@FirstRound How Chewse Operationalized Transparency — Starting With Salaries | First Round Review

In Chewse’s early days, Lawrence and Schenck debated how to best show appreciation to their employees. “We considered different benefits programs, but it always came back to compensation. People really care about their comp. We wondered, what was the most authentic way to handle compensation? It only seemed right to introduce transparency,” Lawrence says. And if you think this is something to hold off on until you have a fully-fledged HR department, think again. This policy is especially effective for super early-stage startups. That might seem counterintuitive, because with such a small staff, wouldn’t there be even more sensitivity around pay? “Incorporating transparency from the very start will set the tone for the organization you become. It’s so critical that you hire people who want open salaries — not just as a tool, but as the type of person who appreciates that approach. You find people who say, ‘I buy into diversity, I buy into equality and fairness.’ Those are the kind of people that you want to grow into leaders at your startup.”

The Case for Transparent Salaries
Foundational cultural values

Four Keys to Making Transparency Work
Post salary in your job descriptions
Define a ratings system
Choose the variables to determine a compensation formula.
Hold monthly reflections, which double as performance discussions.

Six-step approach to conducting productive monthly reflections.
Start by hiring people receptive to feedback.
Use a simple, low-lift grading rubric.
Use the meetings to develop and grow your employees.
Expect — and welcome — disagreement.
Train your managers in tone and approach.
Convene tribunals to help managers measure success uniformly.

Looking Forward
Move toward a transparent culture by making employee salaries open. This tactic can also benefit your diversity and inclusion efforts. Build a framework and structure around how you rate and evaluate employees for raises. Start with a ratings system that’s tied to a worker’s output level. Formulate how you’ll determine compensation based on that — try a multiplier, or tinker around with your own formula. Then hold monthly reflections, which also double as performance discussions. Train your managers to speak empathetically and openly during these meetings, and in hiring, look for candidates who demonstrate a willingness to be introspective and open. Convene quarterly tribunals for managers to make their case for raises and challenge each other on their decision-making.

“After implementing open salaries, we’ve become a more healthy-conflict culture. Originally, my thinking was, ‘Can’t we all just get along?’ What it’s actually forced me to do is to recognize that conflict is inevitable, and get serious about how myself and my managers communicate when it happens. You can’t avoid disagreement. What you can do is surface it, address it and talk about it early, and that’s what having an open and transparent culture is all about,” Lawrence says. “If more companies implemented this policy, I think you’d have a lot more diversity. You’d have a lot more women and minorities applying for tech companies and being part of tech. Cultures would become less toxic and you’d have more productive conversations faster. This is the only way innovation and inclusion can continue on together.”

UPDATE: Paying yourself as a freelancer