Monday, May 21, 2018

Open Salaries at Disbelief

Disbelief is a little over four years old. One thing I've wanted to do is write a little more about our experiences of bootstrapping and growing a small services company.

For some background, Disbelief is a tech services company that focuses on problem-solving for game developers. In short, we help people ship their games. Since Steve Ellmore and I founded Disbelief we've grown from five people working out of their apartments to seventeen people spread across two offices in Cambridge, MA and Chicago, IL.

Recently, we completed a transition to open salaries at Disbelief. Everyone at Disbelief knows the salary and responsibilities for each role. We've had a goal of fairness and transparency within the company for a long time, and this is one key part of that.

The Business Case for Internal Transparency

Our early compensation structure was mostly ad-hoc. Steve and I would get together and discuss a number on a per-case basis. While we'd put a lot of thought into it, we weren't happy with this process. It worked fine when the company was a group of people who we had known for years, but it wasn't going to scale and it wasn't particularly transparent to anyone.

A problem-solving services company relies foremost on good communication and cooperation, it's literally our business model. If we can't communicate and work well with clients, we are not going to succeed. Building a culture of communication means we have to practice what we preach internally - clearly communicate business goals, current sales activity, and generally be as open as possible so everyone is rowing in the same direction.

We realized part of this would be more openness when it came to expectations of each position. An ad hoc set of criteria locked in our heads was not sufficient and would not scale. We needed more formal definitions of roles.

Roles and Ladders

What we came up with was a 'ladders' spreadsheet which defines the roles and responsibilities of each position. The rows are each position (Junior Programmer, Programmer 1-3, Senior Programmer 1-3, etc), and the columns describe the responsibilities and criteria for one area of evaluation. The criteria are specific and attempt to minimize the amount of subjective evaluation and ‘gut feelings’.

One principle behind the criteria is they are rooted in business needs. This gives us focus on what is truly important for the business to succeed and what is not.

For example, one column is "External Communication". Junior Programmers are mostly concentrating on learning the craft of systems programming itself - how to take schooling or self-taught lessons and apply them to real systems in the real world, at the quality level Disbelief demands. Reflecting this, their responsibilities for external communication are minimal - they must be able to report status internally while other, more senior engineers handle the bulk of client communication. At the other end of the scale, Senior Programmers are expected to clearly report status to clients, anticipating and managing expectations, and act as ambassadors for Disbelief as a whole.

Defining these roles took a long time, and we thought very carefully about it. It has become a very useful tool. Monthly one on one meetings with managers have a clear set of criteria to discuss performance. Having the deltas between rows allows us to focus our mentorship and training efforts - rather than try to teach everything at once. Promotions can lay out exact responsibilities of the new role, both beforehand and after. New hires can be slotted based on specific criteria rather than gut feelings. Managers can be trained to evaluate using these criteria, which allows us to scale. The 'requirements' section of public job descriptions are mostly pre-written. At the highest level this document lays out a core of what it means to be a Disbelief engineer.

Flattened Salaries

What we did next is still controversial in many business circles - we flattened salaries. For each role, every person in that role is paid the same. You can find many business articles that will argue for this, as it can take a lot of arbitrariness out of compensation, and increases fairness. It limits situations where two people are doing the same job and getting wildly different pay. You can also find many that will argue against - it removes incentives for increased performance.

For us, it came down to a growing confidence that we had nailed down the core aspects of what the job was in written form. We're not naive - no document will ever capture everything nor handle every situation. We feel we have enough graduations in roles and coverage to reflect people's day to day contributions. What we found is the harder cases just made us reflect and refine our positions and roles. We have enough flexibility to recognize that not every Senior Programmer is the same, but also have made a lot of effort to write down specific criteria in specific roles rather than go with gut feelings. 

Getting to a flattened salary structure required a period of adjustment -- mostly giving people raises to get everyone at their proper level for their role. This took some time as we're completely bootstrapped, and had to make sure our adjustments didn't cause payroll to outstrip our revenue. What made this a little easier is around the same time, we knew we had to do a series of competitiveness raises to get us closer to the market. These raises were broad based, so most people at the company got raises around the same time - some for competitiveness, some also for normalization.

So far we haven't seen many of the downsides or gotten a lot of negative feedback. We took our time with the transition, explaining it to the entire company, and discussing one on one. More often than not we find this a selling point with candidates.

One reason is base salary is only one part of our compensation. Aside from our benefits package, we have a bonus structure that is based on the performance of the company as a whole. If the company does better, everyone does better. 

Cost of living adjustments are done yearly and across the board, and completely separate from merit/promotion increases. Additionally, we frequently review our compensation structure and will make competitiveness adjustments to a position's salary if we feel we're not in line with the market.

At the end of the day, compensation is only one factor in job satisfaction. We feel the positives of equitable salaries at each position outweigh the negatives and foster a culture of cooperation. What works for us may not work for you. 

Open Salaries

We have had an open 'Ladders' spreadsheet within the company for quite a while, and everyone knew the salary structure was flat at each role. Only recently did we decide to attach salary information - we wanted to make sure we had time to address any negative feedback to the new compensation structure. 

So far the reaction internally and externally has been positive. When mentioning we were releasing salary info internally to a couple of friends running their own companies, their immediate reaction was 'oh I've wanted to do that, how did you get there?" That's part of why I wanted to write up our experiences. 

The Future

We hardly consider ourselves done - the compensation structure and roles are a living document, continually reviewed. For instance, we only have programmer roles defined in this structure. While we only recently have started to hire non-programmer roles, we need to define and add them to the overall structure.

An additional problem we're tackling is adding a non-management, individual contributor track for very senior personnel who do not want to be leads but want a path for advancement. For example, recognizing that someone is a domain expert and can mentor/teach the rest of the company about an area. The last thing we want to do is shove people into a management role who are not going to be effective at it.

We've found this a very useful process that helped us sharpen and define our our approach to our work and business. If we find something that works better, we'll not shy away from change. At the end of the day, whatever route you choose for your company should be rooted in what works for your business. This structure may not work for you, but so far it is working for us.

Join Us

If you've read this and thought "I'd like to know more about Disbelief", check out our open positions and drop us a line. 

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