiated for that, then that's what you make" was true at the time of the initial negotiation. This is a separate negotiation, with a source "hey, company X will pay me 20% more"
No, you don't deserve $20k more as you didn't ask for it, you might if you reopened negotiations.
See, whereas you never quite understood the "what if you have a kid" argument, I never quite understood the "don't I deserve the same as that other guy" argument. The way I see it, the magical answer is always the same: maybe you do. Do something about it and you might be surprised.
This happens all the time anyways, hiding the salary of the employee isn't going to make any difference in most cases.
And is it so hard to guess what some (say iOS engineer) earns? The salaries that Buffer pays are in the range of what I expected them to be anyways.
> What if I have a very specialized skill that doesn't fit nicely into your matrix? Let's say market pay for my skill is $200k. Do you create a new category for me? Do I get dirty looks from all of my co-workers because I have a valuable skillset that most people don't?
I'd expect the founder of the company should be able to justify paying someone $200k to his employees when he can justify this to himself and his investors.
I mean it's not like anyone will be blown away by the fact that there are people (VPs, managers) that earn 3x to 100x of what they earn themselves.
What is your fear? That the employees will seize the property of the company and turn it into a communist collective?
Another side benefit of this approach is recruiting. I've always felt that "salary negotiable depending on experience" is such a waste of ink. Being transparent let's individuals who have expectations way out of alignment opt-out entirely. Then you get a nice clean signal for when your pay is out of alignment with the market...good candidates don't apply.
That doesn't stop unbidden thoughts from creeping into my head at 4AM when the two of us are working side-by-side doing the exact same thing.
Typically you aren't working at an internship because you have a proven track record of skills in a certain area. That is kind of the point of doing an internship. And having a proven track record is something employers are willing to pay a lot more money for.
You don't have to justify it, I understand all the bullet points. I'm just corroborating the parent's statement that willful ignorance of someone else's wages can be a useful coping mechanism. Because no matter how many justifications there are, it still stung.
So an ios dev who spent the last 10 years elbow-deep in the innards of some database code or something would arguably be "senior" but not "experienced".
Just one way this could fall out, I don't know how buffer defines the terms.
And if they had the nerve to Google your past salary, then I think you could turn that around and ask for a similar matrix to what you had at your last, more transparent company.
If they refuse, and you can't justify the salary to yourself given the situation, you're probably better off staying at the transparent company. There's more to a job than money, after all.
Having salaries be completely open invites comparison even when there is a lack of information. Bob the Developer in XYZ team makes 20k more than me, is that fair? Maybe, but I don't really know, and I can see that creating friction with the right (wrong?) personalities.
There are some significant advantages in building an open team like this. People know what's their pay-grade and what part of the company they actually represent. If they don't think their cut is fair they can signal it. Many companies have confidential salaries so even when you know you are underpaid you can't argue it without throwing peers under the bus for revealing their salary to you.
Oooh, or what if there's a dragon[1], and I need to be paid extra money so I can spend it on dragon-slaying gear? If you really deserve extra money, the conversation goes like this:
"Why do you make more than me?" "Because my job is harder."
Fun fact: you're not that special. Wage secrecy is good for skilled negotiators and bad for everyone else; being a skilled negotiator does not, however, ethically or morally entitle you to make more than other people. It just allows you to get away with it, and it's trivially unfair.
This sets a terrible precedent. I've been in places where people knew they had to get a better offer to get a raise, so the entire office was job-hunting. Much better to figure out some benchmark ("To get the best folks we pay in the top quintile and insist on no OT" or "We pay modest base salaries, but give double the usual equity to share upside and incent people to act like owners") and then stick to it. Top people will rarely leave for a small raise, though they will leave over disrespect or boredom.
It's my job making sure everybody is paid fairly. If Niel came to me and told me about a competitive offer, I'd say, "well, let's look at the market; maybe we've fallen behind." And then we'd sit down and refresh the data that drove our current pay levels. If things had changed significantly, then it would be time for raises. If not, then we'd talk about why a company might be paying well above market, and whether it's the right choice for Niel to go there.
For specialized skills, yeah, a new matrix category's the obvious fix. If co-workers are the kind of people that freak out at market economics, then it means we're not educating them well, so that's something worth fixing.
I think it's important to remember that secret salaries rarely stay secret, so the choice isn't between full knowledge and zero knowledge; it's between full knowledge and half knowledge plus substantial speculation.
What if the company is not that profitable, can you still stay competitive? Are you willing to risk the future of the company?
I deny the choice. I think most companies that make a habit out of underpaying good people to stay barely in the black don't survive in the long haul. If I were faced with that choice, I'd be honest with everybody about the financials and we'd work something out. Either we're pursing something pretty lucrative, in which case it's a temporary deviation from market rates, or we're barking up the wrong tree, in which case the company isn't worth doing.
I've no particular confidence this would work well, but it seems a consistent approach that has some potential.
Keep it internal to the company - you have an expectation of privacy from your employer and this post just ruined it completely.
I hope they got written signed releases from every one of those folks whose private info they broadcast to the world.
If you worked in a company like Buffer or GrantTree, you'd be wondering why others are so secretive about their salaries, and find yourself more and more disliking the idea of working for a company which is not transparent.
Habit is a powerful thing. Change your surroundings and you'll change your habits.
I wish job postings more often had salary information, too. How am I supposed to know if an interview is worth my time when I don't know if the pay will be higher or even competitive with what I'm making now?
As for me, my cofounder and I both take out the maximum we can without paying lots of unnecessary tax in the UK, which adds up to about £30k per person per year, net.
This isn't the case (at least for me). The reason I wouldn't want my salary published publicly because people may treat me differently based on how much I get paid. The same problems may be true in a company, but at least internally you can control (through hiring) that people are mature enough to handle that information.
More importantly, I don't want other corporations (specifically their marketing and sales departments) to know how much I make.
I may want some people in my life (including corporations, perhaps) to know how much I make, but I want that to be my choice, not my employers.
It's perfectly legitimate for people not to want to share their salaries on a public website.
So you are saying that when buffer hires someone they are aware that transparency = "we may publish your salary some day"? And that everything is an open book?
Hard to believe that is the case. Or that people didn't feel under pressure to go along with (as some research has show) what they previous may have loosely agreed to (See Cialdini "consistency" principle).
"Why don't we break into this guy's apartment? I read online that he makes $98,433 and he should have some expensive stuff in there."
"Hello Sir, sorry to call at dinnertime but I'd like to offer you a once-in-a-lifetime opportunity to buy the timeshare of your dreams. You should be able to easily afford it on your $98,433 salary."
- You have family members who have substance abuse issues. It's common for addicts to steal from family members who they rationalise can afford it.
- You're in an abusive relationship, and your spouse steals your money. Hiding part of your salary may help you feel independent enough to get out.
- Your kids' friends find out how much you earn, and bully them.
- All the rest of your family are part of a religious organisation that demands a tithe. You've lost your faith, but it would tear your family apart to leave.
- You have family who live in a country with a much, much lower standard of living. You support them financially, which is known in their community. Now their neighbours know _just how much_ you're worth, exposing your family to the possibility of kidnapping or extortion.
- Your name is Google-unique, and identifies you as part of a group that is stigmatised on the internet. If your identity leaks into your internet activities (e.g. via Google's real name policy), another major vector of harassment is exposed.
Just a couple of things off the top of my head.
You don't have anywhere near the information necessary to make that claim. Honestly that came across as pretty arrogant.
I'd also argue that a company can be transparent and still understand that some people more private than others. Whether YOU would share your salary with the world isn't material - your employer shouldn't do it unless you've signed off (and I'm sure these people have if anyone involved has a shred of common sense).
I wouldn't want all my love letters and emails published. I wouldn't want my thoughts tapped and broadcast to the world. There's a line somewhere where transparency for the sake of it is either not helpful to the company or a simple invasion of privacy.
There are so many possibly repercussions with family, friends, and outsiders, in addition to the things brought up by other posters re: poaching, etc.
I personally wouldn't want my salary revealed publicly because my family would treat me differently as a result (I know this from experience).
If this idea spreads, it wouldn't be long before someone comes up with a way to API this data into something like LinkedIN or Monster. "Joe makes $100k at CompanyX - is it time for a change?"
Internally to the business though, this seems to have a lot of positives. I'll be interested to see how this evolves at Buffer.
Statistically speaking, you're more likely to make more money by getting a bigger salary now instead of a big payday that may never happen. Statistically, very very few companies will be large enough for employees to cash out.
(wait for it to load and take you to the specifically linked comment)
Also, keep in mind that they clearly set the opposite expectation about privacy with their employees and (from what they say), cleared it with everyone first.
That person's equity position is probably at least an order of magnitude higher than the other employees. As an investor or employee, I'd find this alarming.
http://techcrunch.com/2008/09/08/peter-thiel-best-predictor-...
Call me old fashioned, but I think co-founders should be paid living expenses + 25%, even in a series-A funded startup.
It's risky to comment without knowing the specifics of Joel's situation. But it seems that his $158k salary isn't outside those bounds if he lives in e.g. San Francisco or NYC. Hard to know someone's living expenses without drilling way into their personal financials, and again this is not unreasonably high.
Thiel, from the link you posted:
>> What’s the average salary for CEOs from funded startups? Thiel was hesitant to answer, but eventually said “$100-125k.”
That was in 2008. Adjust for rent inflation, and that should square the numbers for you.
The math the company has laid out says that CEOs should be paid more than any employee in a company, even if they are founders and have a controlling equity stake. I'm simply saying that if I were an investor or employee, I would find that concerning.
It's enough for a luxurious existence in NYC provided you don't have children. I'm not sure whether or not they have children, but that's a lot.
If you don't work in Manhattan or can work from home most of the time, you can have a pretty luxurious lifestyle, yes.
Also, being single with no one to support isn't the average case. I'd argue we should assume that each working person supports one other person. That lines up with American demographics much better.
Yes, there are people making vastly more than $150k, but that doesn’t change the fact that it puts one solidly in the upper quartile.
It's that's "only" middle class, the world is in serious trouble.
It's the loan I took out to pay for my 4 year undergraduate university education in it's entirety.
Is that better?
I was referring to what that salary gets you in terms of standard of living and so on. Cost of living in all of New York, Manhattan especially, is high. $70k doesn't get you very far in Manhattan, especially if you don't have multiple roommates (which you wouldn't if you had a family).
Contrast that to what a family can do with $70k in Cleveland, San Antonio, or Raleigh. It looks closer to what $150k looks like in Manhattan, which is my point.
$150k is most definitely upper middle class. I grew up in Queens my whole life and until I started working professionally, never met someone who made more than $150,000 a year.
When I moved to SF from Alabama, I lost ~1->5% more of my paycheck to taxes. Note that Alabama is a dirt cheap place to live, and that I get so much more from that tax money in SF.
Yes, the taxes here are bad if you compare them to Washington or some other low-tax haven... but they're really not that bad here.
Also, yes, rent is insane in the city. More apartments must be built!
similar salaries at established, larger companies run into the 250-500k range.
From the linked article:
"In Startupland, everybody should be working towards the same goal: that big juicy exit. That’s the only payday any CEO should be worried about (even though more than half of them will never get it)."
I can't agree with that, and this is a key reason I spoke with others in the team and we decided that my salary as well as other c-level salaries should be quite high at this point. We're not planning an exit anytime soon.
Until a day ago, my salary was $118,000. In the first year, my salary was zero and in the second year it ranged from $55,000 to $75,000.
We're at a point with Buffer where there's a massive opportunity, and I'm going into my 4th year now. At $2.3M ARR and being cashflow positive (revenues cover the salaries) we're in growth mode and this isn't investor money we're using to fund these salary levels.
I completely agree that in the early years this would be a big red flag. I think the further you go, the more that notion reverses. I've heard that it can be a red flag if the CEO is not paid enough.
Would love to hear any other thoughts here, it definitely was a tough decision to make and I'm glad that by putting this out there we get all this valuable feedback.
Like you said, you are in growth mode. To me, growth mode means reinvesting as much of the profits as possible back into the company. Paying yourself a large salary during this time is the same as taking money off the table.
There are some good reasons to take money off the table, like paying back personal debt or supporting family members. But paying yourself more because you're the CEO doesn't seem like a good one, because your equity position is so significant.
If you don't have a good reason to take money off the table, it signals to employees and investors that "Joel thinks the money is better spent going into his personal bank account vs. making the company's equity grow in value." That sort of logic doesn't work in a startup that is targeting high growth, where employees are hoping to receive some sort of payoff from their equity. Moreover, it casts doubt on your judgment in capital allocation, which is one of the most important responsibilities of a founder / CEO. *
Obviously, all of this logic falls apart if you're not working on a startup. Low growth businesses that have achieved much of their potential are a totally different story. But you aren't starting a restaurant. Even Uber, at its $4B valuation, is giving compensation packages that are weighted towards options vs. salary.
* http://www.amazon.com/The-Outsiders-Unconventional-Radically...
Why? Fairness. Our employees produce value, and we pay them justly for it. Excess value is retained in the company, and used for growth. The company, whether or not we choose to exit, is an asset owned by us, the founders. It's not a liquid asset, no, but it can be used for secured debt (i.e. borrowing against the value in the company), should we choose (we haven't).
We've been cashflow positive since day one and have revenues somewhat higher than yours. We've never taken investment.
For the first three years, my salary was £6k. Just enough to afford to eat and live in a squat. For the next three years, it was £22k. For the last two, it's been £30k. Our highest paid engineer is at about £60k basic - and we're not in London or a big city.
I guess at the end of the day it's a cultural call, and a personal one, but from my corner, I wouldn't be comfortable earning more than the folks who're doing the on-the-ground production, as we're not here to earn salaries, we're here to grow value.
Investors don't necessarily want founders to pay themselves the absolute minimum because they want the founders to be happy and focused on building the company, instead of being distracted by money worries.
Note: a less cynical take is this: GodDAMN buffer employees must be happy working there if they tolerated transparency to this level...which, really, is the best win-win for all kinds of transparency scenarios.
While some of them do work overseas, Buffer employees should note they're drastically underpaid for Silicon Valley, NYC, or even LA salaries. If they didn't know this before, they should now. Any mid-level dev with decent skills would start around 110-120k before benefits in a highly competitive job market. I know because I hire and offer these salaries right now.
Anyone heading customer service would be in a tier within the rest of customer service, capped at around 90k. This is especially true for a small startup where their duties aren't managing a huge customer service team but rather playing the role of basically another customer service rep.
* Names should be anonymous. Everyone knows where they are within the group and can determine if its fair without knowing exactly who makes what.
* It should include options and bonuses. In some companies non-salary compensation dwarfs salaries, and it's dishonest to point to a CEO salary and say "Look, he only makes 1.something X what regular people do."
* Keep it internal to the company. No point in giving the competition an exact target or requiring whole company buy in before you do it.
* Allow people to redact their own information, but display it as having been redacted. If enough people do that, or just management does it, everyone will sense that things are unfair.
That's absolutely not true. Most companies never have a liquidity event, a significant number of stock options never vest (employees leaving before they're fully vested is very, very common at startups) and even when a company delivers an exit, the vast majority of employees with equity will, at best, walk away with what amounts to a modest "bonus." Facebook and Twitter-like outcomes in which hundreds of rank-and-file employees become millionaires are the exception, not the rule.
Take a senior engineer at a startup with a $125,000/year salary. He has options that are fully vested after four years. Let's say his options represent a .5% equity interest in the startup after dilution and there are no liquidity preferences to deal with (a highly unlikely scenario). His company would need to have a $100 million exit for him to walk away with a pre-tax amount equivalent to his gross salary over those four years ($500,000). In 2012, according to CB Insights, over half of startup exits were less than $50 million, and more than 80% were less than $200 million.
And my point isn't about average engineers. My (corrected, I admit I was overstating things with the original phrasing) point is that, in some companies, the really huge comp differentials come from non-salary compensation. So just looking at salaries is not, in those cases, a complete or honest picture.
If you're not a founder or in executive management, there is rarely any value in looking at equity "compensation" at an early-stage startup. Again, as can be seen in my example, when you're dealing with sub-1% equity amounts post dilution and liquidity preferences, as most employees are, the numbers simply don't work in your favor. To walk away with a meaningful windfall that is substantially higher than the cash salary earned over your vesting period, you will need an exit that is statistically very unlikely.
Any employee who expects his or her equity stake to be on par with founders and executive management is wet behind the ears, and any individual who has dreams of becoming fabulously wealthy is far more likely to realize those dreams by starting a company than going to work for one.
I know that one FTSE 100 co's basic share option scheme is going to turn out >£60k tax free next year (its a 5 year scheme so say 10k pa) so it had better beat that.
If its like equity/option grants in tech companies, I assume it can vary significantly on how much you are given and is pretty customized to your compensation package? i.e. junior dev only gets $10K in shares (over 4 years) vs a senior dev that gets $50K.
But yes it is a one way bet the BT 5 year one due next year is on course to pay out £60k tax free - the UK has also just doubled the max amount you can put in to an approved scheme to £500/month.
* Buffer is not somebody's weekend project
* It needs 16 (yes, SIXTEEN) people to run that thing
* They actually have revenue. In millions. $2.3 Millions!
* Their company values are based on How to win friends and influence people.
Aside from that, open salaries are pretty naive idea, if not completely dumb and dangerous. The lives you live everyday is in effect a game (as in "game theory" game). When you are talking to person, selling goods or buying one you are in the game. Like in any game, information is your advantage and your opponents weakness. This is exactly why privacy matters. If insurance company knows you eat too much pizza, they would want to get a higher premium from you. Similarly if a car dealer can look you up and figure out your salary, he can adjust his negotiation tactics. A plumber making half the money you do would want to charge you more than others. And so on. When all these people would look for their next jobs, their next employer would know how much salary to offer them.
In Sweden all salaries are public, look how awful they are doing.
I guess I'm curious how it deals with extremely variable salaries or is it just last year's that's public?
2) No stress from "how much will I make in 5 years if I stay here"
On net, it let me focus more on doing my job well and less on politics.
I hope all employees agreed to have their salary published on the buffer blog.
Kudos to them for trying something different.
On another note, I am quite surprised at how underpaid some of their positions seem. Senior iOS engineer barely cracking 100k in a very expensive market...
Warm fuzzies are important to a lot of people, look at how non-profits retain people. Also, there are a lot of people who don't know how to negotiate that would probably benefit from something like this.
I know a few devs who stick around at places because they like the people, etc, despite having had multiple offers for more money. Not my style, but it takes all sorts.
Sure, but that's not the only consideration here. Employees don't always have the option of sticking around at a company. Not all startups make it, and people are terminated or laid off from jobs they love all the time.
If and when the time comes to find another job, a public record of your previous salary may not benefit you in your negotiations with prospective employers.
I've told a number of people my salary and regretted it every time. They seem to take a vicarious pleasure in telling other people how much money I make. "Oh, you should listen to delluminatus, he makes $xx thousand a year." Ugh.
And it also limits employees when they want to move as the new employer knows how much they make now.
What I don't understand is why people don't talk about it. If you tell and you learn you are overpaid then you feel good. If you learn you are underpaid, well, time to go negotiate/look elsewhere.
Do people think they ARE their salary? It's simply money that some people arbitrary decided to pay you...
Having a potential employer know exactly what you where paid before puts you at a big disadvantage when it comes to negotiating a new salary /package.
Now, I open the mail at home & am staring at my professor's salary! You see, the secretary had switched our mails by mistake because our last names began with the same letter. I was quite stunned by the number - it was a measly sum, and I did the math & worked out that the Professor's salary was about 60K. Now, I knew my Professor was an important CS scholar & had tons of papers to his name, but that low number irked me. After the PhD and all these papers, just 60K...why..?
At the same time, my Professor had also gone home & opened his mail & was staring at my salary! So much money for some dumb undergrad who was basically an average student & had no major publications or research! He was quite bothered.
The next day, we had a very awkward exchange of mails. But from then on, the student-teacher dynamic completely changed. I suddenly began getting B's instead of C's & even occasional A-. He probably felt, hey if this guy can get so much money in the market, he probably knows his shit. otoh, I began to respect him & the CS program less & less. So I still have to spend 3 more years & take 45 more credits & do the qualifiers to get the PhD & then write all these papers & for what..60K ? That was my attitude at the time.
Needless to say, I dropped out of the PhD pgm with a Masters & went to work full-time. That was the stupidest thing I ever did, but I just didn't know it then. Now, I look back & think...hey if I hadn't known about his salary, I'd have slogged it through & actually gotten my PhD instead of half-assing it out here :(
Our reaction to academic salaries should really be the opposite. It's sad that we undervalue education so much in the US.
Does she really contribute more to the bottom line than any of the other 4 underpaid engineers?
And that seems like a very developer-centric viewpoint. Yes, good customer service can add a lot to a company's bottom line. Some companies have huge engineering issues and need engineers to solve them. Some companies have huge sales issues and need sales people to solve them. Some companies have huge customer service issues and need customer service agents to solve them.
I know few rigorous investors that would stand to pay their CEO/founders more than ~80k a year, at least until it's clear the company is maturing. Also, as a founder with significant equity, I'd much rather put as much of my salary that I can spare (My wife and I need to eat, pay rent, etc.) to go towards bringing in (and keeping) top sales or technical talent. If you believe in my company, the math works out very well.
I also do the occasional angel investment, and frankly, I'd be pissed to see a business I invested in run like this. Two annual international offsite trips? What?! You're building an app to schedule tweets. This is not rocket science. Get to work!
Look, not saying they can't do it.. just saying as an investor, I'd wouldn't support it. Money is after-all fungible. It doesn't matter if sales are paying for 100% of the salaries or not... if there's money being left on the table that can be reinvested into the company by either bringing in new/better talent or retaining your top talent, I would be angry. The founders already have high incentive to stay as long as they can satisfy basic needs on their salary. Employees with little equity do not unless they are paid competitively.
"Chief" and "highly compensated" are not necessarily joined at the hip. It should be possible to have a C-level exec with most of their compensation variable and dependent on company performance or certain metrics, rather than a whopping base salary.
I once had a conversation with an old hat who said "If you call yourself a python master you better be fucking Guido."
One example I've heard discussed (I think by Dan Arieli) is how transparency in CEO pay has failed to bring CEO salaries down. One problem is now CEOs can see what other CEOs are getting paid and naturally every CEO will want to be paid higher than his peers.
I used to think open salaries would be a good thing but lately I'm not so sure. You definitely want to tread very carefully there as there are many implications and unexpected consequences.
I am curious if this is common in startup companies, since I have never worked in startups.
Do they really think they can ban private emails between engineers? it would have been much easier to simply load eavesdropping software on their computer if management doesn't trust them.
I really like Buffer but I'm a little worried about them.
If the company's revenue grows significantly, their salaries could become much more attractive. If, for example, revenues grow from $2M revenue to $20M revenue, senior developers would see their salaries increase by $54k or ~50% over this time.
It could be argued that 10X growth or an $18M increase in revenue is unrealistic for a tweet scheduler, but that's for the employees to determine.
Seems to go against everything I would think was important for a company that is venture-backed.
Venture backed companies should pay their employees well though. If you're worried about food / shelter or constantly wondering if a shift in jobs would give you a disproportionate gain in quality of life then you're not focused on the startup. The biggest advantage of raising a lot of money is so that you can pay a lot of money and not have your team worrying about "I'd have loved to do that trip to Paris, but can't afford it. If I quit for Google, then I'd be good to go.
That said, I'm a believer that founders shouldn't be the highest paid employees.
Saying that founders shouldn't take a fair salary - comparable to what they might get elsewhere - puts them in a untenably risky position that would limit the pool of founders to the independently wealthy and the foolish.
That limitation would not be to the benefit of the backers.
To me, that's part of the trade-off that the startup founder / leaderships takes (for good or ill), and seeing salary in the absence of actual equity positions is only half the picture.
Hopefully they all know each other's equity positions internally and just chose not to share publicly... otherwise it would seem like a betrayal of the open culture if the actual ownership structure of the company wasn't openly known and discussed.
Of course, this doesn't work. Nobody is preventing you from asking your neighbors what they paid for their bread. Once you know what a "fair" price for bread is, then you know exactly how hard you need to work to afford bread, and you have little incentive to work any harder than that.
If you own a company, ideally you don't want your employees competing with each other. You want each of them to compete with themselves, pushing their abilities, growing, learning, improving. You don't want them to know exactly how much they need to do to earn that next promotion, because then they will have little motivation to do more than the bare minimum.
If you own a company, unlike the baker, you can have some amount of control over the flow of information. This control allows you to manipulate your employees motivations. Like any amount of control over anything, this control can be abused...but in capable hands it can also be wielded to great effect.
An open salary policy gives away that control entirely...
For example, Buffer could have easily added a policy saying that each employee's compensation may be adjusted by, say, +/- 20% based on individual factors. That would give some uncertainty, and thus a bit of individual privacy. Peers would still have some confidence that they were, more or less, in a similar range as others with their public performance characteristics.
Let's put ideology aside (i.e. do we want this to work, according to our theories of human nature) and focus on the actual effects. How do you know if you've succeeded? How do you measure this? How do you design the experiment?
Call me skeptical, but I can't help but think that Buffer is doing this, largely, to say "look at us!" and "this makes an interesting blog post!".
I will figuratively eat my underwear if you don't come to regret this strategy (public, non-anonymous open vs. internally open) at some point.
In the same way, posts like these are created to be the first to break a specific norm (i.e. do not post employee salaries publicly) in order to ride the wave of traffic (and hopefully a few additional users).
Having talked to a few Europeans about it, my impression is that both the raw salary and the % you keep are quite a bit better in the US, for professional workers, and that most goods cost less. But you are expected to work more hours with less time off and if you get sick or hurt or something really bad happens to your company/town/industry, good luck to you. There are "safety nets" for most of these things but they have a lot of holes in them.
In the US, healthcare is provided in a professional/fulltime position like these (maybe not the bootcampers). Figure $150-300 a month for healthcare if contractor or not-provided.
What I like less is the salary formula. What's going to happen is that all of the negotiation is going to get packed into the experience and seniority multipliers. It creates the illusion of rigor and possibly does more harm than good.
How do you think we could improve that aspect?
I make $113k/year as a juniorish engineer at a VC backed startup in SV. Am I hilariously overcompensated?
software engineer 1: http://www1.salary.com/CA/San-Francisco/Software-Engineer-I-...
software engineer 2: http://www1.salary.com/CA/San-Francisco/Software-Engineer-II...
Ignore the various salary estimate sites. There's no way that they have an accurate view of the world.
http://www.cmu.edu/career/salaries-and-destinations/2013-sur...
I strongly suspect that salaries in the area have been depressed for a while and are now thinking about catching up to the rising cost of living.
This eliminates the problem of people comparing themselves to their nominal peers on incomplete information. It really tells you everything you need to know about compensation.
But the most valuable part of the buffer system is the formula. You have a framework for calculating what is fair.
One of the dangers at small busy startups with well-intentioned leaders is that you basically forget to give people raises and your employees don't get you to correct it until they are pissed enough to quit. That's part of why I left my original company and it cost me a good employee recently.
[1] https://twitter.com/joelgascoigne/status/413713018455740416
One job I asked for 2x what I made at my old job.
I'm convinced you're paid what you ask for, so long as you can get shit done.
You might wanna talk with Kaspersky?
Some extra reading for you folks:
http://bufferapp.com/about/#our-philosophy (scroll down to the 9 Buffer Values)
The other half to get to full transparency is having clear, measurable definitions of experience, and clear milestones of how to advance in seniority.
And that relates to how this starts to resemble corporate salary structures -- the key difference being that these guys have a defined number instead of a "salary grade". but the idea of plugging positions and experience levels and seniority into a salary structure is key to almost every large company. And as a result, most of the corporate angst over salaries starts to boil down to questions like: "Why is he a programmer IV, while she is a programmer III.", "How do I advance from being a Staff Software Engineer to an Advisory Software Engineer?"
This structure doesn't necessarily remove questions (and sometimes conflict) over career advancement, it just moves the discussion away from money, and towards labels and definitions.
And as some comments mentioned, there are cases where you really want to hire someone whose salary requirements do not match your structure. You may get into sticky situations like having a great coder, but you would have to make him a Lead, or a VP to actually make him fit your structure. And maybe you don't want them to have that level of leadership, because that is not their skill set. So you end up having to decide -- Is this salary structure more important than making those hires, or are you willing to let potentially great hires get away because this structure is more important to the company than those people?
That decision is not one that I will second-guess - I would think that these types of issues and scenarios, as well as other issues raised in the comments, have probably already been debated internally before this decision was reached.
But that would be an interesting follow-up post -- to hear about what discussions and debates went on before making this decision, what the expected impacts will be, why decisions were made, and what levels of growth are expected to invoke changes in this structure.
Because, quite frankly, it's your money. No one should tell you what to do with it, much less to count these, publicly. And if, as the result of this, you get smaller salary, it will be there for the others in the company to see. How motivational.
I think even with this unilateral action, you will get most of the benefits - good people around you are likely to respond back and tell you if you're underpaid or overpaid.
Implied Revenue: $2.0M [1]
Total Salary: $1.7M
[1] ((158.8 - 22)/1.2 - 75×1.2)/12
Lesson - all people game the system for their own benefit.
45k for Android UK average
55k for Android London average
10k GBP is 16k USDThe only downside I see is that some people will be disappointed because the salary reflects their skills and the value the company puts in them. For some this is hard to take if they are in the bottom 20% of people in their peer group.
Said that, it's probably a good idea to start with this compared to introducing this later.
2. What's your backend written in?
That's harsh. I am arguing that fantasying the success of this payscale doesn't mean the company is not responsible for the welfare of the employees as the company scales and grows.
>Every internal email sent between any 2 people on the team has a certain list cc’ed that is accessible for everyone: For example if 2 engineers email with each other, they cc the engineers list, if it’s people on our customer support team they have a support email list cc’ed. Stripe was a great inspiration for this. (More about this)
Openness and transparency and honesty are great. But this seems like it's removing privacy, which sounds very tiring.
But an effect of this "you're being watched" is that you will modify your behavior to at least meet the spirit of the law, and this modificAtion can be I itself beneficial. Trivial example: I used to cuss a LOT...but volunteering in family friendly jobs forced me to not do that, or at least start using "gosh" and "shucks". I found out (as Orwell might attest to) that my mood overall improved without reverting to the negativity so reflexively.
In the case of Buffer...OK, some kinds of very important communication may be stifled. But a whole lot of non productive behavior (idle chatting via email) may be stifled. And then there are benefits of transparency, in which everyone realizes they have to start out in a consensus building mood.
And for the cases where you need to take someone to the woodshed, so to speak? Do it in person. That alone mitigates some problems that come from misinterpretation through the written word
You can sing the happiness song and do all the lets-be-friends dances but at the end of the day we're people competing for resources. This will have lasting effects to all current employees for sure.
You're not.
> If the CEO is pushing for it, the employees will all smile and nod and go along with the crowd,
I don't know what to say. There are more kinds of working relationships than are dreamt of in your philosophy. Not everybody lives in fear of their CEO.
> You can sing the happiness song and do all the lets-be-friends dances but at the end of the day we're people competing for resources
Sure, but some of us cooperate with others in order to compete with everyone else, and that's good enough.