Thu July 3, 2014
The Company Where Everyone Knows Everyone Else's Salary
Originally published on Wed July 2, 2014 6:20 pm
Dane Atkinson is a tech entrepreneur who started his first company at 17 and has run almost a dozen more since. He's so friendly that he manages to sound cheerful while explaining the art of hiring workers for as little money possible.
"I have on many occasions paid the exact same skill set wildly different fees because I was able to negotiate with one person better than another," he says.
Some employees were worth $70,000 a year, but only asked for $50,000 a year. So, he says, he paid them $50,000 a year.
This works great for the company — until the employee finds out someone else at the company with the same job is making far more. "I've seen people cry and scream at each other," he says.
After enough of those painful moments, Atkison decided that at his next company, things would be different.
Three years ago, he started a tech firm called SumAll — a tech company where all the employees know each others' salaries.
When the company first started, there were just 10 people, and they worked together to figure out what everyone would be paid. But it started to get more complicated when they started hiring new people.
Atkinson would have to sit the new candidate down and basically say: Here's what everyone gets paid.
"I distinctly remember hiring an experienced, seasoned employee who has negotiated through her career," he says. "Her response was, 'This is unfair because I can't actually negotiate ... It's a car with an actual price, versus, talk to the dealer.' "
And, of course, a company where everybody sees each other's salaries creates new kinds of tension.
Earlier this year, Chris Jadatz took over the duties of someone who'd left the company. The person who had left was making $95,000 a year. Jadatz was making $55,000. "It made me feel definitely underpaid, as if maybe I was being looked over," he says.
So Jadatz went to Atkinson, the boss, and asked for more money. He got a $20,000-a-year raise.
Atkison has meetings like this all the time. He says it gives him a chance to explain why some employees make more than others — and to explain to employees how they can make more.
For a lot of employees, knowing what everyone makes is less exciting than it seems.
I talked to the CEO of another company that's open with salaries, and he said the reaction reminds him of Americans hearing they have topless beaches in Europe. Before you go to one, you think it's just going to be the craziest thing in the world. Then you get there and it's like, OK, nobody's flipping out because people are topless here. It's just how things are.
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At most workplaces, people don't know exactly how much money their coworkers are making, but a few businesses are trying something different. Just tell the whole staff what everyone is earning. Lisa Pollak from NPR's Planet Money team visited one of those companies.
LISA POLLAK, BYLINE: One of the reasons why salaries are secret is that it makes life easier for the boss.
DANE ATKINSON: I have, in many occasion, payed the exact same skill set wildly different fees because I was able to negotiate better with one person than another.
POLLAK: Dane Atkinson is a tech entrepreneur. He started his first company at 17. He's run a dozen more since. He's friendly and somehow able to sound cheerful even while explaining the art of hiring workers for as little as possible.
ATKINSON: You try to get the candidate to reveal what they want, so you asked them what are you expecting or what did you make in your last job? One person will say I made 80 in my last job. One person will say I made 50. Rarely - and I was guilty of this as well - will you tell the 50 person, oh, that's insane. You should make 70 here, no problem. The 50 person, you're like, I think we really like you. We can probably get there. We can probably get up to you number.
POLLAK: We can probably get up to 50?
POLLAK: This works great for the company until the person finds out they're getting underpaid.
ATKINSON: I've seen people cry and scream at each other.
POLLAK: And after enough of these painful moments, Atkinson vowed that at his next company things would be different. Three years ago he started a tech firm called SumAll, and he decided that at this company, salaries wouldn't be secret.
Hi, I'm looking for Dane.
A few weeks ago I visited the SumAll offices in New York. It's one of those open offices - no cubicles, just long tables with computers on them. There were just 10 people when the company started. They hashed out what everyone would get paid, but it started to get more complicated when they started hiring new people. He'd have to sit the new candidate down and basically say, for your job, this is what people get paid.
ATKINSON: I distinctly remember hiring an experienced, seasoned employee who has negotiated through her career. And her response was this is unfair, 'cause I can't actually negotiate. It is what it is. It's a car with an actual price, versus - you know, talk to the dealer.
POLLAK: If the person accepted the offer, then something else unusual would happened. Their pay would be revealed to everyone else at the company. There was this list on the company server with everybody's names and salaries. And anyone could look it up and find out anyone what anyone was making at any time. And inevitably, some people didn't like what they saw. That's what happened to this guy.
CHRIS YETTUS: My name's Chris Yettus. I am the de facto head of the marketing team.
POLLAK: De facto because earlier this year he took over the duties of someone who'd left the company. It was a lot more responsibility, and so he looked up the salary list.
YETTUS: The personal who was vacating the position that I was about to be moving into was making about 95, I believe. And I was making 55.
POLLAK: And how did that make you feel?
YETTUS: It made me feel definitely underpaid, as if maybe I was being looked over - maybe a little bit.
POLLAK: But here is the strange thing that happens when salaries are public. When you see something that bothers you, you don't have to cry and scream. You can just go and ask the boss. It's public. You're supposed to know it. So Yettus went to his boss.
YETTUS: He said absolutely. We'll get you up there, no problem.
POLLAK: How much do you make now?
YETTUS: I make 75 now.
POLLAK: Oh, so you got a $20,000 raise?
YETTUS: Yes. Yes, I did.
POLLAK: At SumAll, meetings like this happen all the time. And for Atkinson, the boss, it's one of the best parts of having pay out in the open - a chance to talk to people not just about what they make, but why. And often, it doesn't end with a raise. Often, he has to explain that the reason why the person makes more than you is that she's more valuable to the company. And if you do what she's doing, you can make more, too. The way Atkinson sees it, transparency is a defense against the games that bad bosses can play. For instance, you can't pay women less than men if everybody can see what you're doing.
ATKINSON: We couldn't hire a minority at half the price. It just wouldn't stand. We couldn't abuse somebody who really had no self-image and offered themselves at a lower value, right?
POLLAK: Atkinson says some employees have struggled with the system, but when I walked around the office this was the more typical reaction.
MASA MOSTAJAVI: It was actually way less exciting than I wanted it to be.
POLLAK: That's Masa Mostajavi. She manages customer support.
MOSTAJAVI: I mean it's a very, like, plain, like, Google doc with just, like, numbers and names. And it was just very, like - just like oh, OK.
POLLAK: I talked to the CEO of another company that has pay transparency. And he said the reaction reminds him of Americans hearing they have topless beaches in Europe. Before you go to one you think it's just going to be the craziest thing the world. And then you get there and it's like, OK, nobody is flipping out because people are topless here. It's just how things are. Lisa Pollak, NPR News.
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