Posted by: robbryan | November 12, 2012

Why You Should Reveal Everyone’s Salaries

 

This post was originally published on OPEN Forum.
Max Nisen

September 25, 2012

Creating an entirely new kind of corporate culture is difficult. That’s why most companies don’t do it. They stick to the structures to which they are accustomed. 

SumAll, a New York-based company that compiles tools used by small businesses, has taken extraordinary steps to create a truly transparent workplace.

 

Opening the Books

New employees get access to everybody’s salary information, according to CEO Dane Atkinson. In fact, the company’s entire capital structure is open for all workers to peruse. And 10 percent of everybody’s ownership is set aside in a non-profit dedicated to doing social good. 

It’s a concerted effort by the company to avoid certain abuses that occur under a traditional structure.

“When you hide your cap table, it’s one of the easiest evils to do in your life,” Atkinson says. “You can tell an employee that they have a huge amount of value and options but you don’t tell them the total allocation of the company…and it hurts somebody else.”

Atkinson adds that at most companies, someone prints out the list of salaries and the everyone finds out a few days later. “For the rest of their careers,” Atkinson says, “they have to make a secret of it and they are disgruntled that someone is making more money than them, and they have no open way of communicating it.”

 

The Trouble With Transparency

But this transparent method can be rocky at times. Atkinson admits that it’s been a lot more work than he’s expected. Differences in salary or equity have to be explained. During funding rounds, there’s a scramble to figure out what’s going on and how all of the relationships are connected. However, once you get past this initial stage, people start to demand less information because there’s an attitude of trust and less political strain in the organization. In that environment, employees find collaboration much easier.

“Most of our team has refused offers from Google and Facebook and whatnot in the last few months,” Atkinson says. “They are unshakable because once they get that sense of being part of a family and that openness in a company, it’s really hard to go away from it.” 

“We just want to be the counterpoint to the corporate culture that’s out there. We want to help people understand that there are other ways to build successful organizations,” Atkinson says. “You don’t have to fight over information and be overly protective. If you are open and you do take this route, it can work and it’s been working very well for us.”

 

Rob sez:

Atkinson says it’s a lot more work and I’m sure that’s true. But how much more efficient is an employee who believes in what they are doing, feels that they are being treated fairly, and truly cares about the success of the mission and company? Then multiply that by the number of employees….


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