How compensation can change a company (and maybe the world)

Tracy Lawrence
Nov 21, 2016 · 4 min read

When I first began hiring for my startup, I realized — to my dismay — that something was amiss. Many women and engineers weren’t negotiating as hard, or even at all.

As a female founder, this put me in a bind. I’m no stranger to bias. In fact, I’m quite sensitive to it. From fundraising advice (“fake your confidence”) to management advice (“don’t be too nice”), I constantly hit a wall of assumptions based on my gender. And I didn’t want unconscious bias to infiltrate my or my manager’s thinking as we made offers. I wanted to ground our compensation in performance and encourage open dialogue about it.

So we made a tectonic shift in thinking, and decided to base our salaries on a formula…and make them public to the company.

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Everyone at Chewse can see everyone else’s compensation

When I tell people that Chewse has an open salaries, people usually ask,

“So anyone can see anyone else’s salaries?!
Doesn’t that make people resentful?
How do you attract great talent when they can’t negotiate?”

At Chewse, we believe fair pay and transparency can transform the resentment people often feel about their compensation into understanding and empathy. It attracts people who are here for the culture, our mission, and who believe in merit.

Our Chewse compensation philosophy rests on two pillars:

Pillar #1: We believe transparency leads to more satisfaction with pay.

Most companies put pay behind a wall. They think that knowing other people’s pay will create resentment and distract people from the work at hand. In fact, I recently attended Payscale’s Compference and was shocked to learn that 64% of employees who are actually paid AT market rate believe they are paid BELOW market rate. Employees assume the company is skimping to save money or has some other nefarious agenda.

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However, there’s a chink in the armor of closed pay. It closes up the conversation with managers. Outside of the office, with spouses, perusing job postings — the topic of comp is stewing. The problem is that managers typically aren’t involved the conversation due to the stigma of compensation. That’s probably why 36% of Americans think their pay is unfair.

In order to lift the stigma, and invite healthy dialogue, we give individuals access to see the compensation of everyone in the company. After a year of this system, we polled our team and 71% of Chewse employees believe their salary is fair — double the national average. We strongly believe that bringing those conversations out of the backrooms into the light with managers allows people to air out grievances.

Pillar #2: We believe in rewarding great work.

At most companies, negotiations can suffer from unconscious bias based on factors besides performance— gender, race, age, etc. At Chewse, we narrow down pay to a few critical factors — market and output.

We use a salary formula with two main levers. One is a salary band based on market data for each role and the other is a multiplier that we call output levels. These levels are based on skills and performance.

We align employees and the company around one thing we both care about: great work. Compensation is the link. Top performers who do great work should be making 75–90th+ percentiles of pay in their role. And this is available to everyone at Chewse. At other companies, this opportunity is mainly dependent on how well you negotiated from the beginning.

I don’t want anyone to have to be anything they aren’t simply to make more money. I don’t think you need to be more aggressive or a different gender to get the pay you want. If people can come to work being themselves and they aren’t docked in pay for it, then the world can be a more authentic place. And that’s how merit-based pay helps us get closer to our mission of bringing your heart to work.

If you’re interested, we’ve taken loads of inspiration from Buffer’s Open Salaries. We base our salary formula bands on market data from Payscale, who has a database of 54 million salary profiles.

Merit-based pay intrigue you? Chewse is hiring and we welcome the conversation!

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