Hit Refresh: Radical Transparency

We’re back with another episode of our podcast Hit Refresh. You can listen on iTunes, Soundcloud, Stitcher, Overcast, our site, or wherever you get your podcasts.

There’s an informal movement among tech companies to practice a new brand of radical transparency where they share everything from their revenue, costs, and even salaries, with everyone inside—and at times outside—the company.

The hope is to give employees more information, and a greater sense of control over themselves and their work. In this episode, we cover how we practice transparency at Skillcrush and speak to tech CEOs Josh Pigford and Bea Arthur to find out what it’s like to bare your (company’s) soul to the world. Bottom line: If you’re looking to change careers, you should demand transparency wherever you land next. You deserve it.

Please let us know what you think of the podcast! We’d LOVE it if you could write us a review on iTunes. We’ll read every single one!

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Radical Transparency Transcript

Adda Birnir: I guess I do want to take a moment at this point to talk about cash flow, and you know I spoke to the marketing team about this and I wanted to make sure to extend this to the whole team. There’s been a lot of anxiety and sort of, just like stress, and you know I want to take a moment to talk about the months that were cash flow negative. We’re always looking at like are we trending up or are we trending down, right? And so you know, if we’re starting to trend down, that’s bad and we want to like move it back up. But, in the greater context of the business, it doesn’t mean that the business is in danger. Just to really put any concerns to rest: Obviously I try to be very frugal as a company and really don’t want to overextend ourselves, but we have money in the bank. Even if we made no money, we could run the company for at least a few months. We’re so far from that happening, um it’s not a realistic concern and um, yeah.

Okay. so let’s talk about September, how much money did we make? Echoes.

Does anyone have any questions?

Act 1: The Idea

Instrumental theme music.

Adda: This is Hit Refresh, a podcast for anyone who’s stuck and needs a fresh start. I’m Adda Birnir, a self-taught coder, educator, and CEO & Founder of Skillcrush—an interactive learning community that teaches total beginners the tech skills they need to get into better, higher paying careers with real mobility.

Twice a month, we talk about what it look likes to work in tech and why I think that learning tech skills is the single best career decision any forward-thinking professional can make.

But when I say working in tech, I’m not talking about moving to Silicon Valley, or getting a computer science degree, or magically transforming into a young white guy wearing a hoodie and coding all night. Because at Skillcrush, we know that tech is for EVERYONE.

* * * * *

This week we’re talking about transparency. There is an informal movement among tech companies to practice a new brand of radical transparency where they share everything from their revenue to costs and even salaries, with everyone inside—and at times outside—the company.

How transparency is practiced varies wildly from company to company, but the hope is to give employees, more information, and thus, more sense of control over themselves and their work.

Chances are you’ve experienced the opposite of this.

I know that before founding Skillcrush I worked for a number of companies where I never knew the whether the company was sinking or sailing. In fact, the closest I came to experiencing so-called “transparency” was an open office structure that allowed me to see the CEO at his desk with a worried look on his face, a look that I saw get worse and worse in the weeks preceding a round of layoffs. And when I got laid off, the only warning was a particularly long management meeting the day before.

Almost everyone I know has a story like this.

In this episode we’re going to talk about exactly what transparency looks like at Skillcrush, and at some of our favorite tech companies, and what it can mean for you as you consider a career in tech.
So in the spirit of transparency, let me lay out for you what transparency means to us. In practice, transparency means that every team member has complete access to all of our topline revenue and cost numbers. It means that weekly team reviews—where we go over how each team performed that week—are open to anyone, from any team, if they’re interested. It means that our company goals and roadmaps are available for anyone to look at at anytime. And in most instances, we ask all members of the team to participate in the creation of those goals. And it means that our salaries aren’t a mystery to anyone in the company—even mine.

So why should you care? I’ll tell you! You should care because of what transparency can give you: the feeling of being respected, valued, and the knowledge that your job is safe. Information combats anxiety, and if you’ve ever had anxiety about where you stand at a company, transparency is the answer. Transparency goes hand in hand with including more people in the decision making process, and holding higher ups accountable. Transparency means a seat at the table.

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The most radical way we practice transparency has do has to do with salaries.
Now, there are companies where you can actually look up every person’s salary, like the social media platform Buffer. They have written extensively about their salary formula and publish a table with every single person’s salary on their website. This is not how we do things at Skillcrush—we don’t make individual people’s salaries known to the public. That’s something that we as a team would have to vote on and all of us would have to agree to it. Instead, we simply have a formula and a set of salary tiers that we’ll cover in more detail in a bit, that in most cases, allows employees to guess each other’s salaries within $5-$10 thousand dollars.

We weren’t always like this: We used to do the traditional method that, even at the time, often felt completely arbitrary. And over the past few years, as my staff grew I became increasingly uncomfortable with how salaries were getting set. As we made more money I found that I was paying new staff higher salaries simply because I had the money to give them, not because they had particularly better qualifications. It was as simple as if you asked me for $70,000 in 2015 I probably agreed to pay you that. But if you had the misfortune of asking for $70,000 in 2014, you were probably stuck down in the $60,000 range.Honestly, it makes me feel terrible to even think about it. And for a while, I lived in fear of my staff talking to one another about their salaries and discovering the ridiculous disparity. I was also rewarding people for being tough negotiators whether or not being a good negotiator had any impact on their job.

Alright, so now it’s time for real talk. Here’s the deal with negotiating: First of all, no one has an objective “worth.” Your worth is based on context and depends wholly on the revenue and profitability of the company and what your contribution to the bottom line is. And pay inequity is everywhere, meaning that people doing the same or similar jobs are not being paid the same amount. This is for a number of reasons—gender, time of hire, negotiating skills—you name it. But they all pretty much fall under the category of unfair bias.

When it came time, I was always negotiating one on one with each staff member, creating a dynamic where I was the miser refusing to open the purse strings. This all came to a head about a year ago when I had two particularly difficult experiences negotiating. In both situations, they wanted way more money than I could fairly give them, but they didn’t see it like that, and they both left the company. And after that I was like screw this this, Skillcrush needs a transparent way to handle salaries and I want everyone to be in on it, including future employees.

After the break, my Director of Operations Caro Griffin will be explaining in detail how our salary tiers work, and what it means for our employees or employees at other tech companies with similar models. And to be transparent, I think it’s pretty damn good…

Scott Morris: When you’re juggling a busy life on top of a 9-to-5, how do you make a career change fast? Skillcrush teaches you everything you need to launch an exciting, creative career in web design or web development. We’ll show you the secret to making money WHILE you learn tech skills, all in just about an hour a day. Today is all about radical transparency—and we want you to get a chance at the security and respect that comes with being kept in the loop. We’re giving away our free ebook, the Beginner’s Guide to Landing a Junior Development Job. Just head over to skillcrush.com/juniordev (all one word) to download your copy. That’s skillcrush.com/juniordev.

Act 2: This Is How We Do It

Adda: Our solution was one that didn’t have a lot of models at the time—salary tiers that not only put everyone on equal footing, but also make it possible for everyone to basically know how much we all make (including me). In the public sector, salary tables are the norm, but in the world of small tech startups when we were first trying to find a solution…not so much. Our producer Haele Wolfe has the story.

Haele Wolfe: So, when I asked our Direction of Operations Caro Griffin for the intel behind Skillcrush’s salary tiers, why we use them, how she feels about them, she got right to the point…

Caro Griffin: This is just the way we do things.

Haele: . . .but was clear that that it didn’t happen overnight.

Caro: The way that we handle negotiations, salaries and wages kinda happened in…evolved over time in a couple parts.

Haele: Like Adda mentioned earlier, company leadership realized that some people had been hired years prior, and that they were underpaid. At the same time, the company was growing, and they wanted to bring in new people at market rate. And, they wanted to do in a way that didn’t involve bias, which we see as being a huge issue in the workforce as a whole. Remember Ellen Pao from our last episode? She brought up this crucial point:

Ellen Pao: If you look at women, like the reason that they’re uncomfortable negotiating is because they get penalized for negotiating. So of course they don’t negotiate.

Haele: So, for all the reasons Adda and Ellen have outlined, Skillcrush wanted to minimize negotiation and make it a fairer process in general.

Caro: Negotiation is hard. It’s stressful for so many people because no one teaches you how to do that unless you go seek out how to do that and it’s like stressful and like there’s so many things tied to it you know it’s your livelihood and especially if you’re excited about the job and you don’t want to ruin it and everybody handles it differently. Yeah it’s an unnecessary anxiety and you’re rewarding skills that you don’t need for the job so why should we reward for that skill unless we were hiring for it.

Haele: This also became a conversation around our company values, and the kind of environment Skillcrush should foster.

Caro: I think just also from a moral standpoint I don’t agree with negotiation like this? We feel like people shouldn’t have to negotiate like we should just give them what we can give them and they can decide if that’s right for them.

Haele: So, Caro did some digging and saw that there weren’t tons of examples out there…until….

Caro: I read this great article by Molly Graham about salary tiers and this kind of model for like establishing up front what your role should pay and then how to go about hiring people at those rates and communicating to them that you don’t negotiate. I love like everything she has written. I’m like…all of it has radically changed my thinking about some things, including salary tiers!

Haele: To give some context, Molly is a Silicon Valley executive, and current VP of Operations at the Chan-Zuckerberg Foundation, where she works on strategic plans and operations to help other execs hired to lead programs in education, science, policy, and engineering. We’ll link to her article Caro is referring to in our show notes.

Caro: It sounded very straightforward and very fair and very in line with our values as a company. And also from a practical standpoint it seemed like something that would save us a lot of time and energy and like strife. I was like, “I don’t know if I should share numbers when I talk about this,” but I think it would be great to share our salary tiers.

Haele: This was the basic premise of what the whole management team implemented: If you are a full time employee at our company, you start at a baseline of $55,000 per year. Then, we have specific levers that add on that increase salaries by 5-10 thousand per lever, including factors like how many people you manage, how many skills you bring to the company, or how long you’ve worked at Skillcrush. The idea is that this tries to remove subjectivity, but as we’ll cover in a bit, there’s only so much we can limit. It also means some intense transparency among our staff—everyone can likely figure out exactly how much their coworker makes using these levers. To change over to this plan, we needed a transition.

Caro: We released these tiers and realized that a significant amount of our employees were being underpaid and I’m comfortable sharing that I was one of the ones that was the most off based on the tiers, so I kind of got to see first hand how that worked both as someone who put that together and as someone who was financially affected by it.

Haele: As Adda pointed out to me, this was a kind of heroic effort on Caro’s part to negotiate up on behalf of everyone on the team, who were, in general, underpaid.

Caro: We basically made a list of everyone and how much they were off from their current rate to what the tier said they should be at. And then we looked at the differences and the people who were the most off got paid. So like the person who was the most off got paid enough to get them to the same difference that the next person that was off. So like if one person was 10 grand off and the next person was eight grand off then the first person got a two grand raise and they were both eight grand off and then they both got raises until, you know. And so it was like incremental in that way. And we dedicated a certain percentage of our profits every month to raising those people up until we all got up to where we needed to be. So, it was kind of fun. I got raise every month for like several months and Adda was like, “Don’t get used to this!! Here’s your raise again!” It was like, via Hipchat, “You’re up again! You’re up again!
Haele: You’re like, “Great, thanks, love you, bye!”
Caro: Yeah, “K, thanks, Love you, bye!” Like, that’s such a Skillcrush kind of thing!

Haele: The salary tiers also give us an idea of what’s to come, which is typically not available in most companies. You sort of wait and hope for a cost-of-living raise, and maybe ask for promotions?

Caro: As an industry like a lot of people say they like “but there’s a lot of opportunity for job growth!” Like as an excuse sometimes and it’s like no you can look at our tiers and if you move into a manager position you can expect to make X more and if you stay with the company a year you’re going to get an X bump for longevity. Like it’s pretty you know it’s a decent road map of how you can grow with the company and what you’re compensation would look like.

Haele: The system also helps to even out the discrepancies that can occur between roles at a company. This is a particularly rampant problem in tech—and something I can speak to personally. At a major tech company, I’d get paid half of what junior developers make. Instead…

Caro: I think one of the things that I’m most proud of with the salary tiers is that it reduces …it dramatically reduces the gap between technical and non technical talent. And it’s something that I see a lot of startups do. I will not name names, but I was recently looking at an Angel List profile for a company that was going to pay a junior front-end developer like $90k and they were going to pay their Operations manager 35. Um… and this is a New York based company and I was like, How do …
Haele: I was going to say hopefully they’re not living in a city!
Caro: No it was a New York based.. New York City. And I was like how can you pay anyone $35k in New York City much less a manager and then expect the junior engineer to make three times as much. And it was just very like, I’m sure there are non-technical people making fair wages there and good wages, but that tells me right there that I don’t have a real seat at the table as a non-technical person.
And so I think like, that’s something I really appreciate about ours, is that I do think it’s like we value everyone’s roles and everyone’s contribution to the company and I think our salary tiers speak to that.

Haele: So this is an attempt at making professional life a little easier, a less stressful. But, like I said, it’s not a perfect formula. According to Caro, we still have to refine our skill tiers to make it less subjective, better define middle management, and make adjustments around international employees. We need to address the difference between supervising work and being a manager—one gets you more money and one doesn’t—and we need to add some new levels to our org chart to accommodate our growing company. And new levels mean new tiers, new levers to pull, and new considerations. I’m looking forward to the all-hands meeting where we decide on what that looks like, together.

Act 3: What Does This Mean for You and Me?

Adda: So, what are other companies doing with transparency? Is there such a thing as too much transparency? And most importantly, what does it mean for the people working at those companies? I spoke to two fellow entrepreneurs who both practice their own brand of radical transparency.

Bea Arthur: Yes! My name is Bea Arthur and I am a licensed mental health counselor and three-time startup founder. Currently my latest project is The Difference which is a machine learning mental health startup.
Josh Pigford: OK, cool, so. I’m Josh Pigford, founder of BareMetrics, we do revenue analytics, amongst other things. We help businesses grow is really sort of our focus.

Adda: I wanted to talk to Josh and Bea because each of their types of transparency is a little different than how we do things at Skillcrush. They both are very open about their companies externally. In Josh’s case, that means that you can literally see Baremetric’s real time revenue on his company’s site, and in the case of Bea, it was about writing extensively about her company’s closure. I wanted to know what inspired them to share these stories and numbers with everyone, and how it has impacted them, their companies, and their staff.

Adda: Yeah I mean I guess that’s my big question for you, is like why do you do it? Like I’ve read blog posts of yours that are very like, vulnerable and they expose a lot. Like what it is that…like why do you put yourself out there like that?
Josh: So writing for me is like start up therapy. So like, it’s most of the writing is not coming from a place of me like an authoritative,like “Hey here’s what you should do.” I don’t know what I’m doing, so I’m writing it so I can figure it out.
Bea: Yeah it’s so funny, people are always like, you’re so brave, you’re so brave. I’m just, I was really going through it. And, the best thing that happened, the best best thing that happened when the company closed was the so many people reached out to me, people that I didn’t even, people that were more acquaintances or people that I never met in person, and were like, this happened to me, I know what it’s like, it’s gonna be okay.

Adda: But there is risk involved in this from CEO point of view—and one that has an impact on my employees future security.

Josh: Like, if we were today to broach the subject of making all our stuff public and it had not been, I don’t know that I would choose to do that. Um, at this point, because it’s super risky.

Adda: At the top, you heard me announce our monthly numbers to our team….but you’ll notice that you didn’t hear me announce the actual number. As you might imagine, given that this whole podcast episode is about transparency, we had A LOT of internal discussion about whether or not to include the recording of the actual numbers. In this clip, you will hear me debating this question with Director of Operations Caro Griffin, Director of Curriculum Chelsea Jennings, and Director of Marketing Hilary Fetter.

Adda: So I should’ve like thought about this a little bit more ahead of time, but basically we’re doing this episode about transparency and I guess (sighs) the big question is how…cause I know we’re transparent internally, but I guess the big question is like how transparent should we be externally?
Hilary Fetter: How does it hurt us?
Adda: The question I’m trying to ask is I’m trying to ask is why would we do it? It’s a general practice of transparency like “Okay, we’re going to put it all on the table” because I think there is something very strange about we are transparent but we hold this one piece of incredibly crucial information back. You know what I mean?
Chelsea Jennings: Yeah, I was going to say, I agree, I think it aligns with our company values that we’re practicing internally but why not do it in a more outward facing way that’s still in alignment with who we are and what we do and who we represent.
Caro: Salary tiers in particular I’m all for sharing, because I think we wouldn’t have salary tiers if someone else hadn’t shared their salary tiers. And I guess from a revenue standpoint I’m a little bit more like, “Whatever!” I guess move would probably be yes but I don’t have strong feelings necessarily either way.
Hilary: Um, cause I was struggling with like okay in terms of my question of what detriments would it have is if we were going down the path of like thinking about some sort of acquisition, is it bad that we had laid all of this on the table early. It would be a part of any due diligence conversation that is had, but I don’t know if it would turn people away or bring them in like “Holy shit they’re really profitable” because it’s right on the edge.
Chelsea: It could be like yeah, “Hey that’s impressive!” or “Oh my god, they’ve been around for how long and that’s all they’re bringing in?”

Adda: So we went back and forth, trying to figure out what the line is between practicing radical transparency across the board but also protecting our company’s future, and our company’s employees, and eventually decided….

Adda: Okay so I guess I…my inclination is not to share revenue. But yeah I guess the bottom line is that I’m worrying about unintended consequences that I’m not aware of basically that’s my fear. And it feels like it’s one thing—I do readily tell people in person all of the time and I will continue to do that, but there’s something about putting it in a podcast forever and ever and that seems really scary.

Adda: Of course, two days after this conversation, I remembered that I’d actually shared our revenue numbers on a different podcast! So if you really wanna know, go check out Whitney Johnson’s awesome podcast Disrupt Yourself. BUT—telling you numbers or not, internal transparency is still key to our company. Everyone from our most senior managers to part time employees has access to our revenue and are actively informed of our numbers each month.

SO, what does this mean for tech employees? This is all well and great for CEOS, but also, who cares about CEOs? Here’s Josh again.

Josh: Um, I mean, to some extent I feel like the employees we have are, in part, because of the transparency. They also know what they’re getting into like up front, there’s not this thing of, I don’t know anything about Bare Metrics. Well like, it’s all out there. It’s like, understanding how people work, and the transparency thing is like a very sensitive knob to adjust when it comes to people on your team. You know when you have a low month or a slow month the team, like, that affects them. You know?
Adda: Right. Yeah. I mean, sure, certainly. Right, I mean, you’re talking about the psychology—I mean, I will say that I have this issue with my team. Like, there was a month where we were cash-flow negative just a few months ago, and it was the first time we had been cash-flow negative in awhile, and I had a bunch of people worried about their jobs, and I was like, it was funny for me, because a lot of those people had been around a year ago when it was cash-flow negative like month after month after month, and I was kind of like, “Guys! You guys have such short term memories! Do you remember when we lost so much money, so many months in a row? And you’re still here! You know what I mean? I didn’t let you go!” But that was an interesting—you know what I mean, it was a reminder that I really have to like, put everything in context, because like, it’s obviously like, does that conversation trickle down?

Adda: Another problem we encountered when putting this episode together is how to show the view from the other side of the table—from what would be your side. Lauren Lang is a member of our sales team, and was in the meeting where I explained that everyone’s jobs were safe. She spoke to our producer Julia—because hey, how transparent could she really be, having to talk to me, the big boss?

Lauren Lang: I would totally be comfortable with Adda hearing any of this. We had some lackluster sales numbers last month, and morale was down. We were feeling kind of bummed, and on top of that, we felt kind of unsure of what we’d done right, what we’d done wrong, and didn’t really have a sense of like, how serious it was. So, were we in trouble? Was the company going to have to start laying people off? And, in our daily sales department meeting, which Adda, our CEO, always attends, she sensed our tension and she pulled up the latest P&L spreadsheet right then and there, and walked us through it to show us that, as a business, we were totally solvent, and okay. And that was just such a relief. It was more important to her that we felt united as a team and felt like we were gonna be okay.

Julia: Look, we’re not just trying to get in with the boss. Like we said, our salaries come from a formula—it’s not like she can deny me my yearly raise, it happens automatically. But what we are getting at is that for people like us who work in an industry leading the way in transparency, it’s everything.

Lauren: So, to me, professional transparency is the idea that people do better work when they’re fully invested. And they can’t be fully invested unless they know what’s going on. So being transparent means sharing information that requires a certain amount of trust and good faith in your employees, but also demonstrates respect for their intelligence and commitment to the company.

Adda: I’m happy to hear what Lauren said! And, yeah, Julia’s not getting a raise for that segment.
So, transparency is about giving employees tools and abilities to decide for themselves, and to hold bosses accountable to do right by their employees. Transparency is a growing movement in tech companies, especially among smaller startups.

And there’s a lot of reasons for this trend, but I think one major factor is that techie types are all about data, and transparency is about giving information to the people who need it most: the people on the ground making the decisions.

My own motivation for being transparent is moral—yes, but also largely pragmatic: I need to delegate, and how could I possibly delegate while withholding information my employees need to do their jobs? And how could they do their jobs well if they felt like they were standing on quicksand?

Plus, telling the truth is sanitizing. Being transparent holds me accountable to my employees in my decision making. Sunlight really is the greatest antiseptic.

So yes, we’re transparent about material things like goals, and revenue, and salary tiers, but we also try to practice honesty in all aspects of the business. Everyday. Even when it hurts. And I think for you as someone who might be interviewing or researching potential new employers, this is what you should expect and demand.

You deserve the respect and security of knowing what’s actually going on. You deserve control. You deserve a seat at the table and you deserve to have all the same information everyone else has.

And you should be able to hold higher ups accountable to their decisions.

To quote the GREAT Barbra Streisand: Truth is everything. I love the truth!

Haele: We’re produced by me—Haele Wolfe—and Julia Sonenshein. We’re edited and our music is composed by Arlen Ginsburg. Our art is by Monalisa Kabos. Kelli Smith and Scott Morris read our ads. Huge thanks to Bea Arthur and Josh Pigford for their critical insight, and for leading the way with transparency.

Shoutout to our whole crew at Skillcrush—especially to Lauren and Caro for talking with us, and to the leadership team who let us crash their meeting. We love you.

You can find us on itunes, Soundcloud, Stitcher, or wherever you get your podcasts. Subscribe and PLEASE leave us a review. We read every single one. We also want to let you know that we make so much more content that can help you move forward in your career—whether you’re a total tech newbie or navigating your new skills on the job market. Come hang out with us at skillcrush.com/blog for articles, worksheets, guides, and even comics. Our newsletter is awesome, so be sure to sign up. See you in two weeks.

Kelli: Thinking about a career in tech but not sure where to start? With The Break Into Tech Career Blueprint, you’ll work with a career counselor to design a custom learning program to prepare you for an amazing and rewarding career—whether that’s launching your own freelance business, working full-time for a busy tech company, or buzzing in from the beach as a digital nomad. Visit skillcrush.com today to chat with a career counselor and see why learning tech with Skillcrush is the answer for your next career move. We’re giving away our free ebook, the Beginner’s Guide to Landing a Junior Development Job. Just head over to skillcrush.com/juniordev (all one word) to download your copy. That’s skillcrush.com/juniordev.