Transparent salaries have come up again in Tech Twitter under the #KnowYourWorth hashtag. There is interesting discussion going on around why are there compensation differences between US and non-US salaries, is sharing your salary a good idea? and selection bias. I’d also like to share some of my personal experiences as someone who’s had their salary posted publicly (while at Buffer) and worked at companies who are less transparent about salaries. Please note that these are my own opinnions and I belong to a group that is both privledged and overrepresented in tech.
Let’s start with this Tweet:
Pay inequality is a big problem in tech, especially for underrepresented groups like women and minorities. The best way you can help is by sharing yours. I’ll go first.— Zac Sweers (@ZacSweers) February 14, 2020
🏫: B.A. - C.S.
⏳: 5.5 years
💸: $205k base, $500k equity over 4 yrs#KnowYourWorth
Lots going on here so lets dig in. (Sorry in advance for being intrusive Zac)
Location is probably the single biggest factor in compensation. Zac lives in New York, which has one of the highest (if not the highest) cost of living in the US at 129% higher than the national average. If you’re curious, this post about what its like to make 6 figures in NYC is enlightening. NYC has a very healthy tech scene (second only to the Bay Area), so there are usually multiple companies with competing offers for in demand software engineers.
When you compare compensation between EU and US it is not an apples to apples comparison. In the US, healthcare is privitized and there are much less social programs that act as a safety net. Public transit is either non-existent or needs major improvements in every US city. There’s too much to say for a single blog post here, so the TL;DR is that EU salaries are going to look low since it’s hard to get a decent comparison of benefits.
Someone with the title of Staff Engineer (usually) has to work accross teams, is solving problems on the scale of years and is a mentor/guide to multiple engineers. Every role is different, but a good Staff Engineer brings a huge amount of value to a company, they are a force multiplier in some sense. One very rough way to get a sense of an employee’s value is to look at the average amount of revenue per employee and compare. Zac works at Slack, so I grabbed the best numbers I could find:
$140 million annual revenue / 1700 employees = $82,352.94 rev per employee per year
This number can be impacted by a number of things including the percentage of engineers, public perception and numerous choices made by C level execs. What we can do with this number is to compare it to Zac’s yearly compensation.
(($500k / 4 years) + $205k) / $82,352.94 = ~4.0071
So Zac’s salary represents the yearly revenue generated from about 4 engineers. Which, so long as Zac is fulfillng the responsibilities of a Staff level engineer, makes sense. A good Staff Engineer is going to influence 100s of not 1000s of decisions at a company during their tunure.
Comparitively, Buffer which operates differently to Slack, has a revenue per employee closer to $250K:
Here are the @Buffer financials / metrics for October 2019.— Joel Gascoigne (@joelgascoigne) November 13, 2019
- We crossed a key milestone of $22m in ARR 👌
- Our highest monthly growth rate in around 1.5 years 🚀
Thread with more thoughts ⬇️ pic.twitter.com/LdIWuISagr
There are a number of reasons to have a high revenue per employee – it is much easier to be cash positive (humans are expensive) and it affords you more choices. Too much revenue per employee and you leave opportunites on the table (or off depending on where you’re from). This is all important context when you’re negotiating your salary if you have this information availible.
Is Sharing Your Salary A Good Idea?
In my opinnion it is the right thing to do, but it should not be your responsibility as an employee. Hiding salaries is an excuse to pay people differently for the same job and is an easy place for bias to impact compensation. With transparent salaries, candidates can see compensation up front and waste a lot less of everyone’s time. Instead of individuals posting salaries it would be better to share detailed reports of salary information like Buffer does. This takes the burden off of employees, especially those from underrepresented groups, and places it on the company.
There are arguments to be made that your current salary can be used against you, but would you want to work for a company that does that? It seems like a red flag that the company doesn’t treat employees very well. I’ve had the opposite experience in that I could reference my compensation at my previous role with clear signals early on “we can’t pay you at that rate” or “we’re in the right ballpark and can be competetive”. This was my experience and your milage will vary.
As you’re reading the #KnowYourWorth posts remember that there is selection bias going on. You’re more likely to get people who are proud or upset with their salaries and people who live in SF or NY. So if you’re reading these and getting upset, keep in mind that you’re probably seeing people who are on some extreme, the outliers. Chances are you’re doing well, especially when compared to other industries.
Have some thoughts on this? Reach out to me on Twitter: @hjharnis