As we (7 of us) stepped into our new office in April 2014, we brought with us lot of enthusiasm and energy. We started setting up our file structures on the shared drive and created multiple folders to structure and share information with each other. We created a folder called as Salary details and put it under decent access control, so that no one except the founders of the company can access it.

As we started talking about our philosophy of openness, transparency and no management control stuff, one fine day one of our core team member explained that we are not following what we are saying. This was shocking as we always thought we were different and quite open. But as he pointed out we shared everything (including company financials, client rates, proposals etc.) but salaries with people why?

This led us to think deeper as to why we didn’t share salaries with everyone? What is so special and personal about salary? Why is it that a person who is designated to handle salaries irrespective of experience can be trusted to handle this information with care, but someone who is quite mature is not? What will happen when we share the salaries? Will the conversations on increasing salary exponentially increase? Will people not join us because of it? Will we loose control?

I think the last question was the key. We collectively realised that keeping salaries confidential is a very good way of exerting management control over people. Knowingly / unknowingly we are giving an indication to people that their remuneration is in the hands of trusted few, who are more like their managers and only they can decide what one takes home. Obviously this is a very simple way of putting it and there are bunch of other factors which are at play in doing this. But this made us determined to challenge this notion, also the fact that we are hiding some information from our team didn’t seem right.

So how do we do it? Should we come with a change management plan with impact etc? Well we are a start up based on simplicity, so we did what was simple – talk to people. We had a bunch of group sessions with everyone in the company. Quite obvious the first reaction from people was full of shock and surprise. The discussions were why do we need to do, we will lose people as some might be uncomfortable with it, people might not join such a disruptive company and given we are a start up are we ready for this risk, while we (the people in the company) are ok with it what about others who join next, we will end up spending so much time in trying to explain everyone’s salary and the conversation about hike or salary comparison will be a ongoing exercise, etc. But slowly this started growing on people.

We together tried to address each of these questions. The first step was a session with everyone to explain parameters on which we decide salaries. We came up with a list of 13 / 14 parameters and yes some of them were overlapping. The next step was to guess everyone’s salary as a group. This took us almost 2 hours but we were pleasantly surprised in the end. The group was able to guess everyone’s salary within a deviation of 10%, as a first exercise it was a good start. It made us confident, as by giving proper context people were able to make the right choices.

The next step was to address some of the apprehensions that people had about what will happen when their salaries will be disclosed. We debated each of the questions mentioned above, the biggest question was will people not join us because of open salary. We as a group decided to take this risk. The expectation was that if we all sign up to be the ambassadors of this concept then we will surely make everyone coming into the company comfortable with it.

The other thing which most people were worried about was what will they go through when their salary is known to everyone and vice versa. Will people respect / value each other based on the salary they get in the company? Is it ok if one ask’s why someone else is getting higher / lower salary? As a company based on transparency, we all felt that its ok to be open about salary and its even better if we ask one another why someone’s salary is the way it is rather than thinking about it discretely and discussing it in closed group. Also if we want to build an open, family culture where people respect each other, then people valuing each other based on the money they make is completely counter to the overall thought process. In addition to the above, raising some of these questions empowers us and through subsequent discussions we will gain some knowledge about how salaries are being decided. Second, it keeps the rest of the team on its toes, whenever they decide salary for a new person coming in, because now they will be asked as to why a person is getting so less or so high.

Its been more than 6 months, since we rolled this out and so far it is going well. We have had probably maximum 1 or 2 discussions on salary and people are able to participate in deciding salaries of candidates who are selected as part of our recruitment efforts. Some of the fears that we had on people not joining us have been proved wrong, though it is early days but the feelers are positive.

Now we are about to complete a year of operation and we are planning to do salary hikes as a group. The group is working out the modalities on how we do it, but one thing is clear we will try to keep it as simple, transparent and participative as possible.