7 ms·

Let's say I'm a competitor, and I find that Niel (randomly picked) is someone I want to hire. All else being equal, I offer him $100k (website says he's making

Let's say I'm a competitor, and I find that Niel (randomly picked) is someone I want to hire. All else being equal, I offer him $100k (website says he's making $88k). He comes to his boss to say "I like it here, can you match it?" 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.

ricardobeat 13y ago
"All else being equal" is a huge assumption. Will your company offer the same environment, flexibility, openness, remote work? You should first assume that Buffer keeps their employees very happy to be able to openly publish their salaries.
- JonFish85 13y ago
  That's great, but what if Niel has a kid? Suddenly priorities are shuffled in a big way. Maybe he needs a 5% raise to afford <whatever it is that the kid needs>? Is it worth it to the company to lose the employee over 5% of salary?
  - jasonwocky 13y ago
    I think the point of the transparency is that they'd discuss a situation like this as a company.
kapilkale 13y ago
Equity is still off the table.
- btbuildem 13y ago
  Yes because that works out profitably for more than 0.001% of participants.
JonFish85 13y ago
To add on top of that, who says that this kind of transparency breeds trust? Transparency is great in some areas, terrible in others. Take away bathroom stalls to find an area where this isn't as true (extreme example). 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.
- owenmarshall 13y ago
  >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.
  - warmfuzzykitten 13y ago
    How did your coworker _feel_ when he got that information? Was he happier?
  - michaelt 13y ago
    If I am one on a team of 20 engineers and I want an extra $10,000 p.a. for all my colleagues, I need to persuade the company to spend $200,000 p.a. 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.
pekk 13y ago
I would assume your real reason for objecting is that you employ people and like the information asymmetry that lets you pay someone less than they could get
- JonFish85 13y ago
  Another way would be to look at it from the perspective that I don't want to be backed into a corner. One of the things that I hated about working at a big company was the "compensation matrix"--you plug your factors into a matrix and the formula told you what you were worth. To a company, some people are worth more than others: "work ethic" is a tough one to plug into a matrix. 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)...
blah314 13y ago
You know, you're making a good case for techies publishing their current salary/day rate. In a sellers' market disclosure should drive prices up.
- minimaxir 13y ago
  That would only work if everyone discloses. Prisoner's dilemma.
  - blah314 13y ago
    s/everyone/a critical mass/
rcoder 13y ago
Three things: 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.
- JonFish85 13y ago
  >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. 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.
- angrybits 13y ago
  I don't disclose current comp unless/until it benefits me in the negotiations.
- CodeMage 13y ago
  > 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. "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.
DominikR 13y ago
> Let's say I'm a competitor, and I find that Niel (randomly picked) is someone I want to hire. All else being equal, I offer him $100k (website says he's making $88k). He comes to his boss to say "I like it here, can you match it? 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?
- kenrikm 13y ago
  Why is a Senior iOS engineer (Andy) on a "Intermediate: 1.1X" multiplier? - you can't be Senior and be intermediate in my book. Seems he needs his multiplier upped to the proper level. $107k is low for a iOS Dev in the Bay Area.
  - philsnow 13y ago
    Could be seniority relates to breadth and tenure of experience whereas experience is related to skill at the particular position. 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.
  - brandoncapecci 13y ago
    That's the first thing I noticed too. Senior iOS Dev making 1k more than a CHO? Only their employees know the culture and value everyone provides but that sort of thing would make me uncomfortable.
vladimirralev 13y ago
This matrix makes sense if you hire your team to be of roughly equal performers (within the seniority range) who value honesty. I doubt they will ever hire a 200K person, because they made a business decision that they don't need one. Even if they need one, they can always review the matrix and add flexibility. It takes a specific approach to hiring when using this structure. 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.
pbreit 13y ago
I don't really care for it myself but I think one thing is that they are creating a culture that is disinclined to acting as you describe (ie, salary pumping).
scythe 13y ago
>What if I have a very specialized skill that doesn't fit nicely into your matrix? 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. [1]: http://www.imdb.com/title/tt2207833/ http://www.imdb.com/title/tt2207833/
- kazagistar 13y ago
  Dunno, if person A goes to gets a PHD in distributed systems and spends 40 hours a week furthering their knowledge of computing topics, while person B spends 6 years after university uninstalling viruses from windows computers, and spends their time after work watching cartoons, it seems very plausible there would be a significant difference in their worth to a company due to a significant difference in skills, even if they are both hired on as "developers".
mathattack 13y ago
Let's say I'm a competitor, and I find that Niel (randomly picked) is someone I want to hire. All else being equal, I offer him $100k (website says he's making $88k). He comes to his boss to say "I like it here, can you match it?" 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.
wpietri 13y ago
As a boss I'd love this. 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.
- umsm 13y ago
  I don't think that many bosses think like that. What if the company is not that profitable, can you still stay competitive? Are you willing to risk the future of the company?
  - wpietri 13y ago
    You're giving me a choice between risking the company's failure and rooking some of the employees out of pay they could get if they were more self-serving? 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.
dllthomas 13y ago
A possible approach by the boss would be to 1) see if there is flexibility to provide more within the current system (maybe Niel is more "senior" than we had recognized?), and 2) see about tweaking the formulae so everyone (or at least everyone with overlap with Niel) gets more. You may not be able to make up the whole difference, but you might not have to, and I expect very different social results than "we're paying him more to stay". I've no particular confidence this would work well, but it seems a consistent approach that has some potential.
manicbovine 13y ago
When you run a company, you just assume that your competitors know the pay structure. It's trivially easy information to discover (through interviews).

ricardobeat 13y ago

"All else being equal" is a huge assumption. Will your company offer the same environment, flexibility, openness, remote work? You should first assume that Buffer keeps their employees very happy to be able to openly publish their salaries.

JonFish85 13y ago
That's great, but what if Niel has a kid? Suddenly priorities are shuffled in a big way. Maybe he needs a 5% raise to afford <whatever it is that the kid needs>? Is it worth it to the company to lose the employee over 5% of salary?
- jasonwocky 13y ago
  I think the point of the transparency is that they'd discuss a situation like this as a company.

kapilkale 13y ago

Equity is still off the table.

btbuildem 13y ago
Yes because that works out profitably for more than 0.001% of participants.

JonFish85 13y ago

To add on top of that, who says that this kind of transparency breeds trust? Transparency is great in some areas, terrible in others. Take away bathroom stalls to find an area where this isn't as true (extreme example). 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.

owenmarshall 13y ago
>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.
- warmfuzzykitten 13y ago
  How did your coworker _feel_ when he got that information? Was he happier?
- michaelt 13y ago
  If I am one on a team of 20 engineers and I want an extra $10,000 p.a. for all my colleagues, I need to persuade the company to spend $200,000 p.a. 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.

pekk 13y ago

I would assume your real reason for objecting is that you employ people and like the information asymmetry that lets you pay someone less than they could get

JonFish85 13y ago
Another way would be to look at it from the perspective that I don't want to be backed into a corner. One of the things that I hated about working at a big company was the "compensation matrix"--you plug your factors into a matrix and the formula told you what you were worth. To a company, some people are worth more than others: "work ethic" is a tough one to plug into a matrix. 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)...

blah314 13y ago

You know, you're making a good case for techies publishing their current salary/day rate. In a sellers' market disclosure should drive prices up.

minimaxir 13y ago
That would only work if everyone discloses. Prisoner's dilemma.
- blah314 13y ago
  s/everyone/a critical mass/

rcoder 13y ago

Three things: 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.

JonFish85 13y ago
>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. 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.
angrybits 13y ago
I don't disclose current comp unless/until it benefits me in the negotiations.
CodeMage 13y ago
> 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. "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.

DominikR 13y ago

> Let's say I'm a competitor, and I find that Niel (randomly picked) is someone I want to hire. All else being equal, I offer him $100k (website says he's making $88k). He comes to his boss to say "I like it here, can you match it? 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?

kenrikm 13y ago
Why is a Senior iOS engineer (Andy) on a "Intermediate: 1.1X" multiplier? - you can't be Senior and be intermediate in my book. Seems he needs his multiplier upped to the proper level. $107k is low for a iOS Dev in the Bay Area.
- philsnow 13y ago
  Could be seniority relates to breadth and tenure of experience whereas experience is related to skill at the particular position. 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.
- brandoncapecci 13y ago
  That's the first thing I noticed too. Senior iOS Dev making 1k more than a CHO? Only their employees know the culture and value everyone provides but that sort of thing would make me uncomfortable.

vladimirralev 13y ago

This matrix makes sense if you hire your team to be of roughly equal performers (within the seniority range) who value honesty. I doubt they will ever hire a 200K person, because they made a business decision that they don't need one. Even if they need one, they can always review the matrix and add flexibility. It takes a specific approach to hiring when using this structure. 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.

pbreit 13y ago

I don't really care for it myself but I think one thing is that they are creating a culture that is disinclined to acting as you describe (ie, salary pumping).

scythe 13y ago

>What if I have a very specialized skill that doesn't fit nicely into your matrix? 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. [1]: http://www.imdb.com/title/tt2207833/ http://www.imdb.com/title/tt2207833/

kazagistar 13y ago
Dunno, if person A goes to gets a PHD in distributed systems and spends 40 hours a week furthering their knowledge of computing topics, while person B spends 6 years after university uninstalling viruses from windows computers, and spends their time after work watching cartoons, it seems very plausible there would be a significant difference in their worth to a company due to a significant difference in skills, even if they are both hired on as "developers".

mathattack 13y ago

Let's say I'm a competitor, and I find that Niel (randomly picked) is someone I want to hire. All else being equal, I offer him $100k (website says he's making $88k). He comes to his boss to say "I like it here, can you match it?" 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.

wpietri 13y ago

As a boss I'd love this. 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.

umsm 13y ago
I don't think that many bosses think like that. What if the company is not that profitable, can you still stay competitive? Are you willing to risk the future of the company?
- wpietri 13y ago
  You're giving me a choice between risking the company's failure and rooking some of the employees out of pay they could get if they were more self-serving? 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.

dllthomas 13y ago

A possible approach by the boss would be to 1) see if there is flexibility to provide more within the current system (maybe Niel is more "senior" than we had recognized?), and 2) see about tweaking the formulae so everyone (or at least everyone with overlap with Niel) gets more. You may not be able to make up the whole difference, but you might not have to, and I expect very different social results than "we're paying him more to stay". I've no particular confidence this would work well, but it seems a consistent approach that has some potential.

manicbovine 13y ago

When you run a company, you just assume that your competitors know the pay structure. It's trivially easy information to discover (through interviews).