A star employee walks into your office with another job offer in hand, and asks for a raise. Would you give them one?
At Magoosh, we make every effort to avoid a situation like the one above, but we don’t negotiate on salary. Bhavin, our CEO, already wrote about our rationale here. Now I’d like to give you an inside look into how we approach raises.
Research shows that people—depending on factors such as current position in the company, gender and race—are not equally likely to ask for raises, and that managers are not equally likely to evaluate raise requests from different people.
While employees may reevaluate and reconsider their value and respective compensation, some are able to voice these concerns much more easily than others.
On the other end, even with a strong intent to value employees throughout their careers, managers can be susceptible to unconscious biases and, therefore, may not be providing credit where credit is due.
To solve this problem, we created a comprehensive performance framework to determine the appropriate salaries of Magooshers over time. The framework—which we continually strive to improve—mitigates the issues with negotiation, such as how some employees are more likely to ask for raises, or push for their team members to get raises, than others.
Our end goal is to make sure that people are compensated fairly throughout their career at Magoosh.
While we could write multiple posts diving into each of the steps below—and we likely will—this article is meant to give you an overview of how we do it.
Step 1: Find reliable market data and create salary tracks
Our approach: We looked into a number of ways to find reliable market data from sources such as AngelList postings, Glassdoor, and a number of salary surveys. While salary compensation surveys certainly have their pros and cons, we currently use one from Radford because of recommendations from others, the large dataset, and their focus on job level as opposed to job titles.
One issue with a large set of salary data from any source is that it’s just data, not a salary track. So, as a next step, we take this data and smooth it out to create tracks with logical increases between the steps. If there aren’t enough data points for one particular job description, we look at related fields to compile better, more reliable data. What we end up with is something that looks like this:
|IC Level (Individual Contributor)||Manager Level||Track Name (e.g., Operations)|
Step 2: Match internal jobs to market data based on job duties
Our approach: Beyond a large set of data, another key determinant in deciding on a salary compensation survey was looking for salary mapped to level of work as opposed to title.
Titles at Bay Area companies fluctuate greatly. A VP at a large company with lots of hierarchy, etc., for example, may do very different work from a VP at a small company with a lot of funding—and the two should be compensated differently.
This difference was important to us. We didn’t want to do a disservice to our employees and accidentally mismatch them to a salary that didn’t capture the complexity of their work.
You can see a quick example of the difference in salary for the same titled position at differently sized companies below:
Step 3: Create a set of examples that make level matching tangible to managers and employees
Our approach: At this point, we have the salary tracks for each job family, as seen above. And we have a leveling chart with general examples, provided to us as part of the survey.
However, the examples are very generic. They are enough to map to the right salaries, but they are not Magoosh-specific, nor are they enough to create a performance path from. Examples based on internal work here at Magoosh are at the heart of what enables us to match internal roles to their equivalent market rate pay.
These examples have been painstakingly curated through thoughtful conversation between all of our team leads to determine what type of internal work matches the generic language that’s provided. For instance, if a general example referred to “difficult conversation,” we would determine what that language would refer to specifically at Magoosh.
Here is an example of what this might look like:
The Radford leveling chart language “smaller problems” refers to the following at Magoosh:
- Examples of smaller problems that don’t require a lot of coordination:
- Composing and scheduling emails to students
- Planning a team dinner
Step 4: Calibrate
Our approach: Steps 1 through 3 encompass the steps that enabled us to create the basis of our framework.
- Market salary data → Leveling structure tied to market data → Company-specific examples tied to leveling structure → Role-specific, non-negotiable salaries tied to market salary data
Calibration is a quarterly check on all departments to ensure that every manager is thinking about examples in the same way. It protects employees from managers who might be resistant to promotions while also helping to reign in others who may be too eager.
Deep dive into Step 4: Calibration Process
Every quarter, we have a recurring structured task for company-wide leveling—what we call the system of performance increases at Magoosh.
Mid-quarter, managers write up notes and have holistic discussions with employees on where folks currently stand based on the scope of the work they are doing, the complexity of the projects, and the amount of supervision they require (or are providing, in the case of those on the manager track). Managers and employees refer to both the salary track for that position as well as the examples for each section, as described above.
If, based on an employee’s progress, their pay should be matched with a higher level, their manager will write up specific examples of their team member’s work. This write up includes:
- how the employee has been doing the work,
- the employee’s goal setting,
- the success of their projects, etc.
These examples—as well as their ties to our leveling examples—are shared as a proposal with all other managers.
All department managers comment on the proposal with questions, thoughts, and concerns. Afterwards, they all meet to further discuss each proposed level change.
This process is arduous and, at times, reveals issues or areas in which our examples might be lacking. However, this is also a critical step that enables every situation to be provided its due time and thought. There are no rash changes, and every change has the buy in of folks from different departments.
If there is someone on a team whose work has increased in scope but their manager hasn’t brought it up, another team lead involved in the project will ask about it. On the other hand, if a proposed change isn’t in line with the examples at that level, that will be discussed as well.
It is in this step that we are able to deliberate and clarify what changes are being made.
Having a process delineated enables us to be thorough and thoughtful each quarter. No steps are missed and there are no random raises that don’t follow process.
Drawbacks to consider
This evaluation process does have its drawbacks:
- It’s time consuming—we’re still working on ways to scale it.
- At times of disagreement, it can be frustrating.
However, it is through these very conflicts and open dialogue that we are able to create clearer examples and better systems of thinking for the future.
The benefits far outweigh the drawbacks
All that said, the benefits far outweigh the drawbacks. Working on this salary structure will hopefully continue to promote compensation fairness and consistency between different roles, genders, backgrounds, departments, and more here at Magoosh.
- With a purely market-based framework and a no-negotiations policy, the shyest introvert is afforded the same opportunity for raises as the most persuasive self-aggrandizer.
- If an employee is unsure whether their manager is reviewing their performance fairly— a situation they are encouraged to bring up—they also know that their manager’s evaluation is reviewed by others at the company.
- If a person in one department is worried that their peers in other departments are moving up more quickly, they can count on examples for different roles and departments all being calibrated against one another and similar examples being set at the same level.
It is our hope that building upon these structures will foster further pay equality as we grow as a company, increasing inclusion and diversity as a whole.