Ever been curious how much money your co-workers earn? Of course you have.
It’s that time of the year when the topic of salary and performance reviews come up in conversation regularly with friends and/or family.
Most people around now have some sort of annual performance review to determine how much of a pay rise they’ll get, and why they think they deserve one at all. Then I mention that where I work, we do it very differently.
The conversation usually goes something like this…
Friend: “Ugh. I had my performance review last week and it was horrible. I put together this whole pitch on why I deserve a raise, only to be told there wasn’t budget for it. But I know that Dave on my team got one because he’s mates with my manager.”
Me: “That sucks. It’s really different where I work — everyone knows what everyone gets paid, and pay rises are primarily based more on feedback other people give about you, rather than you trying to sell yourself.”
Friend: “Wait, what? How does that work?”
… and then I explain it.
Given it seems a lot of people can relate to this, I thought it’s a good time of the year to share my experience working somewhere with open salaries, and what I’ve discovered along the way.
What’s an open salaries model?
In most companies it’s considered taboo — and sometimes even contractually banned — to discuss your salary with coworkers. Open salaries are basically the opposite of that, whereby the focus is on transparency rather than secrecy.
In the 18 months that I’ve worked at Cogent, I’ve learnt a lot about how we do open salaries, and why we do it. At the end of the day, it comes down to transparency being one of our core values, and having an open salaries model is just one example of how this is lived every day. We also have complete transparency on the company’s financial performance and forecasts.
How it works (here)
Although it’s still pretty uncommon in Australia, there are a bunch of businesses around the world that have adopted an open salaries model. Whole Foods was the pioneer in the 80s, and Buffer is another well-known example.
For us, salaries are available for any employee to look at on a structured salary table. On the table are 30 possible ‘levels’ people can be at, spanning from graduate level to CEO. Different skills, responsibilities and impact on the business are mapped to different levels. Any team member can then see what level another employee is at, and the salary associated with that level.
When a new team member joins Cogent, the final stage of the interview process is an open conversation about where the candidate and Cogent think that person sits on the table. There’s no hard and fast negotiation, just an honest, mature discussion.
Here’s Mark, our CEO, explaining a bit more about it on SBS recently:
WATCH AN EXPLAINER AND EXPERT INTERVIEW ABOVE Cogent, a Melbourne firm that helps start-ups manage digital platforms, keeps all finances ‘open’. How much the company earns, how profit is shared and staff wages are all transparent to the company’s employees. According to CEO, Mark Wells, transparency helps solve problems like pay grade negotiations.
How we do salary reviews
You might be wondering how your level, which seems quite structured, gets reviewed and changed. We do it once a year and it’s a two-part process.
Part one involves the salary table being reviewed based on the CPI and broader market data, and the salaries associated with different levels are adjusted. This means that if you stay on the same level, you’ll likely still get some sort of pay rise.
Part two is focused on the individual and whether you should now be on a higher level. It involves ‘opening the floor’ so to speak for anyone to provide feedback on anyone else. For people who’ve been working more with a client than coworkers, we’ll often invite feedback from the client as well.
This feedback goes directly to the person’s People Manager (who’s someone they can talk to about their career, rather than a hierarchical boss), and this person collates the feedback to make a decision about whether that person is at the right level.
Why it’s great
From my experience working at Cogent, I’ve found there are a lot pros to having an open salaries model.
Open salaries removes the ‘unfair’ nature of having multiple people with otherwise similar roles on different salaries, and the associated resentment, negativity, uneasiness, and unfairness. This has a huge impact on culture.
It seems that having a clear alignment between skills, experience and salary shines a brighter spotlight on learning and development. The conversation shifts from “I deserve the same salary as Dave” to “How do I get my skills to the same level as Dave’s?”
When you know not just what your colleagues get paid, but why they’re paid at the level they are, it fosters a more respectful culture. It’s impossible for everyone to know each other’s backgrounds, and I certainly wouldn’t have known some of the amazing skills and experience my colleagues have if it weren’t for the salary table.
When we’re hiring, we’ve definitely met candidates who hate the idea of open salaries. It’s rare but it happens, and that’s ok. Since transparency is one of our core values, it’s a pretty good indicator that they’re not the right fit for us to begin with and we move on. Simple.
As a female working in the male-dominated tech industry, it’s incredibly refreshing to work somewhere where a gender pay gap is highly unlikely. Of course, gender is only one instance of inequality, but having a model where everyone knows what everyone gets paid also eliminates any other kind of bias.
When it’s not great
While the pros certainly outweigh the cons, there is one main con I’ve observed. It’s during the hiring process, when a candidate is choosing between us or another company. Most businesses would offer more money to get them onboard, but this is something we don’t have the luxury of doing. It hasn’t happened many times, but it does happen.
What it all means
Personally, I love that I work somewhere with an open salaries model. Not because I know what my colleagues get paid — in fact I very rarely think about it — but because it’s a sign of something much bigger. To me, it means I work somewhere mature and respectful where people are treated equally and transparency isn’t just a buzzword.
We’re always on the hunt for great people. If Cogent sounds like the type of place you’d like to work, say hi via our Cogent Careers page.