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For 30 years, Whole Foods Market ( WMT ) has operated with a transparent salary policy. Any employee can find out the pay of every one of the company’s 91,000 workers, from the most junior grocery baggers to co-CEOs John Mackey and Walter Robb. The company even has a salary cap. No one — not even Mackey or Robb — can be paid more than 19 times the average hourly pay of all Whole Foods employees. That, not surprisingly, has changed the way employer and employees negotiate. “It’s a great check and balance for us,” says Mark Ehrnstein, global vice president of team member services. “Team members often have questions about what someone else earns. Our open pay policy gives them clean line of sight into that.” Ehrnstein says that many employees take advantage by making an appointment with the HR department, during which they can view the so-called “wage disclosure report” and take all the notes that they want to incorporate into their own salary negotiations. (Printing the report is not allowed.) The impact of the policy is hard to quantify, but plenty of evidence suggests that it’s worked in the company’s favor. Ehrnstein says that Whole Foods’ employee turnover rates are much lower than its competitors’, and the company has been on Fortune Magazine’s list of the 100 best places to work for 18 years running. And yet, despite the example that Whole Foods’ policy has set, Ehrnstein says that the companies following in its footsteps are “few and far between.” That may be changing, however, and it shouldn’t come as any surprise that a new wave of pay-transparency trailblazers is rising from Silicon Valley, land of innovation. Startup Buffer Posts Its Salaries Social media management startup Buffer has taken Whole Foods’ model a step further by making its salaries truly public: Every employee’s salary is published on the company’s website (under the “transparency” button on site’s home page). And while transparency has become a big part of the five-year-old company’s identity, that wasn’t the plan. The whole thing started because Buffer’s founders wanted to share their progress with the world. “We started tweeting, ‘Today we are making $100/month,’ ” says co-founder Leo Widrich, who serves as chief operations officer. “It didn’t strike anyone as transparent. We were just sharing what we’re doing.” But as the numbers got bigger, eventually hitting $1 million a month, people started noticing — and asking why they kept doing it. “We asked ourselves the question: ‘Why should we stop now?’ ” recalls Widrich. The founding team decided to expand on the transparency theme. After getting some mild pushback from employees, it developed a clear (and transparent) formula for determining pay. Then it published a blog post about the new policy … and received some 4,000 new job applications by the next month. Fast forward to today, and the 70-employee Buffer continues to get about 2,000 applications each month. Widrich credits the company’s transparent approach for its success on all fronts. “I believe this has given us an incredible and unexpected boost,” he says. “Customers come to us and say, ‘I chose Buffer as my social media service because I like the way you do things.’ ” Widrich says that transparency is a particularly good fit for young technology companies, which are more prone to pushing the envelope. “This is really deeply rooted in Silicon Valley’s approach to not accepting everything at face value,” he says. “People here generally like to approach things with fresh eyes.” Jet Takes On Amazon With ‘Innovators’ Eyes don’t get much fresher than those at Jet.com, a one-year-old e-commerce startup that aims to challenge Amazon.com ( AMZN ) and has established transparency as one of its core values. Jet’s approach has been to offer employees salary and equity packages dictated by experience and performance levels. Tying equity to experience and performance has proved to be a defining strategy in building a staff committed to the company’s long-term success. “The kind of people who are drawn to Jet are innovators and risk-takers,” says Deena Gianoncelli, executive vice president and chief people officer. “When you’re an owner, you’re not thinking about how much you can get on a short-term basis.” The company doesn’t give raises, per se; if an employee wants to make more, he or she must earn a promotion to the next level. The approach has removed contentiousness from salary negotiations and engendered a more collaborative environment, says the company. Gianoncelli says that more mature companies should consider transparency as well. “I would definitely encourage other companies to really look at what their compensation structure and philosophy is and how it’s driving the collective efforts,” she says. “Companies that are more established would have more work to do in making such a transition, but there are ways.” SumAll Targets ‘Evil’ It all starts, according to Dane Atkinson, CEO of social media analytics startup SumAll, with wanting to drive out the “evil” that he had grown to realize was layered over the way compensation was handled historically. He hoped to take a bite out of that evil when he adopted SumAll’s transparent salary policy upon founding the company in 2011. “We didn’t form this policy to destroy evil,” Atkinson said. “But we realized how insidious the world of compensation was. It’s only in darkness that this kind of stuff can prevail.” Lifting that darkness from SumAll’s salary negotiations — the company basically encourages employees to compare their value to that of other employees — has changed the tone of those conversations, Atkinson says. “It allows us to talk very quickly and honestly about the truth of the matter,” he says. He says that the resulting trust between SumAll and its staff has helped the company keep its employee churn rate at about 10%, generally considered quite low for tech startups. Atkinson agrees with Jet’s Gianoncelli that while more mature companies will face additional challenges in adopting transparent salary policies, it’s in their best interest to consider doing so. And given the number of inquiries that he’s been getting from large HR organizations interested in the bones of a transparency policy, more might be getting ready to test the waters, emboldened by the success of a few brave tech startups. “Openness is always preferable to secrecy,” Atkinson said. “Going from secret to open is daunting, but I think it’s an extremely productive thing for a company to do.” Scalper1 News
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