I'm at a startup where I found out a junior hire -- worse in every way than myself and several steps down in title -- is making at least 30% more than I am. It's a strange position. I've started polishing my resume as a result.
Honestly, I just found out, and I am trying to figure out when and how to bring this up. It feels like there are several good timings for bringing this up:
1. When I've just delivered something of high business value
2. When the company is really needs me to deliver something of high value
3. Annual review
4. Right before quarterly/annual budgets
5. When I have a competing offer
I've asked for a raise, not too long ago, without any information in hand about competing salaries. That conversation did not lead to a pay increase. I found out -- not long after that conversation -- that the post-funding folks make substantially more than the pre-funding folks.
Salary aside, it is an excellent job. I enjoy working there, believe in the mission, and I am relatively unlikely to leave for a more lucrative offer. I think management knows that, which is why they don't feel the need to pay myself (or other early employees) market rates. Management pays the least an employee will work for.
I gave my company a choice: raise my salary/title to reflect the new hierarchy or lose me to a competitive offer. They fed me a line about how the company was making money, but not enough to raise everyone's salary (translation: we don't think you can get a competitive offer).
I took another job 3 weeks later for 25% more money + actual equity (not bullshit stock options).
Startups can be fun, but in terms of compensation, the early employees will get screwed over.
Management is hoping to keep employees happy by maintaining them in a state of ignorance, which never works. That is not a good sign.
Think carefully and explicitly about the decision-making processes that could have plausibly created this situation where people doing the same stuff get paid substantially different amounts. Think about the values reflected by those processes, and the odds that the company does not have some major storms ahead given the people at the helm.
I've worked at a few places where it was against the rules to talk about your salary. I asked the owner why (quoting what Spolksy had said) and I was told that if the employees know what each other earned, half of them would leave. I asked why some people were being paid more than others for the same job, and the owner told me, "Some people are better at negotiating than others." And I knew for a fact that I am terrible at asking for more, so it was time to look for another job. Shame really. It was a good job, but I'd always feel like someone had negotiated better than me and was earning an extra 20%
I saw a sheet of salaries for a random subset of employees. Pre-funding engineering hires were universally paid substantially less than post-funding hires. The way we're structured, there isn't an equity upside which would cover the difference. If this was a one-off, you could chalk it up to hiring error, negotiations, Dunning-Kruger with regards to estimate of my own skills, etc. However, even myself excluded, a few of our best engineers are being paid substantially less than people much worse than people hired later on. It was pretty universal.
Often it's simply dependent on when you were hired. Employers have to stay competitive but won't give you a raise if you don't express discontent. When wages trend upward new hires can often end up making more money.
Some employers, anyhow. But I think it requires a certain level of negligence or callousness. You might be able to save a little money on payroll. But I think that ignores the hidden costs in reduced goodwill, lowered trust, and higher turnover.
That's pretty much true, but in the more "responsible" startups an employee who's been around long enough would be compensated with equity (or the equivalent in benefits) to compensate for the difference.
You would be surprised about how few "responsible" startups there are. Most will never be responsible until they're under scrutiny. I've been with a few that actively derided the idea of compensating employees who were underpaid during the initial growth phases. They thought that because they'd agreed to help "build the business" that nothing more was owed in better times.
One of them got a lot of press as a successful startup and landed several new large contracts. Which is why, after a year of executive self-congratulations and bonuses, their lead developer, who had saved several failed projects singlehandedly, left for more realistic pastures. They only brought him up to just below market when he talked about leaving, had no intentions about rewarding him for past underpaid accomplishments (which were obviously investments on his part), and despite their poor compensation packages had an overly strict culture for non-executives. Management compensation was top priority, and retention was assumed - they thought people would just stay despite having better alternatives. Even if he stayed, he'd have to watch other people get screwed. He wasn't the first, and doubtless he won't be the last rat to abandon that ship. I left as well, seeing that they really didn't care about anyone who didn't have ownership and a briefcase.
It's really not that uncommon. Being at the top of a company requires only one of three things: luck, lies ("charisma") or capital. Quite a lot of new business owners get mislead by their own kool-aid. They start believing that their vague "vision" is the most important thing and treat the people who do the real work as replaceable cogs. They give no thought to training costs or productivity and have high turnover rates. Merely treating the staff better could have a huge and positive financial impact. They'd probably know about these management issues if they didn't defensively fire people who voiced dissent. But a fool and his competent staff are soon parted.
I agree with the overall sentiment of your comment. However, I think psychologists would disagree with the idea that charisma -> dishonesty, and I think holding such a viewpoint is damaging to long-term success.
