Balsamiq : Salary Policy

http://blogs.balsamiq.com/team/2011/09/12/salary/

by jagira • 15 years ago

122 134 15 years ago

blogs.balsamiq.com

latch3• 15 years ago

I've seen a handful of companies with remote employees adopt a different policy. Essentially, they pay you an average salary by hot-market standards and don't adjust downwards. So, if you live in an expensive city (SF, NY, TK, LO) you are paid a fair market wage in those cities. If you live in a cheaper area, than lucky you.

Personally, I prefer this. Maybe because I tend to like smaller and less hip cities. But it keeps things simpler for the company, and it means that, as an employee, you have a pretty significant say in, what we can call, your net income.

balsamiq11• 15 years ago

I don't think that's fair, not everyone can move easily (family etc).

latch3• 15 years ago

I think in 99% of the cases you are mistaken "can" with "want". That aside, whatever way you pick isn't going to be fair to one of the two groups...at least my way 1 group gets an advantage out of it (and the other group doesn't, out of choice (the vaste majority of the time)).

If an employee was to get rid of his/her car, would you reduce his/her salary by $~1200/month because it isn't fair that he/she nets more money than the people who can't live without 2 cars?

corin_• 15 years ago

If the job requires that they be in a particular location, paying them based on that is fair, and very common. For example national services in the UK do that (such as post office), because if you're a postman/nurse/whatever in one place, you can't chose to live anywhere.

However if you don't care where they live, they should all be paid equally - a person living in Thailand doesn't deserve less money than a person living in NYC, and just because they don't need as much money, doesn't mean they don't deserve it.

buff-a2• 15 years ago

How do you deal with someone who says they live in Manhattan, but actually lives in Mumbai?

cageface5• 15 years ago

It seems unfair to me that I might be paid less because I've opted to live in a cheaper area. Why should I have to subsidize my teammate's expensive, hip, urban NYC lifestyle if I've decided to live somewhere cheap and save money for early retirement, starting my own business, supporting a larger family etc?

tomh-• 15 years ago

So how is this going to work? Pick the highest salary found in the area and add X, where X is a little? I never found the numbers from sites such as 'salary.com' or 'glassdoor' to be very reliable as it always 'depends'.

balsamiq11• 15 years ago

It is indeed a bit of a fuzzy process. We look at stuff together (ranges from salary.com, other similar job postings), then we agree on what's "a little better than the average". Maybe it means picking 3/4 point in the range...in general, I have found that people have a number in mind that would make them happy...it's a matter of finding it out and making sure it fits within the policy...it's easier to do than to explain. :) So far, those one-on-one where we decide the new level have been fairly easy meetings.

jaryd5• 15 years ago

Has this resulted in anyone taking a pay cut yet? Does everyone know what everyone else gets paid (including management)?

mbesto• 15 years ago

Just read Dan Pink's Drive where this idea comes to fruition and it makes complete sense (especially in my own life). From Drive[1]:

Instead of paying employees the wages that supply and demand would have predicted, they gave their workers a little more. It wasn't because they were stupid. It was because they were savvy. Paying great people a little more than the market demands, Akerlof and Yellen found, could attract better talent, reduce turnover and boost productivity and morale.

Highly recommend reading Pink's book.

[1] http://www.amazon.com/Drive-Surprising-Truth-About-Motivates...

StavrosK4• 15 years ago

So an employee that lives in X makes less than an employee who lives in Y for the same amount of work... I don't see how that's fair, since I would be getting paid $1000/mo by those standards. Conversely, I would get a raise of an order of magnitude if I wanted to up and move to, say, New York.

danmaz742• 15 years ago

Look at it the other way around. If where X lives a decent home costs you $1,000/mo, and where Y lives the equivalent home costs $2,000/mo, how fair would it be to get the same wage?

StavrosK4• 15 years ago

Completely fair? They're getting paid to work, not to live in expensive houses.

kamaal9• 15 years ago

What should the company be bothered about what and where I'm spending my money. If I spend more will my work become more valuable to the company or vice versa?

On the similar lines I don't understand the concept of companies asking people about their compensation in the previous company. You are supposed to pay for my work, how does my compensation even matter here?

If my previous compensation was high will my work in the current company become more valuable or earn higher profits?

roel_v• 15 years ago

But of course, and that was handily left out of the post, in Italy developer don't really have all that much options, so the whole discussion is moot anyway...

ekidd4• 15 years ago

A common trap: We want amazing programmers, and we pay them slightly better than average.

I'm good at what I do, and I aim for more than "a little better than someone with your same job in your geographical area."

Some of the most amazing consultants I know charge far above their local market average. And I'm always happy to write them checks, because they're amazing programmers, and they would be a steal at 5 times the typical market rate.

balsamiq11• 15 years ago

With our formula, the job category to compare these people with would be "amazing consultants", not average consultant. In other words, these people are very senior. No?

mseebach• 15 years ago

Amazing people don't travel in homogeneous pools whose salaries can be averaged out meaningfully. Finding these people is hard enough, finding out what they would get offered down the street is harder yet.

kamaal9• 15 years ago

What has being senior got to do with quality of work delivered? Sure experience counts for some thing. But measuring someone's worth by looking number of years on the resume seems to be a bad metric for hiring.

I generally put in twice the effort as a my boss on almost daily basis, I expect to be what he is now in half the time he took to be.

Why not just flatly pay them on the amount of work done, regardless where(location) they work.

rscale2• 15 years ago

Let's take this from the realm of the abstract to the concrete:

Let's imagine an absolutely top-notch consultant with excellent hard and soft skills that mesh nearly perfectly with your current and projected needs.

How much would you offer them if they lived in NYC, Detroit, or San Juan, PR?

ekidd4• 15 years ago

Seniority does not, in my experience, correlate with productivity. The programmer I most want to hire has the job title "intern", and he will be hired straight into a major tech company at a princely salary. He'll be worth it, too.

I've interviewed enough programmers to know that the average talent level is absurdly low. But there are amazing people out there, at every level of seniority, who do 5 times more work than average, and keep doing it.

If you pay only a "little bit" more than market rates, you'll lose these people late in the hiring process, when they take an offer for 40% more at another company.

nadam4• 15 years ago

Could you provide an example what such an amazing programmer knows? In my experience beyond a level employers cannot even measure your knowledge, because that would require them to be really good at what you know best. If you are an extremely good developer, you can get a job at Google or at a similar company, and you will receive slightly better than average compensation. But getting 5x market rate? Being a good programmer is not enough for that I think, no matter how good you are (unless you built something truly special, like solving NP problems in P.:)). You have to build up your personal 'brand' for that I am afraid.

Edit: I am really curious who are those extremely smart programmers.

Guys on the top of this list?

http://community.topcoder.com/tc?module=AlgoRank

Or guys who were at the top of the Netflix prize top scores list?

Those are some truly gifted guys (one in a million caliber), but even most of them don't earn 5x market rate.

secoif2• 15 years ago

You don't need provide 5x to the value, you just need to convince the employer you are.

Also, much of a programmer's worth pays off over time: specifically how easy is it to maintain their code? Writing truly maintainable code is HARD and difficult to quantify.

ekidd4• 15 years ago

When I'm interviewing programmers, I would define "amazing programmer" as a combination of 3 things:

1) Talented: Can they code well, even when things get tricky? This loosely correlates with things like TopCoder rank, but it leans more towards software engineering and debugging skills.

2) Driven: Are they relentlessly productive, even without supervision?

3) Solves the right problem: If there's a solution which provides 80% of the benefits for 20% of the cost, do they find it? Do they also know when it's time to turn a nasty ball of hacks into a rigorous model?

If you have these 3 things, then you will easily create 5 times more value than the average programmer. Note that you won't necessary get paid 5 times more, because that also depends on your negotiating skills, your marketing ability, and how much money your clients or employers have.

phamilton2• 15 years ago

Knowing things isn't really the tip off of a good programmer.

Put them in a foreign environment, with a foreign language/api/framework/application/etc and within a short learning curve they will find solutions to problems 1) you didn't know you had, or 2) you had long since given up on finding a better solution to.

If you can replace the programmer with books (and time to read them), they can't be that valuable. You don't pay one person 5 times market rate if 5 people at market rate can do their job. You pay someone for the concentration of talent.

theycallhimtom• 15 years ago

I'm 13th on the TopCoder list (1st in US). I'm not sure that the list matters as much as you think. I can solve algorithms problems (those similar to what you see on TC) very quickly, but they just don't come up that frequently at my job. That skill does make job interviews a joke.

The main difference is that I have spent a lot of time working on writing code quickly and correctly. Every time I competed in TC I would read the code of the best people and try to figure out why their code was so much simpler than mine. Now I think I can write clean code faster than most.

The downside is that I have spent a ton of time working on 50-200 line projects. Throw me into a 500k line code base and I'm no longer world class.

Getting to where I am is mostly a product of spending a ton of time in college practicing for programming contests. In college I saw a very strong correlation between time spent programming outside of class and programming skill.

tptacek• 15 years ago

Comparing consultant comp to full time salary is an apples/oranges comparison, as is the sort-of "second derivative" comparison of (a) how different consultants set their comp relative to each other and (b) how full time developers set their comp relative to each other.

The mechanics by which a consultants comp are set are just wildly different from how full time salary is worked out.

kingofspain• 15 years ago

The average wage where I live now is shockingly low - and that's after coming from a somewhat depressed former mill town. I moved here though because it's absolutely stunning and my life will be immeasurably better because of it (once I finish this damn never-ending contract and get some free time at least!).

I'd hate to have to take a giant pay cut just for wanting to actually enjoy my life. If anything my productivity and quality of work has gone up. Pay me less for that and I'm off!

zura3• 15 years ago

What about this situation:

X and Y are places with similar cost of living, but people in X have lower wages and they are used to live cheaper (i.e. they buy less goodies, etc..) than in Y.

In other words, maybe it would be better (more fair) to compare costs of living instead of average salaries?

balsamiq11• 15 years ago

I think that's too subjective. We look at average local salaries as a way to see "what does the local market say this job is worth right now?" - basically deferring the range to what the market decides is fair.

zura3• 15 years ago

On the other hand, you seem to use cost of living comparison for profit sharing.

Quote from: http://blogs.balsamiq.com/team/2011/09/12/profitsharing/

"9. then all weighed by the cost of living in each location: this is important because it's fair. The fact that we're using cost of living instead of average wages is even more fair (i.e. Italy has low wages relative to the cost of living)."

The last sentence, regarding Italy, corresponds to the situation I described. So, if it is fair for profit sharing, then it also seems logical to treat it as fair for salaries as well.

kamaal9• 15 years ago

I read this somewhere on HN a while back "Pay a man by the hour and he will put in as many hours as he can, Pay a man by the brick and he lay down as many bricks as he can".

I would go on to add and say, If you a pay people flatly some will work, some won't and rest will do mediocre. The guide to get work done is to drive the rewards in that direction.

I fail to understand what stops companies from paying people on the basis of work done, rather flatly or hours spent. Is it because it will set a dangerous precedent and that productive people will end up earning more than what you expect to pay?

I refuse to believe that people are not motivated by money or that money is somehow not a major motivating factor. All passion, determination et al management talks is OK. But I'm not happy earning less than what I'm supposed to. Just because I could it doesn't mean I should. I do more than everybody else back at work, so I obviously I deserve more.

The way salaries work is to get bulk of the work from a few. But then reward every body equally on a average basis. That to me seems like expecting a few to carry a burden of the whole lot. And has a strong stench of communism to it.

whatusername• 15 years ago

To quote from the article: "This is the base salary. To participate in the company's profits, we also have a generous profit sharing program as well."

wpietri3• 15 years ago

At least with software, productivity is very hard to measure without introducing perverse incentives. This is especially true at small or innovative companies, where people must be flexible.

Moreover, software is creative work, not brick-laying. There's a fair bit of evidence that incentive schemes harm that work. (See "Punished by Rewards" for details.)

I code because I love it. If it didn't pay, I'd be like my actor/musician friends and get a day job. So I just want my salary to be livable and fair. I don't really care about maximizing it.

kamaal9• 15 years ago

Yes, Even I love to code.

But just because true hearted altruistic people like you exist. It doesn't mean I must replicate the same. I'm motivated by many other factors apart from money. But just because that is the case, I feel no reason to settle down for less than what I deserve.

And just like you mentioned I want my salary to be just fair. Just pay me for my work. That's all I'm asking. And is that a unjust demand?

mattmanser• 15 years ago

The problem with this idea is that it's very easy to incentivize the wrong metric.

What are you going to do for a programmer?

Feature? Prepare for features that barely meet the spec and nothing else.

Lines of code? Prepare for massive code bloat.

And all of these will also mean no-one will bother with internal tools or any quality of life clean ups. Refactoring will be avoided. Helping other people will mean earning less money.

There's also research out there that shows this is a bad idea. This type of incentivization has negative effects on productivity in our type of work. People won't say no to more money, but it doesn't make them work better.

Your final paragraph highlights bad management, not communism. If you've a few stars and a lot of mediocre then your management has failed. Be it their hiring, their day-to-day management, their personal development of their staff, their lack of challenging work, poor planning, whatever it is it's not expecting a few to carry the burden, it's letting a few carry the burden because of bad management.

kamaal9• 15 years ago

I disagree here,

There is good enough metric for your 'work', its wealth generated at the end of it. Many even refer to it as value created. Again I know the next question you will ask is what if the person worked hard and still fail. Well that is not going to be often.

Team work is every body working to achieve something. One set of people making up for other peoples inefficiency isn't team work.

I am not telling people must be paid more money to motivate them, I am saying.. We must ask people to work more to earn more money. Which is perfectly acceptable. I don't know why I should earn equal to some guy sitting next when I do far more than what he does.

Again counter argument to that which people put is, that putting in extra effort is personal choice so it shouldn't be compared. Well in that case, the other argument is also valid. If some one chooses to be inefficient its his/her problem.

Duff5• 15 years ago

That concept just doesn't work for knowledge workers. Cash incentives for non-mechanical tasks have minimal value.

You need to pay people enough, but not too much. The rest is about having leadership in place that can create a good work environment.

If compensation was correlated to performance, industry would have figured out a way to pay for performance and let the people doing nothing go.

lutorm3• 15 years ago

Also frequently referenced on HN is the TED talk about how monetary rewards lowers performance in creative endeavours.

People in creative jobs are not simply monetary-maximizing machines. They will work hard if their work is interesting and rewarding in all kinds of non-monetary ways. (I also assume that what they think is that if you don't like the work, you'll leave and find one you like better, or that pays better. So you don't get people who don't like the work, don't do a good job, but will try to hang around as long as possible because it pays so well.)

Besides, I agree with the other posts that any practical scheme for paying programmers for performance will be subject to issues of "optimization by proxy". Just look at finance: there, where you'd think it would be easier than most other fields to measure "the wealth generated" by people, all that apparently happens is that you incentivize short-term gain at the cost of assuming huge long-term risks.

rscale2• 15 years ago

This policy rubs me the wrong way, because I believe in value-based pricing.

If I generate $1m of value for your company, I should be able to negotiate the capture of a reasonable chunk of that value. My decision to live in a high or low cost city doesn't change how much value I'm delivering, so it shouldn't have a meaningful effect on my price. Either I'm worth it, or I'm not.

balsamiq11• 15 years ago

Hi rscale, we have a profit sharing program in place as well. Also, if you're a super-senior person, that's who your base salary will be compared to. Also, you might get an extra performance-based bonus. Basically I consider the base salary to be just that...the base.

marklittlewood2• 15 years ago

Balsamiq and profit sharing. Should be read alongside Balsamiq on salary policy.

http://news.ycombinator.com/item?id=2986673

scottjad2• 15 years ago

Your profit sharing program does not answer rscale's question, it compounds it, since you also reduce profit sharing by cost of living.

biot• 15 years ago

Why not go further? Everyone submits their living expenses to the company including food, shelter, and so on. Limits are set on what is considered to be a reasonable expense. Above and beyond that, everyone gets the same base weekly stipend plus an additional 50% of the stipend, cost-of-living adjusted for their area. To further promote equality amongst employees, company robes can be distributed to everyone. Multiple employees living in the same city can move into the company commune to further enhance the brotherhood and keep everything fair.

Murkin2• 15 years ago

Enjoy it while it lasts. Sure its cool and fun while there is a small 'startup-minded' team, racking in huge bonuses.

But once you grow a bit, you will inevitably have employees take a look around and think:

  "Hey.. home come I am much better than these two guys around me, 
  and we all make the same money ?"

Socialism has been tried in many different forms and ways, sadly "equality between equals" is not a concept Humans are willing to accept too well.

balsamiq11• 15 years ago

Not everyone makes the same money. If you're better, you will be compared with more senior jobs (and I mean senior as "more capable", not with more years worked).

Murkin2• 15 years ago

So you basically have two people sitting in the same room:

  a) 45 year old veteran, 3 years in the company, titled "Software engineer II"
  b) 25 year old grad, 1 year in the company, titled "Software engineer V"

Sure its all open and nice, but don't you think (a) might be a bit.. disgruntled ?

jaryd5• 15 years ago

Balsamiq,

How does the open salary policy work? Are salaries posted on a big white-board? Does the open salary policy have an effect on employee behavior? In many cases people are reticent and fearful to talk about/compare their compensation. People tend to attribute their personal self-worth to their number and consequently hold on to it pretty tight. How did you guys get over this particular hurdle?

balsamiq11• 15 years ago

They are in a spreadsheet in a shared drive, along with all the rest of the stuff. What I have found is that because of our base salary policy, people don't really care about the hard numbers...they know that they are paid well and that their colleagues are paid well...at least that's from what I can see. One employee told me that they'll not look at the numbers because it makes them uncomfortable, and that's fine with me too.

jaryd5• 15 years ago

Ah -- so it's just the base salary in that spreadsheet? Why not share total compensation as well (including bonuses)?

wpietri3• 15 years ago

I think this policy could use something about fairness, too. Some great programmers don't care much about money and hate negotiating. You want to be sure they get paid as well as somebody who is as good but is greedier or more aggressive.

cageface5• 15 years ago

I didn't care much about money when I was younger. Now that I appreciate more how brutal this field is for older programmers and what it means to be older and less employable in a bad economy I'm much more aware of my running bank balance. I'm also more aware that I have a finite amount of mental energy for coding every day and if I'm selling it instead of building my own things I'm not willing to do it cheap.

marklittlewood2• 15 years ago

Great post Peldi.

Before people get too bogged down in just the salary piece of this puzzle, you should also read Peldi's comments on bonus: http://news.ycombinator.com/item?id=2986673

Balsamiq is a fairly unusual business and Peldi has grown something pretty extraordinary. This is a highly profitable business that has made a conscious decision to be great on its own terms, not on the terms that a Silicon Valley venture capital firm might impose on the business.

If you want some more background, go and watch this video of the talk Peldi gave at Business of Software last year. There is also a transcript you can speed read if you don't have an hour to spare.

http://blog.businessofsoftware.org/2011/08/do-worry-be-happy...

dmoney• 15 years ago

How do you do the profit sharing? Does everybody get the same percentage, or is it based on how "senior" they are?

balsamiq11• 15 years ago

http://blogs.balsamiq.com/team/2011/09/12/profitsharing/

flexd• 15 years ago

That is sort of a odd policy. I get the impression everyone works remotely from wherever they live (but I might be mistaken). For someone with a computer science background the salary here is like 80k - 100k USD. I don't know what people average in the US but it's certainly not the same across the globe. For bigger companies I can understand this might not be such a problem but for smaller ones the salary difference would make up a lot of money.

But I guess they stick to having people work remotely from within the US?

vacri• 15 years ago

I'm curious as to how this policy affects someone like me - the jack of all trades. I'm the guy who comes into a place wearing one hat, and for better or worse, ends up wearing four or more different hats in sometimes quite diverse positions. It's hard to figure out what salary I "should" get on the market because my position doesn't exist on the market.

jaryd5• 15 years ago

Could you identify people in your industry that perform a similar job to you? If you could select the comparison pool than I would think it would be more accurate/useful than, say, an aggregate based on simply job title.

three14• 15 years ago

I'm in a similar situation, and I can't. I sometimes do IT for a small Windows network and for Linux and the VPN that connects everyone to both. I program in C#, perl, Java, shell, and XSLT depending on which part of my job I'm doing, and some of my job is "software architecture" which other people actually program. My industry is a tiny niche, and generally hires programmers from outside it and trains them, so salaries aren't a function of the industry. How would I find a good comparison?

encoderer4• 15 years ago

Anybody in the United States may be interested to know that they are permitted by federal law to discuss their salaries with their co-workers.

The NLRB is known primarily as the board that governs unions and union organizing. Well, for many years they've considered employees discussing salary info as protected organizing activity. Any employee that experiences adverse action by an employer after discussing salary with a coworker should contact the NLRB. They will pursue the issue on the employees behalf.

This advice comes from my lawyer, but you should consult your own before you do anything. Also, my 0.02 is that as an employee, I feel I'm often at the higher or top end of my employers range, and despite the fact that I legally COULD, I don't really see any value in discussing my pay with a coworker.

asmosoinio• 15 years ago

> Also, my 0.02 is that as an employee, I feel I'm often at the higher or top end of my employers range

That's what you think, and that's why your employer also likes you to keep your mouth shut. Or?

(After all, more than 50% of people are above average drivers, or whatever the exact anecdote is...)

encoderer4• 15 years ago

While I appreciate your concern for my general welfare, you can see some write-ups about my negotiation experience in my comment history, and in a few instances where I've been privy to department payroll information, I've been at or near the top.

copper3• 15 years ago

> I feel I'm often at the higher or top end of my employers range, and despite the fact that I legally COULD, I don't really see any value in discussing my pay with a coworker.

Back in the day, I used to work for this place where, you've guessed it, according to the people who did my salary reviews, I was always close to the top end of my employers range. So, yeah, you can imagine how that worked out :)

While it's always possible to get a general impression of what a coworker earns (always assuming it's possible, or legal), it's no substitute for numbers.

Duff5• 15 years ago

When I went to buy a new car, the salesman said the "market for trade-ins was awful", and my car was worth like $8,000. Meanwhile, not 50 feet away, the same car with more miles was listed for $22,000.

The salesman fluff I heard is identical to the "you're near the top end of the range for this title" crap that you hear from HR. It's fluff, intended to make you suck it up and go away.

encoderer4• 15 years ago

See my reply below. But suffice to say, don't be so quick to apply your experience to others. My comfort that I'm either the highest or nearly the highest paid developer where I've worked isn't coming from some blind promise from HR.

blahedo2• 15 years ago

> despite the fact that I legally COULD, I don't really see any value in discussing my pay with a coworker.

It depends on your goals. If your main goal is negotiating more money for yourself, and it's true that you're already at the high end, then yes, not much motivation. If you're interested in seeing a more equitable distribution among your coworkers, letting them know your salary can help them negotiate a better salary.

Other reasons to publicise your salary include helping to recruit people to your field (if you're paid a lot) or debunking the idea that you're well-paid (if you're not).

For instance: I teach college, and I'm happy to do so, but I'm not in it for the money. I discovered that my students often think that us professors make a lot more than we actually do, and I decided to start telling them: in my seventh year as an assistant professor (in my previous job) I made $52k/yr, and was (I think) the highest-paid member of the junior faculty. Many of my students made more than that as starting salary. It was enough for me, but the students were shocked, and came out with a better understanding of where graduate school might lead them. Knowing my salary also helped some of my colleagues negotiate a better salary for themselves.

encoderer4• 15 years ago

The trouble is, if coworkers know you're paid more, it seldom engenders trust, appreciation and respect.

leon_2• 15 years ago

In a world of tele commuting it's pretty backward to base salaries on locations. If someone is great pay him what he is worth to you and not what he would get if he decided to go and work at the local cubicle farm.

I'm hoping for a future where you get paid what you are worth and can travel around the world working from wherever you want. A boss that says "Yeah, the beaches there are wonderful and people earn $5/month. So your new salary is $6" is a deal breaker in that dream ;)

jamii• 15 years ago

> I'm hoping for a future where you get paid what you are worth and can travel around the world working from wherever you want.

If you're a competent programmer, you're already living in that future. Remote work is pretty easy to get these days, especially if you freelance and do either web dev or iOS/android. I don't do either and I've still managed to live on three continents in the last year or so.

scottjad2• 15 years ago

Using location based salary comparison sites is broken if the job is for remote not onsite work.

If hackers in NYC are paid $150k, and Philly $80k, neither of those numbers matter. What you want is the going rate for remote-working English speaking US citizens in eastern time zone close to a major airport with the given skill set.

What this company is doing is like deciding how much to pay an employee based on whether or not they have a pool and tennis courts in their backyard, rather than based on supply and demand.

Note: Location still matters, which is why I mention timezone because depending on business, location/timezone of existing employees, and where HQ is located it may change the demand. Also since most remote workers travel to gettogethers occasionally I mentioned airport.

edw519• 15 years ago

everyone knows how much everyone else makes

This may work well when things are going well, but as soon as there are internal "issues", it is a recipe for disaster.

"Joe earns 25% more than me, but doesn't show up until 10:00, so why should I bust my ass coming in earlier."

"For what she earns, Shirley should be providing way better specs than this."

"Cut me a break. I spent 3 weeks overtime getting that thing done, and Fred gets all the credit (and money!)"

"I'm way better than Jim. Pay me as much or I quit."

"Jerry must have something on the boss to be paid that much for doing so little."

I could go on and on, but you get the idea...

Team building is tough enough. Making compensation public adds another layer of complexity. Now every internal concern is made more difficult because the dollars come into play. There is no argument or discussion where salary is off limits. Before long, that's what everyone will be thinking about when you really want them thinking about anything else.

Duff5• 15 years ago

People get over it.

I work for a public sector employer. My salary is fully searchable and posted on the local newspaper's website.

Unless your company is doing dumb things like discriminating against certain types of people, there aren't many surprises to be had. Frankly, working with a useless coworker is frustrating regardless of salary.

eli• 15 years ago

Yeah, but your employer probably has a pretty well defined process for setting salaries and giving raises, right? Perhaps it isn't a fair process, but at least consistent. Private companies aren't always like that.

pavlov• 15 years ago

Making compensation public adds another layer of complexity.

Doesn't hiding compensation also add layers of complexity? Not only does the boss need to dedicate energy to maintaining the secrecy, but she must also keep track of the possibility that the secrecy has been breached without her knowing (i.e. the scenario you describe is in effect but nobody can talk about it).

kamaal9• 15 years ago

To be frank hiding the compensation creates more complexity. It creates 'us' vs 'them' hidden internal rivalries.

No matter what, if you comparatively underpay a hardworking guy compared to some who is earning more and doing less. There is going to be huge friction, and salaries often leak out in some way or the other. And the good guy is either going to have his way or worst walk out.

Now please don't point me to some survey taken by some one in some corner of the world, where some group of people had bigger long term motivations when compared to immediate money and then declare tell that money doesn't matter.

Money is a huge motivating factor. Its strange that employers feel its unethical and unhealthy to compare salaries whereas at they same the keep comparing work all the time.

cageface5• 15 years ago

This information was leaked internally at a company I worked for years ago. It turned out there were some pretty wide discrepancies in salaries for people in similar positions. I suspect this is often the case at private companies and it definitely wasn't good for morale.

lojack2• 15 years ago

> "Cut me a break. I spent 3 weeks overtime getting that thing done, and Fred gets all the credit (and money!)"

http://blogs.balsamiq.com/team/2011/09/07/pace/

tl;dr Don't work overtime, work sustainably.

All your other issues are with differences in pay, which is exactly what the article is advocating against.

kamaal9• 15 years ago

Sorry to say, but I don't buy this thing.

Deadlines and goals are fatal to the success of any software project today. And that is so for a very simple reason, you have to always drive towards something under well defined clear timelines.

This is very essential for two reasons. The first being measurement and continuous improvement. The second being you must decide what is a acceptable time for something to get done, and stick to it and adjust pace accordingly(The definition of a deadline). Else all it leads to overly delayed projects.

I have worked in a similar set up you described for a year or so. Have never seen such clueless roaming about in my whole life. Last time I heard they are still developing. I have done more work in a month than what they have done in say half year.

The reason is simple, pace again has a metric - Its, how fast?

theBobMcCormick• 15 years ago

Salary information is never really secret, even if the official policy says it's secret. There's always salary information, often inaccurate information, percolating through the grapevine at every large organization.

I've never worked anywhere with an open salary policy, but my guess would be that, while it might be hard for some people to adjust to, in the long run it would remove a large source of internal politics.

notatoad• 15 years ago

all those sound like fairly valid concerns. if somebody isn't pulling their fair share, somebody should say something about it. if you actually should be making more than somebody else, you should be able to say something about it.

VladRussian• 15 years ago

i have no problem thinking all these thoughts even without [ or may be precisely because of not ] knowing other people's salaries :) Knowing other people's salaries would allow to stop my imagination run wild about their huge salaries (while i'm getting peanuts :) and may be turned my thoughts into useful way, like for example :

"Joe earns 25% less than me, yet shows up at 10:00 - 2 hours earlier than me - may be i should start busting my ass a little bit." ( and if he does happen to earn 25% more, than, well, nothing lost and changed :)

toyg3• 15 years ago

I'm amazed at some of the replies here. "He'd pay a better-than-average base salary -- THAT'S NOT ENOUGH!"

Guess what? Outside the Valley bubble, more often than not it IS quite enough.

usedtolurk• 15 years ago

Heheheh... all these comments just go to show that no one policy can be fair for everyone. :)

Balsamiq have a policy that aims at fairness, is transparent (and yet open for discussion!) and has a better-than-average chance of appealing to their target audience - people who aren't driven by money but don't want to be taken advantage of.

If you can't find a compromise that works for your situation - go work somewhere else.

ylem• 15 years ago

I think the problem is what happens with time. Imagine that you have a graduate in a time when the economy is doing poorly. There will be lots of people out of work and competing for jobs, so salaries (in general) should be less generous. Later, if the market picks up, then that year's crop of hires will have higher salaries. Fast forward a few years. Assuming that the difference in skill levels is negligible, salary differences could still be significant. Now, imagine that salaries become public...

benaston• 15 years ago

This is all bullshit. Each company pays what is profitable for its business model. Work in a hedge fund? Your pay is commensurate with the business model. Work in a digital agency, likewise. As far as I can tell a digital agency is a digital agency, is a digital agency. They all work the same market with the same overheads. It doesn't matter that the dev in the hedge fund is doing precisely the same job (in my hypothetical scenario).

"You are paid a little better than someone with your same job in your geographical area."

Of course you are, otherwise your employer wouldn't be in business. The operative word being "little". Substitute "a lot" and either they have a disruptive business model and are willing to pass on the cream to their employees (unlikely), or they are going out of business.

Give me any dev in any city in my country and I will be able to tell you what they are on based on their seniority and sector plus or minus a few grand (and what's a few grand after higher-rate tax?).

Tldr - this policy is moot because salaries are open secrets.

FWIW, if you want to earn more go into contracting (i.e. take on more personal risk), move sector (i.e. go into finance), start your own company, or move into a more traditional profession.

Balsamiq : Salary Policy

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