Smarkets startup lets employees pick how much they get paid

Smarkets CEO Jason Trost lets employees pick how much
they want to get paid.
Smarkets

• London-based betting startup Smarkets lets employees
  pick how much they want to get paid.
• The system works through social consensus, with each
  employees’ salary information published within the company’s
  internal wiki.
• There’s pros and cons to the process, says Smarkets CEO
  Jason Trost, but ultimately, it works.

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“It’s not as cool as it sounds,” says Jason Trost, CEO of
London-based betting company Smarkets, when asked about his
company’s unusual policy to let employees pick how much they’d
like to be paid. 

“It’s a crazy process,” he continues. “But it does work.”

It was about three years ago when Trost introduced a system at
Smarkets for employees to pick their own salaries. The
inspiration for this decision was largely based on what he
describes as a companywide pursuit for greater transparency.

“I think this is the fairest system,” he says. “It gives people a
rightful sense that they are more in control of their job, more
in control of their position.”

At Smarkets, employee salaries aren’t the result of conversations
with upper management; instead, each person picks how much they’d
like to be paid, and then their colleagues vote on whether or not
they think they’re worth it. Each employee’s salary is published
within an internal wiki, and they’re invited to renegotiate their
worth twice a year. (Originally, Smarkets reviewed salaries once
a month, but Trost says that this process turned out to be “way
too disruptive.”)

Smarkets

If you ask for a substantial amount more than what your
colleagues make, you might face your peers’ disapproval.

“People scrutinize what you ask for within an internal court,”
says Trost. “Some people will think it’s about right, and some
people will say that it’s too high or too low. Usually, they say
it’s too high. And then they get negative and positive
feedback.” 

While employees can’t veto someone else’s salary entirely, they
can attempt to block it. The system works largely off of social
consensus; if you take issue with how much someone else is
getting paid, you’ll have to confront them about it
directly. 

Angeline Mulet-Marquisenie, a French engineer who
has worked out of Smarkets’s UK office for four years, said that
the process has triggered hard conversations among employees.
But, ultimately, she said that the system created a healthier
environment.

After all, employees will talk about salary discrepancies,
whether the information is public or not. “The public salary makes it much healthier,”
she said. “The fact that we know what everyone gets paid, and
that there isn’t that much inequality in how people are
paid.”

Smarkets

But there’s drawbacks to the
system, as well. When the process was employed early on, Trost
said that one employee, unhappy with a project he was assigned,
doubled his pay as a matter of protest. In the end, the
disgruntled employee settled for around $40,000 less, but, said
Trost, “It was upsetting and a waste of time.”

Mostly, however, this “pick your
own pay” approach allows for greater flexibility. “I think it
lets people be human,” Trost said. “If someone needs to buy a
house and they want a few thousand more…If you can give that to
people, that’s really nice.”

Trost said he believes the system
benefits people who might be good at their jobs but aren’t strong
negotiators. Additionally, “it decreases the incentive to
brown-nose, and the incentive for office politics,” he said.
“It’s much harder to schmooze the crowd when you know what
everyone is getting paid.”

But instituting the process in
the first place wasn’t easy. “It’s really scary to be so
transparent — scary for everyone,” Trost said.
“People don’t want to know how much their colleagues make because
they don’t want to know if they’re making more than them.
Managers don’t want to do it because they feel they’ll lose
control.”

Is this the future of salary
negotiating? Trost thinks it might be. “It’s important for
humanity to keep improving these social systems,” he said. “I’m
not just doing this because I think it’s a good
idea — I want Smarkets to be an example
company.”

As for whether or not he would
recommend applying Smarkets’s salary process to other companies,
Trost said that it all depends on the company. For smaller,
scrappier startups, it might just work. For larger, established
companies, it would admittedly be more difficult. 

“If the management has the
courage to deal with the ups and downs, it could be worth it,” he
said. “But there might be a trade-off.”