Starting Formisimo gave me an opportunity to do things differently. The first change I wanted to make was that all members of the team would know what everyone else was paid.
When we were discussing why openness around salaries was important, my co-founder Tom said:
“If we can’t explain why someone gets paid a certain amount then we’ve made a mistake”.
Salaries are never truly kept secret – you always have an inkling of what someone gets paid. Maybe you don’t care what a co-worker’s pay-slip says, but there are few positives in having a secret society when it comes to wages and many negatives from it.
The further you progress in a business, and in your career, the more you get paid and the more you have to justify your salary. Openness about salaries adds another layer on to this – I believe that knowing that your salary is visible adds an extra % on to your performance. You're driven to prove your salary every day, and to everyone involved in your business.
The market-rate for your skillset may be a data point in how a company chooses your salary, but it’s not the first validator when your colleagues find out how much you get paid.
Their first thought is “Is he/she worth it”, and that’s a binary “gut” feeling based on historical data.
Here are some of the things that enter your mind when you find out a colleagues salary:
What’s their work rate. Are they devoted to the company?
Flipped: Are they "sweating spinal fluid" for the business.
What are their supporting skills like Do I see that person getting stuck in and helping me and others? Are they helping me become better at my job?
Flipped: Do they brush me off, or say they can’t help me? Do they dump me in situations?
How good are their interpersonal skills Are they easy to get along with, and are they a good communicator?
Flipped: Are they a douche?
Decisions and Handling When the dust has settled, do I respect them for the calls they made and the way they made them. If bad decisions are made, do they talk about the thought process and learning - do they make changes based on the data?
Flipped: Do they make terrible decisions? Do these decisions make my job more difficult?
Nailing all of the above isn’t easy, nor quick - nor is it possible to nail all of them all of the time. They're targets that should be driven for.
From Day Zero we’ve shared salaries, along with our P&L, with our team. Aside from any private HR discussions we share everything internally – but this is the first time we’ve shared our salaries externally.
The benefits of sharing salaries in this blog is an opening up of an already open-business, to anyone who may want to engage with us in the future, as a customer, an employee or an investor.
I hope that our public sharing encourages other companies to do the same, even if just internally.
It’s a step that I believe every business should take, but I acknowledge that it’s harder to do this in an established company vs a startup; there’s a lot of layers of salary decision making in a company that’s been active for ten years. Just because something is hard doesn't mean it shouldn't be tackled if there's a clear benefit.
Formisimo Salaries (Year Two)
(Available at https://docs.google.com/spreadsheets/d/1Tqm4bpnxuAcZMwpEXlamMWVyz7fzfPTUqA8gdWl89BQ/pubhtml)
Formisimo has an annual company wide performance bonus for all non-shareholders in the business. PePe is our internal PErsonal PErformance bonus, paid on hitting personal achievement targets. Targets are set by the team member and PEPE “buddy” and are work-related self-improvement targets.
Finally I'd like to thank some of the companies out there who helped us shape our open policy - One of which is Buffer, a leader in radical transparency, and their blog at https://open.bufferapp.com/introducing-open-salaries-at-buffer-including-our-transparent-formula-and-all-individual-salaries/ was an inspiration for us (along with their open policy on many other aspects of the business).
A great blog on TheNextWeb goes through the pro's and con's, and talks about the importance of having everyone on board when you go public, either internally or externally (FYI we discuss internal open salaries at the interview stage with team members). thenextweb.com/entrepreneur/2014/04/27/make-salaries-public/
And you can't take a big step like this without the permission of the team, and the support of the other stakeholders. My co founder Tom has a background in recruitment, having worked at the coal face in a recruitment company and then at a recruitment startup, and his support and ideas are vital.