A little over a month ago, Buffer — a startup that, among other things, lets you schedule your social media postings — decided to publish its salary format and the salaries of all its current employees on its blog. You could see, for example, that the CEO — interviewed in the video above — makes about $159K per year right now. There were a lot of different reactions to the idea of doing this, as you might imagine. If you grow up in certain cultural worlds, you never discuss the exact amount of money one is making, even if it’s a lot. (In those worlds, you replace it with “He does well” or “We’re OK.” I know because I grew up in some of those worlds.)
Buffer did this because their second value culturally is “default to transparency.” Transparency, like exact salaries, is something that terrifies a lot of organizational leaders. The top should know everything, the theory goes, because they’ve been around the longest or have the most contextual experience to deal with it. The middle should know less, and the bottom third is the worker bees. They just need to do their jobs; information doesn’t need to actually reach them.
Even Buffer admits in their blog post:
Sticking to radical transparency was probably both one of the most frightening and exciting things to do over the past months. It meant to open up and make ourselves extremely vulnerable for ideas, since they were easily accessible to everyone on the team.
Buffer received 2,886 applications for job openings in the month since the Dec.19 news of its salary transparency showed up on its blog, compared to 1,263 in the 30 days beforehand, Gascoigne said. “We’ve never been able to find great people this quickly in the past,” he says.
Alright, so … they basically doubled their job applications in a little over a month just by being transparent. And while they got some no-fits in that bunch, they also found some great people — and quickly. They plan to expand from 15 to 50 employees, so this sequence is important. This isn’t “I wrote a job description and we put it on Indeed; the floodgates are now open.” This is transparency as a strategy — and one that’s mostly working. That’s interesting.
Keith Rabois, who’s been involved with the funding rounds for LinkedIn, PayPal and Square, wrote an interesting article about why transparency matters (it’s actually more a contextualized re-telling of a talk he gave, not a direct transcript, just as an FYI).
In the early days of Square, transparency across the organization was taken for granted. It just seemed obvious to both Dorsey and Rabois that is how you build a high-functioning company — you make it incredibly transparent. Ultimately, if you want people to make smart decisions, they need context and all available information. And certainly if you want people to make the same decisions that you would make, but in a more scalable way, you have to give them the same information you have. Complete information also helps reduce the politics in an organization. One of the key drivers of politics in an organization is information asymmetry.
Could not possibly agree more with the end sequence: complete information will reduce politics, because information only being shared at the top — “That’s above your pay grade” or “That’s not something you need to worry about” — basically breeds politics, and that’s never good in the long run. I believe there has to be some form of hierarchy — when there’s a crisis mode, humans always want to know who’s taking the last shot — but you can have hierarchy and still share information. Not a lot of people realize that.
There’s some other good stuff in that post, including the idea that most people — as they build companies — focus entirely on the product that the company will provide, but in reality a company is a group of people making a product the best they can and then tweaking that product, but all while working together and interacting. You actually need to focus on your people, not your product, if you want success. Almost no one I’ve ever met seems to embrace and realize that.
This whole transparency thing could be an emerging trend, at least with Silicon Valley companies. Here’s the CEO of Buffer on what he’s experiencing:
JG: It does seem to be a trend. It’s not only us. It seems like people have wanted to do it and not thought about how until now. I really enjoy meeting people, having coffee, to discuss transparency. Last week I had coffee with a guy doing similar things—his company’s called Balanced Payments. It’s open source, on the business side they share everything as well. I have had Google Hangouts with someone who values transparency. At Unbounce.com, they encourage their staff to share everything they’re passionate about. I’m definitely seeing a trend emerging here.
Good. I personally have no problem with the salary release thing. In any job you work, you’re always kinda guessing where you’re at relative to people just above and below you anyway. I can’t tell you how many bar convos I’ve heard in NYC where someone is like, “Well, that person’s gotta be making 90, and he/she does shit!” Hm. See, if you knew that person was actually making 72 and doing shit, would it change your view on things? Maybe he/she does shit because he/she believes they should be making 90, but are getting shafted at 72. Maybe he/she’s on the market! Suddenly the context is completely different. With transparency, it doesn’t have to be. And to think: the idea of talking to people and sharing information and letting everyone in on the secrets could actually help your company be effective.