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Open Salaries: Outcomes

blog.lunarlogic.io

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Re: Open Salaries: Outcomes

#161

Post by Spooky23 »

scarmig wrote: post #75

Hmm. My experience tells me that a lot of this depends on the details of the team, and that there isn't a right-for-everyone policy. My story: I worked for a company that paid a bit below market salaries, for the SF Bay Area. I was on a team with two more junior engineers. At one point one disclosed to me that they felt underpaid. That led to a salary discussion where I explained that the company habitually underpaid…

I had a similar issue back in 2000. I was a new grad making the princely sum of $50k as a DBA. The woman who trained me and was incredibly capable made $27k -- literally less than she would make running a Gap.

It got out, people got pissed, which they should have been.

Re: Open Salaries: Outcomes

#162

Post by Retra »

jjnoakes wrote: post #132
hx87 wrote: post #82

Earlier quoted context omitted.

Exactly--open salaries might cause some companies to crash and burn, but these are companies that /should/ crash and burn.

I'm not arguing one way or the other about open salaries, but should a company really crash and burn for hiring someone who was willing to work for some price $X, even if it is lower than their peer? I mean the person did accept the job knowing $X, right?

If that were true, these companies would have no reason to fear opening up. After all, each of their employees made conscious decisions to be underpaid, so why would they leave?

Re: Open Salaries: Outcomes

#163

Post by throwaway4job »

pcsanwald wrote: post #121
scarmig wrote: post #75

Hmm. My experience tells me that a lot of this depends on the details of the team, and that there isn't a right-for-everyone policy. My story: I worked for a company that paid a bit below market salaries, for the SF Bay Area. I was on a team with two more junior engineers. At one point one disclosed to me that they felt underpaid. That led to a salary discussion where I explained that the company habitually underpaid…

As a manager, I've always felt that I have zero incentive to pay anyone under a fair market rate. I also have always managed salaries in such a way so that if we had open salaries, there wouldn't be any surprises and no one would feel they weren't being paid fairly. Most people I know in similar roles to mine act in a similar way. So I'm not so sure that most companies are really out there trying to underpay their em…

I don't try to underpay employees, ever. I try to make sure I never lose an team member because of a dumb comp issue.

However, open salaries would be problematic for me, because I've made some bad bets on new hires who are overpaid compared to what they deliver, but where it's not reasonable to fire them either. Imagine, for a moment, a team with 100 engineers, 96 of whom I think are paid fairly. But 4 of them are, in my opinion, overpaid by 25% or 30%.

I could fire those four, but that would cost me more than freezing their pay until they level up, or a lot of time passes. so instead, I keep them on, and hope their peers don't find out what they make, because they might come to the wrong conclusion.

Re: Open Salaries: Outcomes

#164

Post by st3v3r »

brianwawok wrote: post #77
hx87 wrote: post #76

Earlier quoted context omitted.

> Can usually get close to ranges if you ask a few coworker friends and/or interview around. Isn't that transparency, although in a very biased and limited form? Why would having more transparency reduce your leverage? It's easier to play the right cards when you know what cards are in play.

> Why would having more transparency reduce your leverage? Because of jealousy. There have to be a good 10-20 software companies with this Open Salary thing. From them, find one where for two people with the same # of years of experience, person A makes 2x what person B makes. From what I see, they all more or less settle on a (base pay) + (# of years * multiplier) + (maybe a location bonus) = Salary. I don't see var…

Basically, you're arguing that it's fine for companies to undercut their employees?

Re: Open Salaries: Outcomes

#165

Post by aomurphy »

davidgrenier wrote: post #2

I'd like to get push-back to the idea of everyone earning the same salary. Why wouldn't it work from some people who seem to have some experience like you have?

The situation for salarymen of the same year in big corps. at Japan is kind of similar. Wages are only from tenure, so two people who have been at the a corp. for 10 years have the same salary, even if one's a total duffer and the other is super important for the company. The reasons for this are historical, but don't really matter to this discussion. Almost everyone at these big co.s are hired right out of college in yearly "classes" and then stay their until retirement (ideally, obviously things are more complicated). The system isn't as strong today, so I'm describing something that existed more in the '80s.

What end's up happening is people in the same year are sorted by many other things. Better more interesting tasks are given to higher status workers, they avoid more grunt work, get nice perks (at top levels, things like a company car, etc.), and more respect.

It's hard to separate the effects of this on the company from all the other things Japanese companies do which are different from USA/Europe. But you might look into that.

Re: Open Salaries: Outcomes

#166

Post by ryandrake »

sheepmullet wrote: post #153
morgante wrote: post #144

Earlier quoted context omitted.

I agree with your anecdotes, but I think it's not because tech is less transparent but because most developers have no mind for career or salary optimization and treat their jobs like games rather than business propositions.

I totally agree. I think we are just using the term transparent differently. Telling people to go on a random walk for a few years and maybe they will move from mid to senior is the kind of transparency you get in tech. Real transparency would be: If you deliver project X and can demonstrate you got Joe and Raj up to speed on Y then we will promote you/increase your salary/give you a big bonus/put you on the project…

I agree with you too. I've never seen a job in tech where it was clear what it took to get to the next level (either salary-wise, responsibility-wise, move-into-management-wise, etc.). It's always hand-wavey "do better and who knows!" or "you'll be senior engineer after a few years!" type guidance. Sometimes I'm jealous of folks like salespeople who have clear metrics. Pull in $X in sales and your bonus is $Y. Bam! That would be awesome.

Re: Open Salaries: Outcomes

#167

Post by ryandrake »

michaelt wrote: post #149
hx87 wrote: post #76

Earlier quoted context omitted.

> Can usually get close to ranges if you ask a few coworker friends and/or interview around. Isn't that transparency, although in a very biased and limited form? Why would having more transparency reduce your leverage? It's easier to play the right cards when you know what cards are in play.

Why would having more transparency reduce your leverage? You: "I've gone above and beyond, and produced $X of value. I'd like a raise of $0.1X please" Boss: "If I did that, I'd have to give your 20 peers the same raise. You'll need to produce at least $20X value if you want a raise of $0.1X. I can give you a raise of $0.005X if you like"

I think a few people in this thread seem to be confusing salary transparency with "everyone makes the same salary". Don't think anyone is arguing for the latter.

Re: Open Salaries: Outcomes

#168

Post by ryandrake »

sheepmullet wrote: post #156
ryandrake wrote: post #137

Earlier quoted context omitted.

Currently "salary negotiation skill" is one of the primary drivers of one's salary, whether or not negotiation is a necessary skill for the actual job. In other words, you end up rewarding people who are good negotiators, not necessarily people who are good at their job. Of course you may coincidentally reward people good at their jobs if they happen to also be good at negotiating. Give that up, and people who are go…

In practice people who are good at negotiating will just negotiate a different title. It happens all the time in tech. Think of all the useless architects on much higher salaries. As an ex-manager if I wanted to hire a mid level dev who was too expensive I would just hire them as a senior dev. Edit: or even worse you lock people in based upon a rigid system like years of experience and end up like teaching where an a…

Ideally, we could have a magical box that you could feed the sum of all of an employee's achievements and out would pop their objectively-determined market-competitive title and salary. Things like negotiation and seniority and popularity contests and office politics and whether your manager likes you would have nothing to do with it. I'll concede we don't have such a box, so companies have to make due with a combination of these other imperfect systems. I argue that "individual negotiation skill" is a pretty terrible choice among those systems--unless your job role actually involves negotiation.

Re: Open Salaries: Outcomes

#169

Post by Tsagadai »

moduspwnens14 wrote: post #94
ryandrake wrote: post #43

Earlier quoted context omitted.

I didn't down vote, but the comment would be better if it were expanded with some details about why he thinks people who are good at their jobs should avoid open salary workplaces. I would think nearly all employees benefit from open salaries. For most companies, the salary information asymmetry is an effective way to keep the salaries of high performers DOWN. If you don't know that the mediocre guy who sits next to…

> I didn't down vote, but the comment would be better if it were expanded with some details about why he thinks people who are good at their jobs should avoid open salary workplaces. I've tried a handful of different ways to explain this (before backspacing out this comment box and trying again), but here's the best I can come up with: You always have the ability to negotiate for higher pay. If you've spent much of y…

This is my experience too. This sort of open company (from appearances in the original article) is pushing the salary negotiation as part of broader openness. Once you have buy in with the broader financials the negotiation can take place within a consensus and many of the arguments about what someone personally believes can be brushed aside by the majority views and the actual financials. From my experience, people who really deliver things end up reaping a lot more because they can argue from what they are actually worth on the bottom line and their value as multipliers.

Re: Open Salaries: Outcomes

#170

Post by user5994461 »

Retra wrote: post #162
jjnoakes wrote: post #132

Earlier quoted context omitted.

I'm not arguing one way or the other about open salaries, but should a company really crash and burn for hiring someone who was willing to work for some price $X, even if it is lower than their peer? I mean the person did accept the job knowing $X, right?

If that were true, these companies would have no reason to fear opening up. After all, each of their employees made conscious decisions to be underpaid, so why would they leave?

No they didn't. Most likely their employees have no clue what they could get elsewhere, or they better take that job here first than wait 2 months for another offer elsewhere, or they needed to be in city X before moving to a better company, or...

Random number: 50% of employees consider their employment as a stepping stone.

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