I wanted Fog Creek to have a salary scale that was as objective as possible. A manager would have absolutely no leeway when it came to setting a salary.

But as he describes the system more, it doesn’t sound so radical.  Basically, Fog Creek determines a level for everyone based on Experience, Scope, and Skill.  Experience being how many years an employee is bringing to the table, scope being how much management they need or how many folks they’re managing, and skill being what they’re actually able to do.  Basically, every employee is assigned a pay level based on an average of Scope and Skill.  That average is  then compared to a sliding scale based on years of experience.  There’s an infographic in the article here.

Splosky is pretty convincing at heading off arguments about salary inversion — that’s when the market determines that rookies are worth more than current employees when labor markets are tight and demand for workers with certain skills are in high demand.  He basically says that employers should bite the bullet and give everyone a raise or determine other workplace incentives to keep employees.

There are a couple of possible issues here, the first being that Splosky’s payscale system seems geared toward the software industry.  While Skill, Scope, and Experience may seem like universal measures, they may be more difficult to apply to an accounting team or marketing department.  Second, it seems that even this simple scoring system could get complicated very quickly and many of the measures are subjective, essentially eliminating any fairness and transparency that was originally intended.

Still, this system is admirable in that it exists.   Many companies give raises (or don’t give them) based on whether or not they want an employee to stay and as a motivational tool.  Since most managers don’t have a system for giving raises, it becomes a shoot-from-the-hip, gut reaction game.  That’s just not good business.  Splosky found a system that works for his company.  Creating one for your company is also important, but it’s important to:

1.)  Keep It Simple:  Creating extra work and bureaucracy isn’t going to help anyone.  Even a simple three part rating system at Fog Creek can get complicated.

2.)  Realize It’s Not a Cure All:  Employees are motivated by all kinds of things and, for the most part, crave fairness.  A system like this will promote fairness, but will not be completely fair in and of itself.

3.)  Don’t Fear Transparency:  Splosky’s most radical suggestion is complete transparency in pay.  Employees may share information any way so why pretend that salaries are secret?  Don’t let someone’s ‘level’ become code for salary and another numer to hide.

4.)  Tailor a System:  Creating a system that’s right for your market and company culture is important.  Some work environments are driven by efficiency, others by service, and others by sales.  It’s important to determine what drives your company and create a system that rewards the right combination of people and skills.

Read Splosky’s full article at Inc.com here.