Why everyone at this startup knows each other's salary
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That's how it works at Jet.com, the buzzy e-commerce startup that's only been shipping orders on toilet paper, toothbrushes, dog food, and everything in between, since last year.
Marc Lore, the CEO of Jet, recently explained to Tech Insider why the company made such an unusual decision.
Simply put, it comes down to the culture he wants to cultivate at Jet.
Lore, who previously founded Quidsi, the parent company of e-commerce sites like Diapers.com, Soap.com, Wag.com, and more, before selling it to Amazon for about $550 million in 2010, said that he wanted to replicate the culture of an early stage startup even as Jet grew larger.
And radical transparency is one way he thinks he can do that.
"When you're in an early stage startup, the reason why people love working there is because everyone knows everything," Lore told Tech Insider during an interview at the company's Hoboken, New Jersey, headquarters on Friday. "There's mutual trust. There are no games. Everything's fair. And if something's not fair, you know everything so you can call someone out on it... People just thrive in that."
Lore also said that having everyone's salary out there "empowered" employees and helped ensure that they aren't taken advantage of.
This pattern gets compounded during the annual review. There's a finite amount of money to allocate, and the manager knows that the unhappy employee needs a bigger raise and the happy employee will still be happy with a smaller raise.
"It breaks down trust," Lore said. If the person making less finds out that her colleague is making more, "is that a company [she's] going to run through a brick wall for?"
Probably not.
"The underlying foundation is shaky," Lore said. "It's like a relationship built on lies... Just because you don't know [how much the other person is making], everything's OK. But as soon as you know, it's not OK. I just felt like it's not a good foundation to build a workforce that's empowered and feels like there's trust."
How it works
There are 13 different salary levels at Jet.com, ranging from $40,000 per year for entry-level employees to $300,000 per year for executives. In addition to salary, every full time employee at Jet - there were 266 of them as of last week - is given equity in the company. How much equity you get depends on your salary level, but everyone at your level gets the same amount of equity.
"You create a culture where people want to give the best they got, not because they're going to make more money, but because they feel a part of something," Lore said. "They feel an owner in the business, and you feel like you could could make an impact."
There are no bonuses, and the only way to get a raise is to get promoted to the next level. (Lore said that people at the company have already skipped levels.)
One result of this, Lore said, is that people don't go out and interview for other jobs just to come back to their manager and try to get a raise, a waste of time for the employee and both companies.
"It's like you don't negotiate with terrorists," Lore joked. "Everybody knows it just doesn't happen."
Lore said that this policy isn't for every workplace, but there's no question it's working for Jet so far.
"People thought it was crazy when we first said [we'd share salaries], and now that we've done it, it's not as crazy - it's kind of cool," Lore said. "Because you feel empowered. You're like 'I know what everyone's making, and then you're open and free to talk to your manager and say 'hey listen, this doesn't seem fair.'"
