Meet The Companies That Make Their Salaries Public – And Say They Are Happier For It
This is Joel. He’s 28, and he earns $218,000 (£153,000) a year.
Everyone knows that, because it’s on this public spreadsheet. All the salaries are public at Buffer, the tech startup Joel Gascoigne runs; from his pay as the CEO to that of the lowest-paid worker, Mick, who makes $46,100 (£32,510).
Joel Gascoigne has team members around the world – and all their salaries are public
Gascoigne, a Brit who’s originally from Sheffield, decided to make salaries ‘transparent’ at his social media publishing company three years ago.
At first it was scary, he tells The Huffington Post UK: “No one else does it, and we thought there must be a very good reason for that.”
Gascoigne’s team – including workers based in London – is part of a growing movement towards an “open culture” in business. While bosses of some companies can be reticent to reveal what they and their staff earn, others are actively choosing to, because they think it makes everything fairer – and employees happier.
“I personally was very excited about disclosing my own salary,” Gascoigne says. “It was an example of something, like many things, where there is little conversation around the right salary to pay yourself as co-founder and CEO of a company.”
To the rest of team it felt “natural”, he says, because the company – which at the time only had 10 people – was already committed to a “value of transparency”.
Some problems did arise, though, when Buffer decided to make staff’s salary public to the whole world on a Google spreadsheet.
The open spreadsheet showing salary calculations at Buffer
“Someone felt that if their friends and family knew their salary, it might change the relationship they have with them,” Gascoigne explains. But that initial discomfort proved unfounded, he says: “In the end, an overwhelming result we found was that a lot of these kinds of fears showed themselves much less than expected in reality.”
Before the spreadsheet was released, Buffer’s team had frank conversations about how much different people’s salaries should be and why, which “helped us avoid any kind of surprise,” he admits.
The decision has made it a more enjoyable place to work, Gascoigne says, pointing out that when salaries are out in the open, “a lot of the politics can go away”.
As Buffer’s team has grown from 10 to 80, it has introduced a formula to explain exactly why people are paid what they are.
It starts with a base salary, taken from a combination of the industry average, using data from salary-review sites Payscale and Glassdoor, and the cost of living in the employee’s hometown.
Buffer then considers how much the role type that person does is worth, and ranks the experience of the employee as ‘beginner’, ‘intermediate’, ‘advanced’ or ‘master’ – a master gets an extra third of their base salary added on. For every dependent an employee had (a child, or partner who doesn’t work, for example), their salary is boosted by an extra $3,000 (£2,118) a year.
The Buffer team
The team gets a 5% ‘loyalty’ payrise for every year they spend at the company, and can also choose between owning some extra equity in the company or an additional $10,000 (£7,061) in salary.
With such a clear formula, it means people talk about money – and ask for pay rises – less, Gascoigne claims.
“I believe it makes money less important. It helps us take that part of the conversation off the table from the beginning. We try to make sure we are paying above the market level, so that there is little need for negotiation and so that everyone who is part of Buffer can feel as much as possible able to focus on the incredible opportunity and mission we have, rather than making rent.”
And for Gascoigne, who now lives between New York and Hawaii while his team are distributed all around the world, sharing his own salary has made him be “extra thoughtful” about what his pay should be.
One UK company also using open salaries is GrantTree, a London-based startup that helps businesses get government funding. “Transparency is one of our core values, so all information is by default transparent: salaries, detailed accounts of the company, strategic discussions,” it says.
And the global upscale food shop Wholefoods – which has branches in the UK – has been making everyone’s salary public since the 1980s. “Wage transparency helps promotes inclusiveness and ensure our compensation system is fair,” its website reads.
Wholefoods believes in ‘wage transparency’
SumAll, another social-media based startup , also has open salaries in a company-wide Google document. It claims this helps it avoid pay rise negotiations completely.
“Usually the way it works is that the best negotiator, the person who’s always asking for more, gets paid more because the squeaky wheel usually gets the grease,” CEO Dane Atkinson told qz.com. “This is much better, it’s based on value.”
At Sumall, salaries are reviewed every few months and anyone can ask for a raise – which is then determined by peer feedback.
Mahssa Mostajab, a Customer Support Manager at the company, told NPR radio that she expected to be shocked by some of the numbers she discovered, feeling as if she saw too much, but ultimately wasn’t. “It was way less exciting than I wanted it to be,” she said.
The obvious downside of telling everyone – quite literally – what they are worth is the risk of creating unhappiness among people feel they aren’t being valued enough, or are envious of others on the team. Gascoigne from Buffer dismisses this: “I think this happens anyway, with or without transparency around salaries, and we’re happy for it to happen in the open and for those conversations to be triggered early. It helps us avoid any build up over time of bad feelings people might have.”
While most companies try to be creative when it comes to the products they create, Gascoigne points out that few try to be innovative with how they actually run their own business. Buffer says it has seen a dramatic rise in the number of people applying for jobs at the company since publishing its salaries – and a better quality of candidates too.
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Ian Pearman, the CEO of one of the UK’s biggest advertising agencies, AMV BBDO, has taken a step in that direction for his 400+ staff.
This year, he is rolling out benchmarked pay bands – similar to what we see in public companies like the NHS. His agency won’t have a list of people’s names with their salaries alongside them, but everyone will know what range everyone else’s job title falls into.
Ian Pearman runs a top UK advertising agency
Pearman tells HuffPost UK that this can address concerns over discrimination, as well as frustrations over pay.
“The eternal question that employees ask themselves is ‘are other people who do the same job – inside or outside the company – getting paid more than me?’. And naturally, they assume they are,” he says.
“Nothing is more corrosive than the sense that there is inequality in the system. And layered on top of that may be specific concerns relating to gender and race – ‘Am I paid less because I am a woman? Or from an ethnic minority?’ With transparency, these questions don’t even occur.”
Knowing what managers above you get paid can make you stay longer in one workplace, he reasons: “Very few employees have a clear view of the full ladder of pay,” meaning attempting to work out if you’ll ever earn enough to pay for a wedding, a house or a car is often just a “guesstimate”. If someone can get an idea of the salary they could reach by staying somewhere long-term and being promoted, they can work out if they can build the life they want at that company.
He even claims he’d even consider going a step further and make individual salaries public: “Ultimately, anything that reduces the fog around pay should help to reduce its power as a differentiator between companies. With fuller information, companies should have an incentive to gravitate to the ‘mean average’ of their industry, and that in turn should help to reduce daft ‘churn’ caused by people chasing pay rises by moving companies rather than pursuing promotion through achievement.”
Once Buffer put the its transparent salaries in place, the team found “very few of the fears or reasons stood up to the test of salaries being completely open… [In] somewhat of a surprise for us, the world did not collapse,” says Gascoigne.
“Many of us spend the majority of our waking hours working, so this feels like a worthwhile endeavor. We want to be part of the movement, experimentation and conversation around how work should evolve.”
Gascoigne wouldn’t go back to private salaries and thinks a lot of companies could benefit from doing the same as Buffer has – but, perhaps surprisingly, he doesn’t think it would work for everyone.
“There is such a wide range of the types of companies out there, the industries they are in, and the cultures they are based around. It would be very naive of me to say this can always work for everyone,” he says.
“I just hope that companies will question this, and other norms from time to time, to make sure that they are doing things the way they are for a good reason.”