I've done exactly that, and very deliberately, with GrantTree. All salary and bonus information is available (anyone in the company can log in to the accounting system and check it, along with all the other company financials).
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. I think the benefits of having an open, trusting, transparent culture far outweigh any benefits a single individual can bring to the company. Someone who's willing to damage the culture of the company for their individual benefit is probably not someone I want in this company.
What are those cultural benefits? Well, for example, because we are transparent all the way through, this is also reflected in the very open and relaxed culture, and it then is reflected onto our clients - after all, your employees will treat your clients in the same way you treat them. Most companies are "open" in quotes, but then when you get to sensitive information they closed up, which sets up an uneasy tension. We don't have any uneasy tensions at GrantTree. That's a huge benefit to me. I don't like dealing with uneasy tensions and lying to people and hiding stuff.
It's important to combine transparent salaries with transparent ways for people to increase those salaries, in my opinion. If you don't, people will feel stuck (transparently so). But if you do, people will feel that there is a known path for them to increase their pay and they'll work on that path rather than try to ingratiate themselves to get a pay raise in private.
Any further questions about this - feel free to ask. I'll do my best to respond.
PS: If you're in London and looking for a client management, sales or office manager/admin/support role, or if you know someone who is, we're hiring!
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?
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?
>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?
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.
I work for the California State University system. Using FOIA requests, various media outlets have built up a database where we can see everyone's salary. For example:
http://www.sacbee.com/statepay/
Overall, I would say this has not been a bad thing for us employees.
1. Transparent government is a good thing.
2. I am very sympathetic to a number of people who receive less base compensation then they would in the private sector with similar responsibilities.
3. It shows the importance of career path as there are bands per department (e.g. engineers in one range, computer people in a separate range).
Still, there are down sides.
1. The upper management has found ways to hide salary and compensation.
2. It does lead to some discontent when people are told their is no money for a raise, but person X manages to get one.
I can't figure out why so many public university employees reply to this thinking their situation is relevant. Governments and 501(c)3's are very different beasts than for-profit companies.
I worked for SUNY, State University of New York, for a while. Salaries, bonuses, raises were all public. Never really noticed anything bad come from it.
I used to work at SUNY too. Every January, when this list came out, my boss (a professor) would send his secretary to the library as soon as possible to get this information. Then he would use it to pester the dean.
Fog Creek has transparent salaries. Or at least they did when Joel posted this. It doesn't seem evil to me when it's all out in the open and it's obvious to individual contributors what to do to climb the salary ladders.
The company I work at have a completely opaque approach to salaries, I don't get to now anyone elses salary and no one else gets to know mine - the only people who would be privy would be my employer and the external company accountant, but my last job had a pretty open attitude, so I know both sides of the coin:
This is both a positive and a negative in a few ways:
A couple of positives:
Nobody else knows how much I earn, there isn't any envy for the people junior to me and it doesn't make them feel undervalued - as someone who used to work for less than minimum wage, I know how demoralizing it can be to know how much less valuable to your employer you are than other people.
I don't get jealous of the people above me, I know they have nice cars and bigger houses, but I'm not constantly thinking about this figure and trying to work out why in the hell they are £30,000 per year better than me.
A few negtives:
Negotiating a higher wage is much more difficult, I don't know that A co-worker of equal level gets £2,500 more than me per year just because he negotiated, so I'm more likely to stick with the status quo.
It becomes taboo to speak openly about wages, the boss hides it from us, so we hide it from each other. Any questions to each other are effectively met with "none of your business."
Feeling uncomfortable talking to my employer about wages and increases in salary makes me more likely to leave a company - it's far easier to go to an interview and negotiate with a stranger you don't care about than potentially having hard feelings towards someone you have to work with daily if they refuse you a raise.
But, wouldn't it be just as awkward if you went to you boss and yo said your co-worker that makes 2.5k more than you per year and your boss goes, "yeah, (s)he is smarter and more valuable than you".
Seems to me that rejection is rejection either way (compared to another employee, another company or just in absolute terms).
I worked for a public university and the salaries were public by mandate. I found it harmless for a while, but it ultimately led to me to search for other jobs when I discovered a new co-worked who I considered lazy made $15,000 more than me.
I think a better idea than going completely transparent is to calculate the group or division averages and publish that number. It offers some of the benefits of transparency while depersonalizing the controversial data. But of course that would only work in mid- to large-sized companies.
As great as it sounds, transparent salaries are harmful.
I was in an awkward situation where I was paid much more than other people who joined at the same time as me. One day one of my coworkers found out (due to some accident in distributing stubs) and the relationship became really tense -- he thought he deserved more pay (even though he did half the work I did, he saw it as a measure of the value of his time)
I was once on a project which lasted about half a year. It was really tough work, in a foreign country, harsh conditions, bad management... People were nervous, and one day they found out someone had 12X their salary. It was me, but they didn't know it. I didn't know they didn't have same salary as me or close to it. I was brought in as a specialist, but even people higher than me had smaller salary than me (4X smaller). Situation was not great after that, but names were witheld. I always wonder how it would play out if they found out it was me, we were all on friendly basis.
Transparent salary only works if you start off the company with transparent salary and make financials transparent too, along with linking salary to real product performance to remove a lot of harmful politics.
So transparent salary can be good if everything else is transparent also - otherwise it is very bad and leads to terrible politics.
The first startup I worked at, the founder wanted to make salaries not only transparent, but made known as a fraction of the CEO (e.g. 1/3*CEO_pay). The board, made mostly of VCs, did not like this idea at all and convinced the founder it would bring down the morale of the engineering team if they saw what the sales guys were making (the sales guys were compensated mostly by commissions, of course). I still think it would be a great thing to establish if done when the organization is small enough (and before any investors were involved).
I believe that can be solved by giving everyone the potential to earn more money if that's what they care about. Ideally, at least while the company is still small-ish, everyone has some kind of way that their work is directly connected to making money for the company. So allow them to earn a bonus based on doing things that earn more money for the company.
You might argue that developers are not that closely connected to the company's income (I can see how that would apply). But in my experience, developers tend to care about earning enough money but they're not obsessed about making large commissions, like salespeople are. So if we had developers at GrantTree (we don't), I would simply offer them the choice to move into sales if they prefer the money to the benefits of being a developer (which is a hell of a lot less stressful most of the time, let's face it).
Sure, that means that you'll need to find a new developer to replace them if they succeed in making the shift, but on the good side, you'll have gained a good, highly technical salesperson (worth their weight in gold), and if they weren't happy being a developer, they'd probably have left eventually anyway.
I think sales people are often overpaid, and developers underpaid. After all, the people creating the value and maintaining the product are the ones that are truly "selling" it. The sales people are just pointing people's eyes at what dev makes.
I've not but I'd make the counterargument for working at a business where I'm not sure I care.
I occasionally get curious for curiosities sake, but I've never really been bothered. So long as I make enough to support the lifestyle to which I've become accustomed the fact thtat I probably won't be buying a yacht any time soon doesn't really bother me.
The FEC mandates many political groups detail all transactions in publicly available databases. If the relevant laws cover you, you can use that to see what other people in your organization make.
I never found it too upsetting, except as additional evidence for why people I thought were incompetent should go.
Yes, the last company I worked (www.tractis.com) we knew the salaries of everyone in the team. At start it is something cool to know they company aims to be transparent, but then it is something you let it pass and forget.
Government has transparent pay and it's never an issue, but it also selects for people who are not financially ambitious. There are plenty of hard-working, very driven people in the public sector, but no one's there to get rich.
The issue with what we do in private-sector technology is that performance itself is opaque. If we're insistent on matching compensation to performance on a year-by-year basis, then we're going to struggle with transparent salaries, because it means that performance evaluations are public (and can be questioned) and, to be quite frank, that means we (as leaders) make high-stakes, not-easily-reversed decisions on imperfect information, and that's bound to piss people off.
I like transparent compensation, but there are issues to be addressed.
Fully opaque salaries "work" in a way, but it's goddamn unstable. People talk, and in fact policies that prevent them from disclosing salary are can't legally be enforced (anti-unionbusting provision). Soon, people discover all the things that happened because they were expedient, but are unfair-- the guy earning $185k for $120k work because he was plucked from Goldman Sachs. As soon as one person starts talking, the whole edifice comes down.
To make it more interesting, companies that try to enforce a pay meritocracy get hit in a different way. Most technology companies have such a rubric, where each level and job-description has a tight band, but have an informal and semi-secret "High Compensation Program" for people they take out of Wall Street, in order to get their pay back to a comfortable level within 1-2 years. I'll admit that I've exploited such programs, but they are actually more unfair, because they mean that not only does your Wall Street leverage get you a higher salary, but it also gets you faster career progress. Instead of paying you more than your performance merits, they make you into a high performer with fast promotions and plum projects. Great work if you can get it.
There's no easy way to solve this problem. However, I do think that transparency is a fundamentally good thing.
Now, here's a radical idea. Readers of my blog have noticed that I've been delving into the problems of organizations and concluded that there are 4 organizational cultures. The bad ones are the rank (lawful evil / authoritarian) and tough (chaotic evil / kill-or-be-eaten) cultures that comprise most corporate hellholes. The good ones are the guild (lawful good / superior-as-mentor) and self-executive (chaotic good / open-allocation) cultures. The deep issue is that neither the guild or self-executive culture is very stable, especially amid growth; some stronger alloy of the two is needed.
So, here's a radical idea I'd like to try. Compensation is fully transparent. Salary and every bonus is visible. Exceptional individual performance (especially if sacrificial but important) gets a bonus, with heavy input from the group that the achievement merits it. It's not the 20% year-end bonus that everyone gets. This is possibly 50-500+ percent of salary. Classic self-executive reward structure. That should not be expected by anyone. It should be rare and it's not a ding if you never get one.
Salary, on the other hand, is generous but doesn't come from individual achievement. You're assumed to be a good performer, working hard to do great things. Salary (above market) accounts for that already. You get a better salary by taking a mentorship role. (I'm bringing in what the guild culture has.) If you teach people, you're sacrificing individual achievement for the good of the group, and that deserves recognition. In other words, it's the silent multiplier contributions that often go unnoticed (they're not macroscopic achievements, but they make the organization symbiotic and great) that get you a salary-level bump.
Rewards-for-mentoring seems kind-of like the academic model, or at least what the academic model at its best is trying to be. I'd agree that it has its good points if implemented well, but isn't the worry that it'll push ill-suited people into the mentoring roles because it's the only way to get ahead?
There's also the age-old question of how you assess, or even define, quality of mentorship.
If we're insistent on matching compensation to performance on a year-by-year basis, then we're going to struggle with transparent salaries, because it means that performance evaluations are public (and can be questioned) and, to be quite frank, that means we (as leaders) make high-stakes, not-easily-reversed decisions on imperfect information, and that's bound to piss people off.
I'd argue that the problem there is with the performance evaluation process. If it's broken in this way, then transparency will highlight that (and hopefully force you to fix it). If the evaluation process is fair and agreed to be fair, then that should not be a problem.
For example, nobody has a problem with a sales girl earning a commission on a sale she made, as per the agreed commission system. That's an entirely fair way to reward objectively measurable performance.
In other words, fix the performance evaluation system to be itself objective and transparent, and transparency works.
[+] [-] swombat|13 years ago|reply
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. I think the benefits of having an open, trusting, transparent culture far outweigh any benefits a single individual can bring to the company. Someone who's willing to damage the culture of the company for their individual benefit is probably not someone I want in this company.
What are those cultural benefits? Well, for example, because we are transparent all the way through, this is also reflected in the very open and relaxed culture, and it then is reflected onto our clients - after all, your employees will treat your clients in the same way you treat them. Most companies are "open" in quotes, but then when you get to sensitive information they closed up, which sets up an uneasy tension. We don't have any uneasy tensions at GrantTree. That's a huge benefit to me. I don't like dealing with uneasy tensions and lying to people and hiding stuff.
It's important to combine transparent salaries with transparent ways for people to increase those salaries, in my opinion. If you don't, people will feel stuck (transparently so). But if you do, people will feel that there is a known path for them to increase their pay and they'll work on that path rather than try to ingratiate themselves to get a pay raise in private.
Any further questions about this - feel free to ask. I'll do my best to respond.
PS: If you're in London and looking for a client management, sales or office manager/admin/support role, or if you know someone who is, we're hiring!
Client Manager (x2): http://blog.granttree.co.uk/post/45842335082/join-us-at-gran...
Office Manager/Admin/Support (I really don't know what to call that role): http://blog.granttree.co.uk/post/43396425717/come-work-with-...
Sales: http://blog.granttree.co.uk/post/38246842231/join-granttrees...
[+] [-] UnoriginalGuy|13 years ago|reply
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?
[+] [-] MetaCosm|13 years ago|reply
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?
[+] [-] rational_indian|13 years ago|reply
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?
[+] [-] francesca|13 years ago|reply
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.
[+] [-] Bjoern|13 years ago|reply
[+] [-] snomad|13 years ago|reply
Overall, I would say this has not been a bad thing for us employees. 1. Transparent government is a good thing. 2. I am very sympathetic to a number of people who receive less base compensation then they would in the private sector with similar responsibilities. 3. It shows the importance of career path as there are bands per department (e.g. engineers in one range, computer people in a separate range).
Still, there are down sides. 1. The upper management has found ways to hide salary and compensation. 2. It does lead to some discontent when people are told their is no money for a raise, but person X manages to get one.
[+] [-] 18pfsmt|13 years ago|reply
[+] [-] lnanek2|13 years ago|reply
[+] [-] ajays|13 years ago|reply
[+] [-] drewcoo|13 years ago|reply
http://www.joelonsoftware.com/articles/fog0000000038.html
[+] [-] shanelja|13 years ago|reply
This is both a positive and a negative in a few ways:
A couple of positives:
Nobody else knows how much I earn, there isn't any envy for the people junior to me and it doesn't make them feel undervalued - as someone who used to work for less than minimum wage, I know how demoralizing it can be to know how much less valuable to your employer you are than other people.
I don't get jealous of the people above me, I know they have nice cars and bigger houses, but I'm not constantly thinking about this figure and trying to work out why in the hell they are £30,000 per year better than me.
A few negtives:
Negotiating a higher wage is much more difficult, I don't know that A co-worker of equal level gets £2,500 more than me per year just because he negotiated, so I'm more likely to stick with the status quo.
It becomes taboo to speak openly about wages, the boss hides it from us, so we hide it from each other. Any questions to each other are effectively met with "none of your business."
Feeling uncomfortable talking to my employer about wages and increases in salary makes me more likely to leave a company - it's far easier to go to an interview and negotiate with a stranger you don't care about than potentially having hard feelings towards someone you have to work with daily if they refuse you a raise.
[+] [-] MetaCosm|13 years ago|reply
Seems to me that rejection is rejection either way (compared to another employee, another company or just in absolute terms).
[+] [-] adjwilli|13 years ago|reply
I think a better idea than going completely transparent is to calculate the group or division averages and publish that number. It offers some of the benefits of transparency while depersonalizing the controversial data. But of course that would only work in mid- to large-sized companies.
[+] [-] niggler|13 years ago|reply
I was in an awkward situation where I was paid much more than other people who joined at the same time as me. One day one of my coworkers found out (due to some accident in distributing stubs) and the relationship became really tense -- he thought he deserved more pay (even though he did half the work I did, he saw it as a measure of the value of his time)
[+] [-] chaghalibaghali|13 years ago|reply
[+] [-] Keyframe|13 years ago|reply
[+] [-] RyanZAG|13 years ago|reply
So transparent salary can be good if everything else is transparent also - otherwise it is very bad and leads to terrible politics.
[+] [-] MetaCosm|13 years ago|reply
[+] [-] 18pfsmt|13 years ago|reply
[+] [-] swombat|13 years ago|reply
You might argue that developers are not that closely connected to the company's income (I can see how that would apply). But in my experience, developers tend to care about earning enough money but they're not obsessed about making large commissions, like salespeople are. So if we had developers at GrantTree (we don't), I would simply offer them the choice to move into sales if they prefer the money to the benefits of being a developer (which is a hell of a lot less stressful most of the time, let's face it).
Sure, that means that you'll need to find a new developer to replace them if they succeed in making the shift, but on the good side, you'll have gained a good, highly technical salesperson (worth their weight in gold), and if they weren't happy being a developer, they'd probably have left eventually anyway.
[+] [-] NateDad|13 years ago|reply
[+] [-] damoncali|13 years ago|reply
It's an emotional distinction, so it could just be me.
[+] [-] richo|13 years ago|reply
I occasionally get curious for curiosities sake, but I've never really been bothered. So long as I make enough to support the lifestyle to which I've become accustomed the fact thtat I probably won't be buying a yacht any time soon doesn't really bother me.
[+] [-] chmullig|13 years ago|reply
I never found it too upsetting, except as additional evidence for why people I thought were incompetent should go.
[+] [-] meerita|13 years ago|reply
[+] [-] michaelochurch|13 years ago|reply
The issue with what we do in private-sector technology is that performance itself is opaque. If we're insistent on matching compensation to performance on a year-by-year basis, then we're going to struggle with transparent salaries, because it means that performance evaluations are public (and can be questioned) and, to be quite frank, that means we (as leaders) make high-stakes, not-easily-reversed decisions on imperfect information, and that's bound to piss people off.
I like transparent compensation, but there are issues to be addressed.
Fully opaque salaries "work" in a way, but it's goddamn unstable. People talk, and in fact policies that prevent them from disclosing salary are can't legally be enforced (anti-unionbusting provision). Soon, people discover all the things that happened because they were expedient, but are unfair-- the guy earning $185k for $120k work because he was plucked from Goldman Sachs. As soon as one person starts talking, the whole edifice comes down.
To make it more interesting, companies that try to enforce a pay meritocracy get hit in a different way. Most technology companies have such a rubric, where each level and job-description has a tight band, but have an informal and semi-secret "High Compensation Program" for people they take out of Wall Street, in order to get their pay back to a comfortable level within 1-2 years. I'll admit that I've exploited such programs, but they are actually more unfair, because they mean that not only does your Wall Street leverage get you a higher salary, but it also gets you faster career progress. Instead of paying you more than your performance merits, they make you into a high performer with fast promotions and plum projects. Great work if you can get it.
There's no easy way to solve this problem. However, I do think that transparency is a fundamentally good thing.
Now, here's a radical idea. Readers of my blog have noticed that I've been delving into the problems of organizations and concluded that there are 4 organizational cultures. The bad ones are the rank (lawful evil / authoritarian) and tough (chaotic evil / kill-or-be-eaten) cultures that comprise most corporate hellholes. The good ones are the guild (lawful good / superior-as-mentor) and self-executive (chaotic good / open-allocation) cultures. The deep issue is that neither the guild or self-executive culture is very stable, especially amid growth; some stronger alloy of the two is needed.
So, here's a radical idea I'd like to try. Compensation is fully transparent. Salary and every bonus is visible. Exceptional individual performance (especially if sacrificial but important) gets a bonus, with heavy input from the group that the achievement merits it. It's not the 20% year-end bonus that everyone gets. This is possibly 50-500+ percent of salary. Classic self-executive reward structure. That should not be expected by anyone. It should be rare and it's not a ding if you never get one.
Salary, on the other hand, is generous but doesn't come from individual achievement. You're assumed to be a good performer, working hard to do great things. Salary (above market) accounts for that already. You get a better salary by taking a mentorship role. (I'm bringing in what the guild culture has.) If you teach people, you're sacrificing individual achievement for the good of the group, and that deserves recognition. In other words, it's the silent multiplier contributions that often go unnoticed (they're not macroscopic achievements, but they make the organization symbiotic and great) that get you a salary-level bump.
That's the model I'd try if I were in charge.
[+] [-] dasmoth|13 years ago|reply
There's also the age-old question of how you assess, or even define, quality of mentorship.
[+] [-] swombat|13 years ago|reply
I'd argue that the problem there is with the performance evaluation process. If it's broken in this way, then transparency will highlight that (and hopefully force you to fix it). If the evaluation process is fair and agreed to be fair, then that should not be a problem.
For example, nobody has a problem with a sales girl earning a commission on a sale she made, as per the agreed commission system. That's an entirely fair way to reward objectively measurable performance.
In other words, fix the performance evaluation system to be itself objective and transparent, and transparency works.
[+] [-] adrian_pop|13 years ago|reply
[+] [-] psycr|13 years ago|reply
[+] [-] richo|13 years ago|reply