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Open Salaries: How

I guess the most interesting bit of our open salaries story is exactly how the change looked. I already mentioned that this was an important part of the preparation process, so it definitely wasn’t a gung-ho kind of thing.

First of all, open salaries was an opt-in program. No one was forced to join. Not joining would mean that others won’t know about that person’s salary and that person wouldn’t have access to the salary list.

The explanation is fairly simple. Everyone who joined Lunar was signing up to a company with non-transparent salaries. This might have been an important part of a deal for them. I didn’t want to force that change on anyone.

For anyone who joins the company after making salaries transparent, joining the open salaries program would be automatic.

One part is transparency, the other is having influence. The latter was much more difficult to design. Before the change pretty much no one had any experience deciding on salaries, so with no control raises could go through the roof. Well, theoretically at least.

Another, more important thing was that I wasn’t ready to give up full control. At the same time, giving up control eventually was the ultimate goal of the process.

We ended up designing three stages. The first one would be launched along with making salaries transparent. For the other two the trigger would be whenever we feel like we are ready.

During the first stage anyone who is in open salaries program can propose a raise for anybody, including themselves of course. This should be a concrete proposal; What kind of raise we are talking about exactly and why they think it is a good decision.

Everyone involved in open salaries is invited to share their opinion, either supportive or critical. Or propose a different solution, e.g. a different raise. The discussion happens in writing, in a shared document, so that we can refer to it later and can weigh in when we really thought it through. Finally, the decision is still made by me. The difference is that we have a very open and a very inclusive advisory process.

In fact, it is a variation of our decision making process.

The second stage will be different in a way that the decision would be made by the person who kicked off a discussion. There will be, however, overall financial constraints enforced by me. It would be in a form: “the budget for raises in the next quarter is no more than X.”

In the third stage we’ll remove the budgetary constraint. By that point it will purely be our decision making process.

Children in gnome hats happy about the orderly way in which they arranged their gems and coins

As I mentioned there’s no schedule for going through the stages. I even say that it is possible that the last one will never happen as we’ll never decide that we’re completely ready to remove all the constraints.

The crucial part of the process is a discussion. We didn’t choose to use an algorithm to decide who earns what. The reason is that I have yet to see an algorithm that  addresses what we value. Typically these algorithms would stress technical skills, experience, seniority, etc. We, on the other hand, pay a lot of attention to organizational culture, collaboration, and helping others to get better. It is difficult to quantify such things in a reasonable way.

We ultimately try to combine all our subjective opinions into an outcome that feels fair for everyone. Yes, that means that there are difficult discussions ahead. That’s why there’s one underlying principle for all the discussions: be respectful to everyone.

It is also an invitation for everyone to get involved. If someone is not happy with a proposal, and they don’t speak up, they can’t blame anyone else when a decision is finally made.

That’s pretty much it. One technical detail for launching open salaries was that opt-in decisions could be made for the whole day before the list was published. On one hand, it’s just convenience. On the other, it means that when open salaries are launched the list will be fairly full.

And of course even if someone decides not to join open salaries program at its kick-off they may join any time they want.

The whole plan was put into scrutiny of the whole company so that I could make corrections before launching it. There was nothing major that popped up though.

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