For most companies we worked with, we were always told that salaries and remunerations are confidential information and should not be shared with other employees in the company. The main reason for this is probably to refrain colleagues from comparing and resenting another’s employees salary, especially if one’s productivity is lower but receives a higher pay.
One recent Social Entrepreneur start-up company based in San-Fransisco – “Buffer” – has surprised everyone by being a company that publishes a transparent formula for all of its employees. But just how much measurable and effective is it?
If you see from the formula, the only subjective element is probably the “Experience” factor, which to me is probably the most important factor but surprisingly has one of the least multiplier. So take for instance, a fresh-grad who has a “Junior” level of experience earning a 1x multiplier versus a mid-level candidate with an “Intermediate” level of experience who has worked for several years and earning only a 1.1x multiplier – the difference seems so meager and uncalled for.
I am actually a little surprised that being an US company they did not put any multiplier on the level of education (Degree, Masters, PHD, etc) that a candidate has completed. From what I know, US is one of the few developed countries who has put much focus and respect on its education metrics.
The formula also did not take into account the better performer versus the average performer and pays everything according to the formula. So we could have a situation where an employee hit a high level of experience, living in Hong Kong and choose a salary choice but put minimal effort and still goes home with the most amount of paycheck.
I wonder how sustainable will this formula be for the employees.
Can a paycheck be measured effectively by such a formula? What do you think?