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Comment by portman | Hacker News Reader

I'll make the same comment I made when this was posted last year:

Fog Creek has secret profit-sharing plans. All Joel has done is move a portion of employees' compensation from the "salary" column to the "profit-sharing" column.

If Joel were to begin posting the annual profit sharing of all employees, including Michael and Joel, then this article would make sense. But until then, it's just flair.

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I work at Fog Creek, and this is just incorrect. Profit sharing is a simple formula known to everyone in the company, so you can easily figure out how much everyone made in profit sharing at the end of the year.

Honestly, I know it sounds too good to be true, but all compensation is completely open and honest.

That is not what I was told when I asked last year. Thanks for jumping in and clarifying.

Just to be clear - does that apply to Joel and Michael too? If so, a tip of the hat to both of them.

Since the formula is based on number of days worked, I've always assumed that they just use the same formulas for themselves (and they get a lot more because they've worked at Fog Creek much longer than anyone else), but I guess I've never asked.

But I think the point is more that I know I'm not getting screwed over compared to my peers in the company -- it wouldn't really bother me to find out that they take extra for themselves since it is their company and all...

Profit in this context is whatever your accountant says it is. You can easily shuffle expenses backwards and forwards between quarters if you want to tweak the figures slightly (so, for example, your profit for this quarter is 99.9% of what it would need to be to pay bonuses). Cynical, moi?

Yes, but if this information is public, in a small corporation, it'll probably mean a riot and a significant motivation killer.

I read Spolsky's essay again to see if he mentioned making public the employee ratings. For all his talk of openness in salaries, does he really publish salary information or just the salaries at each tier of the rating system? Are employees allowed to know their co-workers' scores in the tier system? As helwr mentioned below, a lot like Soviet Russia... or the US Government.

Joel said in a stackoverflow podcast that he publishes the formula for the pay scales and profit sharing amounts so if an employee really wanted to know someone else's salary they could figure it out based on their position and how long they have been with the company.

I like the idea of transparency with salaries as long as the company pays well. If an employee decides he/she wants a higher salary than is afforded by a system like that they can look for another job or start their own company.

I just spent 36 minutes searching the transcripts, but I can't find the episode where he talked about this.

https://stackoverflow.fogbugz.com/?W4

However, I distinctly remember, and later confirmed, that Fog Creek only publishes the salaries at each scale, and not the profit sharing.

You may be right about the profit sharing. I thought I remember him saying that it was divided according to how long you have been with the company, but maybe it's not apart of the same "formula".

I don't know what fog creek does. Usually some % of profits is reserved for distribution to employees. say, 10 dollars in profits. 10% to profit sharing, that dollar is divided among the employees, proportional to their salaries. The other 9 dollars go to other stuff, like growing the company, or distribution of profits to shareholders.

So, joel may make a lot of money, but i seriously doubt he's half, or even 10% of the profit sharing money. I also wouldn't count out the idea that some employees (other than Joel and Michael) have stock, so they get paid again when profits are distributed.

employees are rich. shareholders are wealthy.

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