Embedding Founder-led Pay Transparency, with Paul Stovell, Founder of Octopus Deploy

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Welcome to the Foundation Series, where we explore startup compensation with top minds in the industry.
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You'll hear from heads of people, from founders and VCs on how to drive results through startup compensation strategies and practices. Let's dive into today's episode. So Paul, welcome.
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Great to have you here on the Foundation Series. I really appreciate your time, uh, joining me today to, to talk about pay transparency. Uh, [chuckles] what... How to introduce you?
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Octopus Deploy has been a company that has been renowned, certainly within Australia, I think not just because you have a really novel name as a company, but also because you've been, like, a standout success within the, the, the technology space as well.
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Um, but excited to, to speak to you today on the topic of pay transparency.
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Um, I'm gonna obviously get you to introduce yourself and, and Octopus and, and the things you've done in pay in a second, but I've, I've always been really impressed with how forward-leaning I think you've been as a company in, in a lot of different aspects when it comes to your people practices, not just p- uh, pay transparency.
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Um, and so yeah, really excited to have you on the, on the series today. So welcome and, um, I'd love to have you introduce yourself, share a bit about, about Octopus and about your role as a founder. Uh, thank you.
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That, that's a very kind introduction too. So, so thank you, and thanks for having me. Um, yeah, and hopefully this is, uh, useful for, for people who find it interesting.
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Um, yeah, so look, I'm, I'm the founder and CEO of Octopus. I started it, uh, about twelve years ago, um, as a sort of nights and weekends hobby project and then eventually grew it into a business.
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And, um, you know, at the moment we are... we've just crossed three hundred employees. Um, they're globally distributed around the world.
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Um, most of R&D is in Australia, New Zealand, and now Israel, um, and a little bit in Ukraine. Uh, and then we've got sales and marketing support geographically distributed, uh, everywhere.
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And, um, yeah, we just crossed a hundred million in revenue too, which was another pretty cool milestone. Nice.
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So, um, and look, we help companies with deployment automation, so all things CI/CD for, uh, for your engineering teams out there. And tell me, what's it been like being the, uh, the founder of a company like this?
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[chuckles] So Octopus started when I was twenty-five, and I think I'm approaching sixty now, so you know, uh, [laughs] In startup years. Yeah, in startup years, exactly. Um, you know, it's different to what I expected.
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So I'm a software developer by background, right? That's, that's how I, uh, got into this space and sort of fell in love with software creation.
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Um, and so the thing I thought I would enjoy is, you know, writing code and, and, um, and, and maybe building an engineering team.
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Actually, I think the thing I've enjoyed over the twelve years has been, like, there's always something that your organization can do just a bit better, right?
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Like, we're really good at this, this, and this, but we're just not very good at this thing yet. But we're gonna get really good at that thing soon.
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And so almost every year is a case of picking, like, what are the two or three things that we're not particularly good at that we need to get good at, and then, um, focusing down on building that capability.
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And within that, I, I learn a lot about myself, I learn a lot about other people. Um, and so that has made it a, a really enjoyable journey and has kept me engaged for many years now.
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So I think Octopus was first came onto my radar at a, a small developers conference here in Brisbane.
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I can't remember the name of it, but I remember seeing Mike, who heads up the engineering team there, who was talking about essentially like you had kinda open sourced your career framework.
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And I remember at the time being really impressed that, A, you even had a career framework, but B, that you had kinda been so thoughtful about it and then taken the steps towards, um, consulting that and making it available for anyone who, who comes across your website.
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That would've been six or seven years ago. Fast-forward now and, and that same philosophy, I think, has spread to a lot of different parts of your business.
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Most kind of, uh, relevant to this conversation is pay transparency. Tell me a bit about the, the, the philosophy about the sentiment that you have around pay as a, as a founder and, and as part of your business. Yeah.
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Um, that's a very good question. I guess we started probably like every other company in, in the early days.
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We were hiring the first couple of employees, and they were both software engineers, and so we posted a job ad for software engineers. Um, we put a salary number on it.
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We always felt it was really important that as the company, we're the ones naming the number and not asking people what they're currently on and things like that.
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So we hired the first couple of software engineers, and we paid them the same 'cause they joined at the same time to do, you know, roughly the same role.
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Then over time, as you do, you hire other people, and they're doing slightly different roles, so you pay them slightly differently and you're thoughtful about it, but there's not a systematic approach to it sort of thing 'cause it's only, it's only a few people.
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And then, of course, you end up hiring someone who's more experienced, and so you call them a senior software engineer. But now you have to sort of figure out what's the difference.
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I, I sort of know this person's gonna bring more value, but what is the value that they're gonna bring, and how do we sort of quantify that in a way that, you know, feels fair?
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And so in the early days, I think we put a bunch of emphasis on having a defined career framework that people could really connect with.
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And, and this was definitely Mike's doing in, in the early days of growing our engineering org because it was always the biggest organization at Octopus, where we wanted to have five different levels of what a software engineer is.
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So from junior, intermediate, senior, lead, principal, that sort of thing. Um, and we wanted very clear criteria for all of those things.
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And so what we wanted to be able to do when we sit down with someone and say, "Look, we think you're, you know, ready to be promoted to a senior engineer," or, "We think you're not ready to be promoted t-to senior engineer.
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Here's how we think about that. And, and if we share that in advance, then you can think about it too, and you can kind of make sure that you're, you know, working towards these things."
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And so it's really constructive way to have conversations around performance with people.
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And, and then when we introduced that, that was also the time we started thinking, "Well, you know, if we've got two people doing the same thing, we should be paying them broadly the same."
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So I think back then, going back eight or nine years, we probably had salary bands within those roles that were applicable. And I'd say that's probably where most companies are and, and probably where they stopped.
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As the company kind of evolved over time, we, we really leaned into having a very systematic approach to how we thought about compensation.
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And the way that I guess we always thought about it was if we were to accidentally print all of the salaries that everybody was being paid and leave it on the printer or forget to collect it from the printer, um, you know, and someone was to pick that up and share it with the whole company, would we feel embarrassed?
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Would we feel ashamed? Like, would we feel like we're doing something wrong? Now that-that's different to, like, does everyone else agree?
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They might, they might think it's really unfair this person gets paid this and I get paid that. But it was very important to us that we felt like we, we could justify our decisions, and we could stand behind them, right?
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And that, like, that's just part of being an, an ethical person.And so that was kind of always part of the system.
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And then over time, though, what we, what we then introduced was a little bit more of a matrix model where we said, "Okay, within those five bands, let's have different maturity ratings for those things, and we're gonna have three maturity ratings."
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And so we introduced, uh, performing, exceeding, and, uh, maturing. Then if you imagine the table now is five rows, and this is just for one career pathway for software engineer, right?
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So we've got junior through to principal, and then we've got three columns, maturing, performing, exceeding.
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If we were to say this is what we expect of a senior software engineer, someone who's maturing is probably meeting like seventy percent of those dot points.
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Someone who's performing should be meeting like ninety percent of them, and someone who's exceeding is probably doing all of them plus some of the things that would be expected from the next level up.
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So that's a, a way you kinda break down th-that matrix. And then what we said was, in every one of those cells in that matrix, there's not going to be a range.
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It is gonna be a single number, and that's what we're going to pay for people in that role, and they're going to know where they are within that matrix.
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And again, this is probably seven years or so ago, we started to do that. And then of course, we went and rationalized everybody 'cause over the years we'd hired a whole bunch of people for different rhymes and reasons.
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They had different salaries, and so we sort of normalized it into this thing. Over the years, things caught up. We got to a point where everybody was sort of fitting within, within that matrix.
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The thing that we did more recently, which I think touches on the transparency aspect you asked about, is we started sharing that-- those tables internally.
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So within the company, you can go and look up, uh, for marketing, the marketing career pathway, what are the five levels? What's expected of them? What is the difference between maturing, performing, exceeding?
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And what are we paying people to do those roles? And so you can see yourself on that matrix, and you can look at your salary, and you can say, "I'm being paid thing that the matrix says I'm supposed to be paid."
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And, and that goes a really long way, right? I think the thing people get wrong about compensation is it's not the dollar value. The dollar value actually for most people doesn't mean a whole lot.
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Like, it has a, it has an important meaning to their family and how they provide for them and so on, but, but, you know, by and large, people don't get emotional over that number, and it's not really very healthy to get emotional over that number.
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What they do get emotional about, and quite rightly so, is when it feels like it's not fair, when it feels like there is someone else doing the same thing as me but being paid more and actually and less too, right?
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Most people don't really wanna be the person who's being paid more to do the same role as everyone else either, right? 'Cause they work in teams, and being a good teammate is important.
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So that was sort of our evolution over time. Interesting story. I completely agree.
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I think so often it's, it's less about the number, and it's more about how it relates to peers or other roles outside the company that you could reasonably expect to, to be successful in and, and am I being paid commensurate maybe with the market, things like that.
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So completely relate with that experience. You... Talking about the catalyst, I mean, I think the, the question a lot of people may wanna ask is why. You've talked about there was the printer scenario.
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If someone were to walk past and pick up that piece of paper, I think that's, that's a reason for having a solid foundation and, and logic behind your salaries.
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What was the main driver for then going, "Actually, let's just make them available. Let's just give them to people, and, and even if they walk past the printer, they've seen the numbers before"? Yeah. Yeah.
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So I'd say part of it was just part of growing as a company. Like, as you add more people, things just become a little bit more complicated.
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And so as an example, when you have a system where people are just on different ranges, A, it becomes really hard even internally for people to justify why is this person being paid four thousand dollars more than that person.
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They seem to do roughly the same role. We seem to have the same level of expectations from them.
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So, so I don't think ranges kind of ever make sense, and I think they're a pretty hard thing to defend from, like, is it keeping me up at night as a CEO?
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But then you have this systematic approach that, that we took, and that allows you as a management team, and it wasn't just a couple of us.
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As we grew, most of the sort of mid-level managers, for example, saw those spreadsheets, and if you were like an engineering director, you would see all of the engineers, and you could see, yep, this is what they're being paid, and this is where they fit within that matrix.
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And the spreadsheet says it should be this. So that's good because then you've got a whole bunch of people who understand the philosophy and can explain it and defend it to people who haven't seen it.
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But it does, I guess, ask for a whole lot of trust from the average employee, let's say, who's sort of like, "Well, I've heard Octopus has this systematic approach to doing it, and if I'm being paid my salary, and I know Octopus has a systematic approach to doing it, I suppose I'll just trust that the company is following that systematic approach."
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But there's no way to verify that, right? There's no way that, that, that they can check it.
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And actually, I think one of the catalysts was over time we would do our own little audits on it, and we would go, and we would say, "Okay, for all the people that we've got, are they actually being paid according to what the system says they should be paid, you know, for their, their level and band?"
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And we, we screwed it up a couple of times, and the reason we screwed it up was someone got promoted, but at the time we had a hiring freeze or something, and we were meant to pick it up three months later, or they're in, they're in probation 'cause they'd only just joined, and so they missed out on one round of things.
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All kind of, I guess, understandable reasons, but not good reasons.
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And so as we would find those things, we'd go and fix it, um, but one of the things we realized is sharing the actual tables with people is super meaningful because what it gave people was firstly a sense of confidence.
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Like, okay, this is actually what the thing looks like. It's real, and it's concrete. I can see myself on it, and I can see if it's wrong, right? And so I can tell you if something's not wrong, and so that's good, right?
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It sort of puts power back in people's hands to be able to help us make sure the system is working as it's intended.
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And it also gives them a, a framework to think about the next few years 'cause they can look at that and can say, "You know what?
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Realistically, if I'm a senior engineer and I wanna become a principal engineer because that's the number I wanna get paid, can I meet that criteria in the next couple of years?
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Can I grow with the company, or do I need to look at changing career pathways or, you know, go somewhere else?" And so that was a really powerful thing as well.
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But the other thing we were quite transparent about is here's the benchmarks we're using to come up with these numbers, and here's how we come up with them.
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And so people can go and check the benchmark data themselves and, and sort of feel like, yep. Oh, okay. Wow. We have a philosophy.
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The way we think about it is if you imagine those three columns, maturing, performing, exceeding, maturing should be like the fiftieth percentile of the benchmarks we can find for that particular role.
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Performing should be like the seventy-fifth to... and exceeding should be in the ninetieth percentile.Now that's hard to do because in reality, when you pull these benchmarks, they're kind of all over the place, right?
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There's some juniors at the ninetieth percentile who get paid more than seniors at the fiftieth percentile, and you need to create a table that's only going upwards, right, as people progress through their careers.
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So you have to normalize and flatten things, and there's a lot of art that goes into it. But people being able to go and see those benchmarks themselves and kinda say, "Right.
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Octopus says we pay the seventy-fifth percentile," and, "Yep. Oh, that works. I can see it, and that's what I'm getting paid." Yeah. Wow. They feel a lot of confidence in the system. Yeah.
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So you-- I guess you're kinda letting people check your homework in a way.
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Like, it's, it's a, it's a sense of here's, here's the set of numbers that we will share with you as, as part of our pay transparency, but here's the actual numbers that underlie those figures and what we've- Yep.
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-how we've kind of handled them to land where we've landed. Yeah. And, like, I-- for some reason, companies are, like, really defensive about this. But if you imagine, like, what is the point?
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Like, what is the company trying to optimize for here?
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What we're trying to optimize for is we want to hire the maximum number of really smart, talented people, you know, that we can afford to do the work that, that we need to do, and we wanna retain those people.
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And so we have to pay them competitively or we won't be able to hire them.
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And we have to do that consistently or, you know, we can't just hire the new people at a higher rate because then the old people will know they can earn more elsewhere and so leave, right? So that's a silly idea.
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So you have to pay them all the same for the same work, and you wanna pay them competitive enough that they're not really thinking too much about salary, right?
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And we sort of aim for, like, again, that seventy-fifth, eighty-fifth percentile. Yes, you could possibly get paid three thousand dollars, five thousand dollars more if you go to another company somewhere else.
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Chances are you probably actually get paid less. That's what we're aiming for. Those jobs are out there though. But that's not the only reason we want you to be here. Yeah.
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But we want you to be compensated well enough you're not thinking... And it's important, right? Because then that also allows us to then maximize how many people we have, which also takes pressure off people, right?
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I'm not the only support rep answering tickets in this time zone 'cause Octopus can afford two people because we're not paying the hundredth percentile, we're paying the seventy-fifth percentile.
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And so that's the sort of thing the company's optimizing for. If our benchmarks are wrong, we wanna know, right?
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Like, I mean, it's ridiculous that if we have a software engineer who's been here for four years, they've built some amazing stuff, and they're leaving because they can make ten thousand dollars more elsewhere, we should have known that.
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We should have had our pulse on the market. We're active. We're hiring in the market. We should have a sense of what's going on with that market, and we should be making sure our pay is, you know, competitive to that.
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And when it's not, we're not just up-upping it for new people we're hiring, we're going back and we're fixing it for everybody else that's here as well, so they feel confident that the system's working.
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And so if people find better benchmarks, you know, we encourage them, like, share it with us. If you get an offer from someone else, you know, share it with us, 'cause that's what we're optimizing for.
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You know, we're not emotional about how much a software engineer costs, [chuckles] right? That's what the market says it costs. So we're just trying to keep as many of them as we can. Yeah. So why hide it?
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It's, it's really insightful. You touched on two things earlier that I'm keen to dive into.
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One of them is around what it's meant for people in terms of their own career mobility, so being able to identify a path that they may wanna pursue and factoring in the salary as part of that decision.
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Maybe they do wanna buy a house, maybe they wanna start a family, whatever that might be. The other is the, the trust side and the fact that you're going, "Hey, here's what we pay.
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We do pay consistently," and I wanna touch on pay points versus pay bands in a second as well. But what's it done from a, a trust perspective?
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And I think, you know, those dialing in here are probably gonna be very interested from an engagement perspective on what it means for them environment.
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I think we're in a, an interesting space as an industry where I would say, and certainly a lot of research shows that trust is, is diminishing between employees and employers at the moment.
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How have you seen this counter that trend? Yeah. I think sometimes, like, the worst place to be as an employer is, like, actually be doing everything right, but for people to have the perception that you're not, right.
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For people to have the perception... 'Cause then it is sort of like at least if you're doing everything wrong, you'd be getting away with it, right? Like, at least there'd be some, some upside to it.
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But if you're actually in fact kinda doing everything as well as you possibly can and people don't know about it, that's, that's kind of a worse outcome in some ways. Yeah.
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You're not cashing in on the trust credits, are you? Right. E-exactly. And so trust is, like, hugely important, right?
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Like, I mean, the employer-employee relationship, obviously, like we hold the power to some, to some degree there, right? So, you know, we have to kinda be very responsible with that.
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And so by sharing those tables, it does give people a very high level of trust because they can see where they're at. They also know that, you know, their peers are going to be there.
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Now, like, I think when people think about pay transparency, what they think, we're gonna create a spreadsheet, and we're gonna put everybody's actual salary into that spreadsheet, so you know exactly what, you know, Sarah's getting paid.
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But in practice, you don't, you don't have to do that. That's not required.
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If the goal is for people to feel like you have a fair and just systematic approach to compensation that's market competitive, you don't actually need to go that far.
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But what you can say is, you know, "Here's, here's the system.
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You can go and check your salary on it, um, and we're doing our own internal audits, but everyone else can call it out, you know, if we've made a mistake here or there."
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And that can give people a whole lot of confidence in it. Now, it's not, it's not always perfect.
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And I would say, like, even within Octopus today, we probably have a handful of cases of people who aren't being paid according to what's in that matrix.
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They're not being paid less than the thing they should be getting paid, but sometimes they're getting paid a bit more. And the reasons for those are purely historic, right?
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Like, every case is a bit different, but they're self-correcting. And so I think that's like the ideal spot to go, I guess, as far as, as transparency goes.
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And I think internally, actually, we share with people they know which of the rows, you know, as far as, like, they know they're a senior software engineer, right?
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They know they're a level three, and they know their peers are as well. They know for themselves whether they're maturing, performing, exceeding. They don't know if their peers are maturing, performing, exceeding.
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Part of that is really awkward, right? You know, Fred's maturing. Yeah, what does that mean? So the person knows and the managers know, but it's not broadly known outside of the organization.
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And so you don't actually know what Sarah or Fred are getting paid because it is going to be somewhere in those three numbers within that row.
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And that, that does give people some privacy, I guess, as far as what their income is. Yeah. Yeah. And that makes sense, right?
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That's a, a relatively personal thing in the sense of you're on a, a personal performance trajectory. It makes sense that that's something that's kept between the, the leader and the individual.
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Um, what's it done for those conversations, though? Like, as a manager, I'm imagining that that has just made these conversations infinitely easier.
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If you think about, you know, and you've worked in, in other companies before- Yeah. -where you maybe haven't had the level of pay transparency or even the level of definition around pay practices or pay philosophy.
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What's it done for you if you contrast the experience here with the, the, the experience there in terms of those conversations and the ease with which your managers and people are having them?Yeah, I mean, there are some downsides.
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We can talk about, I guess, some of the challenges that do come with it, but I'd-- but it is very much mostly upsides, I would say.
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If I go back to before Octopus, I worked for a consulting company for a while, and, you know, within that company, uh, I don't think they really had that systematic of an approach to compensation.
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And generally, you know, and you find this in every role, you know, there are people who feel confident asking for a higher salary every year, every six months, and there are, there are people who don't.
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There are people who just sort of silently get on with the work and sort of assume that they'll be rewarded over time, and that, that was me, and that strategy worked well for me over time, but it doesn't, doesn't work for everybody, and certainly it's easy to create systems where people are overlooked.
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And then even when it does, when you say, "Hey, I, I think I should be getting paid more for this role. I've matured a lot in the last few years."
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They kinda just throw a number at you and like, "Is that enough to kinda get you to go away?" And actually that, that doesn't really satisfy me.
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You can actually give me a lower number if you help me understand how you got to it and it feels fair. Like that's... And so, and if I contrast that to like I think the manager experience at Octopus, right?
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So someone comes and says, "Hey, manager, I've, I've been here for a couple of years now. I think I should be getting paid more." Well, you can deconstruct that question. You can say, "Why do you think that?
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Do you think because the market for your role has changed in the wider market? Are you seeing job offers? Are you seeing friends doing the same role who are being paid more?"
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Because that's data that our people team would really like to know because they can factor it in when they do their benchmarking rounds next time, right? Yeah.
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So that's half of the reasons why you might think you deserve a, a pay rise, just because the market is booming for your role. And the other half is because, no, I'm doing different things, right?
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I was doing this, and now I'm doing that, and so I'm a senior, and I should be paid more. Well, we've got fairly well-written criteria for what's involved in those things. Let's go through them together.
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And you know what? Actually, I agree. Six months ago, I wouldn't have said yes on this dot point, you know, this dot... You know, now you can.
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So yep, let's go and make that case, and we do performance review cycles every six months to pick up, you know, those, those kind of things, 'cause it's really important that people aren't languishing for too long.
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So that's a really powerful thing for managers. It, it puts the benchmarking problem to the people team because they can spend the time doing that.
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And for a manager, generally my focus is on the people I've got and the expectations they have and the career pathways they want, and are they meeting it, and it's those two things combined that's producing the number they're getting paid.
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It's, it's one less thing to worry about, right? So often managers are, are left scratching their heads around pay decisions and, and having to try to justify them to their people.
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This takes a lot of that out of it because they've got the context behind what a pay point constitutes because the language is there. But then also it's just a point and it's not a band.
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And so now suddenly it's, it's very linear in that sense. Yep. Yep. And it also gives everyone a sense that it's happening fairly as well, which I think is actually the most important thing in this whole space.
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Now, the, the managers do have to be prepared for other questions, though. So for example, because we share the salary tables for all of the roles within Octopus, right?
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And so you can go and see, uh, what does the job band for IT look like? What does the job band for marketing look like? They're all different numbers.
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And we can kinda maybe talk philosophically about, you know, why that should be the case or why it is the case, whether it should be or not, but, um, they're different.
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And so the manager actually has to be prepared to explain that. Do we pay designers differently to engineers? Do we pay product managers differently to engineers? Why do we do that?
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But they can also lean on the people team who can provide some of that explanation.
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So before we had this conversation, you shared with me the compensation philosophy, which I think was seventy, uh, seventy pages of a, of a slide deck, but again, it went into such nuance and intricate detail.
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Have you found that being able to go to that length has, has made those conversations easy because they can speak to, to, to the nuance there in the, in the background? Definitely.
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Because everyone in your organization has joined with different context, right? They're all different people. They all went to different schools. They all have different politics.
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They all have different lived experiences. They've worked at different companies. And so what you have is this melting pot of people with different experiences.
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And most, I guess, the way a lot of people and HR practices work, the sort of default way that a lot of companies do kind of stuff, and so people assume that's how it must work here as well.
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And this is an area that people do care a lot about. Particularly they care about the fairness, I would say, of it a lot. We, we've always operated under this philosophy of we're hiring really smart, talented people.
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And so you're hiring these smart people, you need to trust them, and not because they earn the trust. You should sort of default to offering a really high level of trust as they join and leaning in on that.
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And so part of trusting people is trusting that you can... That they are worthy of being given an explanation of why something is the way it...
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Like, I don't know if you have kids or not, but, like, the argument of, like, "Because I said so," it doesn't work on toddlers, right? It doesn't work on adults, certainly, and not in a workplace.
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So for us as a company, in every decision we've made, every controversial decision and, and even a lot of the basic decisions, we assume our people are worthy of us taking the time to explain to them.
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And it may not be the explanation they want to hear. It may be different. They may think we should do something different. But we assume that they're worthy of hearing that, and we lean in on that, and we overexplain.
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You know, here's, here's why for the people that care about it.
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And, and then what's powerful about that is if there is something we could be doing better, we get to have a conversation around that that's really well informed.
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The most frustrating thing is when you've got this gap between what the company thinks it should be doing and what the employees think it should be doing, and employees are angry at the company 'cause they...
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the company should be doing something different, but it's without context.
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They don't really understand the nuance of it, and that's because you haven't explained it to them, and you haven't assumed they can understand the explanation.
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So we really lean in on explain everything, and then if we're doing something wrong, let's have really constructive conversations around the reality of the thing we're doing, not, not the sort of thing that you perceive that we're doing.
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So that, that's where the transparency matters a lot too. So defaulting to trust. I really liked...
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And actually reading through the comp philosophy, what I loved about it is that throughout key sections, you actually just ask the question, "Does this make sense? Do you align with it? Do you have any questions?"
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And I think something that I often see in conversations around compensation is that a lot of companies and, and, and people within them presumably are trying to be all things to all people.
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As a company, you need to pick who it is that you want to employ and, and bring along on your journey and, and tailor and cater as much to that population. But sometimes it's gonna be to the exclusion of others.
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And presumably you've had people who have gone, "Actually, I don't agree with how you try and pay people here." And so maybe they will opt out, and that's okay sometimes.
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Have you, have you found that as part of the journey or, or maybe just an alignment? So I think there's parts of that deck that are possibly a bit controversial that, you know, talk to.
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And I thought we'd have some people who would... 'Cause... So I guess I kind of operate under this idea that don't owe you the explanation you want.
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I owe you-The explanation that I think is accurate and, and correct, and then you can feel about it how you wanna feel about it. And if your decision is then the company's not right for you, that's okay.
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You've done great things. You'll go on to do great things elsewhere. We'll go on to be a successful company. It's totally fine, right, if we have different points of view.
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What I'm not gonna do is assume that you're not go-- that you won't understand.
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If I was to really take the time to explain a point of view to you, I'm not gonna assume that you would be disingenuous enough not to try to listen, right?
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I'm gonna assume that you will, you will try to listen and see it from my side, and, and I will do the same in return.
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And I'll assume that you're smart enough to understand where my argument is coming from, and likewise, I'd hope you do the same. So that's a really important ground, I guess, for, for the company to, to agree on.
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And so, like for example, in the deck, we talk about this question of, okay, why do different roles get paid different amounts? Why do software engineers get paid more than marketers, right?
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Because, you know, we're not hiding that. It's, it's a clear thing within the, the tables as you'll go and look at them. And, and so, you know, where does that come from?
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And we, we lay out the, the sense that our job is to hire as many people as we can.
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In order to do that, we need to make job offers that they will accept, and so it has to clear a market price, and the market price for all roles is different.
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And we actually don't want to overpay people for a role, right?
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If the software engineers are paid more than the marketers, and we go and pay the marketers what we pay the software engineers, what it means is we just can't afford as many marketers as we could otherwise have.
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And the marketers we do have are the most overpaid marketers, and so they're never gonna leave, even if they totally hate the company. So there's all kinds of bad actually things to avoid in that.
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As a company, we actually don't care what we pay the marketers or the software engineers. It's just there's a market price that we're trying to clear. Yeah, it's a reality.
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It's just the reality that we're in, and it's the reality you're in. Now, y-you as a company, you could sort of say, "You know what? We are gonna pay the software engineers the same as, as the marketers."
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I don't think it makes a lot of sense to do that, but, but you could certainly decide to do that. And your employees may say, "You know what? That is the just and right thing to do."
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But I guess my view of it is, no, that's how the economy works. That's how the market works. Our job is to build amazing products for our company. We need the most smart and talented people as we can.
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And so we're just totally up front with that. Like, "Hey, that's how we think about it. And if that's a problem, there are other companies to work for. That's okay, right?
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But at least we've been honest with you," which a lot of companies aren't. Like we've, we've been totally honest of where it comes from.
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And it doesn't come from the cabal of CEOs that get together every six months and decide how much do we pay people or something, right? [chuckles] It doesn't work that way. You're not supposed to talk about that, Paul.
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No. I said the quiet part out loud. The first rule of the cabal. [laughs] But I mean, that would never work, right? Because the first person to just be like, "Oh, cool.
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I'll just pay everyone more than what the cabal agreed," would get all the good people. So [chuckles] it doesn't... It's a market. It's a market like anything else.
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And the other part, I suppose, is you have upfront conversations around, like, how does gender kind of play into that, right? And so- Mm.
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In the philosophy of the systematic approach that we have, it doesn't matter what your gender is, you're still gonna fall within some part of that matrix.
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So you're gonna be paid exactly the same as your peers no matter what their gender is. That's really important. There's other questions around gender you can look at too. You can look at performance review time.
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Who gets the promotions? Who gets put into maturing? Do people linger in maturing longer?
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If we look at the sort of outcomes of performance reviews from a low result to a high result, where do they tend to fall as far as gender goes?
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And if all of those things are sucking really well, then you know you've got a system that is fair and just, it is doing the right thing. But then there's a reality of like, we hire software engineers.
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The, the broader talent pool for software engineering isn't fifty/fifty male, female, right? Like it, it just isn't. It's a very long way from that. And so what's our obligation in that world?
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Is it to get to fifty/fifty engineers, you know, that are, that are male or female? No, that doesn't, that doesn't make sense, right?
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But but at the same time, if the broader talent pool is like twenty percent, then if we're five percent, we must be doing something wrong as well, so- Yeah, there's a problem there.
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So as a company, you know, we just lay out, this is the philosophy, this is how we think about it.
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If you think it's wrong, then tell us, but we get to have a constructive conversation and learn something from each other around how it can be improved.
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'Cause there's definitely parts of it we're thinking of tweaking and, and improving on.
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But they get to be concrete things about the real thing you're doing, not what people think you might be doing based on what their old company did. Yeah. Yeah. I, I agree.
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And I think I'm keen to wrap that up as well into the, the topic of pay points versus pay bands, because I think, you know, certainly again, my experience, the people that are prepared to negotiate, and it's just a, it's just an inherent part of our society, um, in a, in a lot of different places, is that when they get to the stage of offer, a lot of people feel prepared and, and, um, negotiation is just a, a step in the road.
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You've got pay points which presumably eliminates that entirely. How have you found that approach? Because another thing that I, I get from a lot of...
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whether it's founders or heads of people, is that they want flexibility in their pay structures.
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Now, you already aim to pay generously, so presumably when you're speaking to a lot of candidates, they're probably not seeing the same maybe caliber of offers in the market.
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But how have you navigated the, the elimination of negotiation, if you have? So again, it's a-- there's a way you deconstruct that, right? So someone...
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So you say, like, through the interview process, we've assessed that we think you're a senior software engineer. We don't think you're a lead. We think you're a senior. Within that, we think you're performing.
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Like, we're pretty confident if you join within the first six months, as you learn stuff, you'll be performing. We don't think you'll be meeting what we expect of exceeding.
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So this is where we've placed you, and this is the number, right? Um, by the way, like the number, we, we do vary it by country that you're in, so it's not quite like one number.
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You know, if you're in the United States, you'd get paid differently. But I said this is the number, and that's the number we, we give when we offer.
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Now let's say that number is a hundred and twenty-five thousand or something. And, and they say, "Look, I, you know, I wanna negotiate that up. I think it should be one thirty. I think it should be one forty."
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It's like, where is that coming from? Is it coming b-b-from actually you think you could be a lead?
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Is it coming from you agree with us that, you know, you're kind of more within this senior, this is the set of dot points, and this is where you fit, but you're just seeing offers out there that are better?
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We wanna know about that, right? And in fact, there was a year a few years ago where engineering salaries were just ratcheting up like crazy. It was...
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And so the, the people team at the time were making offer after offer.
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Usually, we're making offers and probably out of every five offers we make, three of them, four of them get accepted.Uh, and then suddenly we have six months where we're making six offers, and one of them is getting accepted, and the rest are all saying, "It's too low.
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It's ten grand off. It's twenty grand off," you know, other offers that I'm getting. Uh, you just sort of say, "What are you doing, guys? We've got benchmarking data. Benchmarking data is helpful.
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That's-- that helps us get to a number, but we are in the market. We are-- have-- we are hiring for these roles, and the market is telling you something. The market is telling you that the price of this role has gone up.
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Up it. [chuckles] Up the offers we're making to people, right? That's where the flexibility comes from. But be prepared. You can't just hire someone doing the same role and pay them more.
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You have to go and do it to everybody else." Yeah. I was gonna ask you about the knock-on effects. If you were to say, "Oh, we can't...
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We can only offer this extra salary to this person 'cause we're hiring them, but we can't afford to do it for everybody else."
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If you can't afford to pay them what the market says they're worth, you can't afford to replace them, right? It's gonna take way longer to replace them.
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Actually, in every role we have, engineering, sales, like there's such a long ramp time for people just getting productive within our company that it's a completely crazy way to think.
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Pay that difference over and over and over before they've even become effective in their roles, right? Yeah. Yes.
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And so even from a budgeting point of view, you might have a finance team that's like, "Oh, but the knock-on effect of meeting these higher than expected salaries is, is gonna be this." Well, tough.
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[chuckles] That's what the market's telling you.
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And in fact, if you have a compensation philosophy like we do, which is we are trying to pay at a certain percentile of the market, and the market is changing, it's not a philosophy if you only stick to it when it suits you, and you abandon it when it doesn't, right?
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That, that's just wrong. So you have to say- And it's damaging to trust, right? Like we talk about how much this, something like this can build trust. It completely undermines it. This can totally undermine it.
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It totally undermines it. And so whereas actually then when you go and do it and you say like, "Hey, uh, Fred, guess what?
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You just got a pay rise because we've been hiring software engineers lately, and they all seem to be getting paid more." Yeah. Like, how does Fred feel about the company? Like this is, this is incredible.
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You've just probably retained- Yeah. -Fred for a really long time, right? Because not 'cause of the money, but because the trust and now he knows, you know, that you're, you're looking after them. Yeah.
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And so how often do people have to advocate for themselves to do that? And whether they feel prepared to or not or confident to or not is a, is a whole another thing.
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So the fact that you've completely taken it off the table for them and just come to them and said, "Hey, here's what we're paying others that are doing a commensurate level role. Congrats.
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Here's, uh, an increase to reflect your value to the company." Just, yeah. Yep. It's a huge boon to those people.
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It's also like psychologically, I guess, you know, when, when people are negotiating salaries, partly it's because, like they have a low level of trust in companies.
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They think companies are just trying to pay them as- Yeah. -little as they can get away with, and so they feel like they have to advocate for themselves. It's the same zero sum, right? Yeah, exact-exactly.
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So why not, you know? If, if, if you're not gonna advocate for yourself, who's going to? That's a very valid, you know, line of thought.
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The other part is like sometimes people, you can tell, like they actually don't want to negotiate, but their partner or somebody is like pushing them to do it.
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And so there's like a, you know, they have to be seen to be negotiating for themselves. That can sometimes be like a, a bit of a role. But again, like showing them like, "Hey, you know, we are paying you this.
261
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This is the benchmark data that we've got that goes into it. It's a very, very fair offer. It's what we pay all the other people doing the same role." That can make you feel very comfortable even to think.
262
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It can convince your partner who has a stake in this. And if it doesn't, it doesn't. There's other people out there, you know.
263
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So unless you're hearing it over and over again, and then in which case your benchmark is wrong. Which is a, is a key point, right?
264
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Is that, you know, benchmark data only gets you so far, and then it, it is a lagging indicator. It's something that was what people were paying whenever they conducted the survey. Yeah.
265
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So the fact is, is that those who are in the market and accepting offers now may be on a very different salary, and so- Yeah. That's right.
266
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-I think it just talks to that partnership that, you know, if you're ahead of people, it's about making sure that if you do have someone who is focused on salaries and developing them based on surveys, that they are also speaking to their, the talent acquisition team and understanding- That's right.
267
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-whether or not those offers are being effective. 'Cause if you're not, then you're just not gonna have the talent. And to the managers within those roles too, uh, like if you're an engineering manager at Oxalys- Yeah.
268
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-you should kinda have your ears to the ground as far as, you know, what's going on in the, in the talent market. That's really important.
269
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Now, you, you will get like the anecdotal stuff you'll hear is like people will always tell you, "Oh, I've got a mate who's being paid more for this thing," but they don't tell you about the other five mates they've got that are being paid less for it, right?
270
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So you have to be thoughtful. And really the test is pick the number that you're offering to people. If they're accepting it, you're probably fine. You're probably clearing market, you know.
271
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And the same actually, when you get a benchmark and the benchmark says the role for this is this, and it's massively different. You've just hired three people to do that thing and you had no trouble.
272
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None of them complained about salary, then you're probably doing fairly right, you know. Yeah. No, that's really cool.
273
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What are, what are some of the tips that you would share with founders or, or some of the incentive behind doing something like this? Why, like, why should others think about following in these, these sorts of footsteps?
274
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Or what would you say to them to, to convince them? Yeah. I mean, I think some of these, some of these laws, they definitely come from a good place. And, and they probably do work to the degree that, like if you...
275
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a-and we've done this, you post a job ad for a range that's higher than what you're currently paying people.
276
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People are gonna see that, and you're kinda silly to think they're not going to see it, and so you better be prepared to answer why. Um, that, that was before we, we had a system like this. Um, but I, I...
277
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you know, people game them, right? So you'll see a job ad and it's like, "Oh, the range for this is, you know, anywhere from eighty thousand to two hundred and fifty thousand." Well, that's- Yeah. -ridiculous. You know?
278
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Pointless. So that doesn't do anything.
279
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No, I think actually if anything, the internal transparency is way more important than what the transparency that you're showing on the job ad, but it, but it does, it does, it does, it does kind of matter.
280
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Let's say, you know, as a founder, you started a company because there was a problem in the world that you wanted to solve or you wanted to paint, you know, your creative abilities in a, in a way that people could experience and admire.
281
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And so there's a whole bunch of reasons you started a company. Chances are HR policies probably wasn't one of them, right?
282
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It's like of all the things you have to deal with as a CEO, it's probably not the thing that gets you out of bed, particularly because, you know, it's a touchy subject, it's an emotional subject, you know, all of, all of these kind of things.
283
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And so as a result, I think what most founders do is sort of try and make it someone else's problem, or they just kind of wing it, and they don't put any sort of systematic thought into it. Um, or they're just really...
284
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they don't really want the conflict that sometimes comes with being transparent. They overthink. Like if we're...
285
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when we do-- when we share the benchmarks internally, some of these benchmarks are really wide-ranging, right?
286
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Like I said, you know, junior engineers where the percentiles kind of beat senior engineers just 'cause that's how the data collection happened and the sample size is small.
287
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And so you share something like that internally, of course you've got to be prepared for someone to ask the question like, "Well, the thing says this.
288
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Why are we only paying this?"And you've got to be prepared to answer that, and people don't want that conflict sometimes, I suppose.
289
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But I can tell you being systematic, being thoughtful about this stuff and getting it out there, it actually the amount of time that we now spend worrying about stuff, it's not like, "Brett asked for a pay rise, and I don't know if I should give it to him.
290
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You know, what's, what's Jodie going to think about that?" It's just there's a system, and you just follow the system, and if you're getting enough feedback, there's something not right with the system.
291
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You fix the system. It's actually super powerful. And again, people care about the fairness more than anything.
292
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So if you lean in on being more transparent than you're comfortable with, assume that everyone on your team is smart enough to understand your explanations of stuff, and if they haven't understood it, you probably haven't explained it very well and just keep trying.
293
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Accept that you're probably not going to make everybody happy, but you owe them an explanation. Um, understand that it's the fairness part that probably matters more. You know, they would be the tips. Yeah.
294
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I think you touched on a, a critical point, which is that n-by not having a system, as a founder, this is a topic that is, is definitely on people's minds all the time.
295
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And by not having a basis or, or a grounding in which your people can speak about or understand how it's done, it's occupying time that could be spent focused on the job and delivering outcomes to-towards your mission.
296
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Um, but it's also taking up time with your managers. It's taking up times of your, your head of- Yeah... uh, people.
297
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It may even be taking up your time because it's, there's no basis for which these decisions are being made. And so, you know, it just makes all of that a lot harder.
298
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And, and that's the tip of the iceberg that you're seeing 'cause the bottom part of the iceberg is like the gossiping that's happening around things, the sort of assumptions people are making. Like, all...
299
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There's all this sort of untapped productivity that comes from people wasting time feeling like they're being treated unfairly when maybe they're not. Like we said, yeah, that's kinda worst outcome, right?
300
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'Cause if you're treating everyone unfairly, at least you kinda get to pocket the difference, but you don't, [chuckles] you don't even get that.
301
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So one thing I'm really proud of within Octopus, so like I said, we're three hundred people. We've been going for like twelve years. We've never had an employment tribunal issue.
302
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We've never had to involve lawyers in any kind of employment thing. It's super squeaky clean. And, and the thing I would attribute that to is we just treat people well. We treat them like humans, right?
303
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We don't give them reasons to be upset about things that we do because we try and conduct ourselves well, you know? That's a great point.
304
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It's, it's a, it's a solid risk mitigation for, for those sorts of, you know, compliance issues. Yeah.
305
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Like p- HR, this is my biggest, like, bugbear, I suppose, with traditional HR, particularly, um, leaders, is this feeling the company gets that the people team, the H, you know, the rebranded HR team, let's say, is here to protect the company or is here to kinda toe the line on company policies.
306
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It just doesn't, it doesn't work anymore. Like, it probably never really worked, and it, it definitely doesn't, it doesn't work now.
307
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What the people team is here to do is make sure that we are living up to all of the things that we've said we would, right?
308
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Like, if, if this is the philosophy, this is the conversation, this is how we think people should be treated, the people team's job is to help ensure we are living up to that.
309
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And o-often that is actually siding with the people rather than siding with management because management's got thick skin, we can take it, but people need help. So that's what the people team has to focus on.
310
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If you do that, you don't have problems. You don't have disputes. Yeah. Yeah. I agree completely with, with that sentiment.
311
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And actually it's a, it's a nice segue to sort of the last part of this, um, this interview that I'm keen to dive into, which is, you know, this, this is an audience of heads of people or chief people officers.
312
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You know, what... When you're a founder, you know, you're heavily involved clearly from the philosophical aspects of how this sort of stuff is developed.
313
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But in terms of what your expectations are, head of founder when it comes to compensation as a commercial skill set, what do you think are some of the key traits or attributes you look for there as, as the leader of the company?
314
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Yeah. So I think, I think one of the things you really are looking for is you want someone who has the s-- like they agree with that philosophy that, that you have, right?
315
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So in my case, the compensation philosophy that we have, I need a head of people who actually believes in that and wants to push, wants to, wants to make it even better than what it is, right?
316
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It, it can't be somebody who doesn't understand where that's coming from. Um, I think like any, any executive, if you have a people team leader, they're probably reporting to the CEO, right?
317
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And that's a very dangerous thing to be doing because the CEO is the unique management role in the company that actually has no clue how to manage you.
318
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So if you're the head of people and you hire a talent acquisition leader, you can manage them 'cause you probably did the job once upon a time. But the CEO, by definition- That's a good point...
319
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probably hasn't run all twelve functions of the company to, to a great degree, and so they can't really coach you on this, but they can have, they will have, and hopefully should have a very strong sense of how they want the people to be treated and what the lived experience of, like in our case, what the lived experience of Octonauts should be like at the company and what's good enough and what's not good enough, what are we not gonna stand for.
320
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So you have to listen to that and make sure you're, you're supporting in that, but they're not gonna be able to give you much career advice or coaching.
321
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You have the standard kind of executive challenge of you've got to spend as much time building relationships with the CEO, but also with all of the other people in the management team, right?
322
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The way we think about it is like the management team is a team that runs the company on behalf of the CEO, and secondarily, they all happen to have different functions reporting to them, but it's a team first and foremost, and so you can't just pipe up when there's a HR question, right?
323
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You should be just as involved in how well our marketing strategy is working or the design of our R&D organization. Like, all of those things are important, but obviously be, be respectful in those things.
324
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And then your team as well, right? That's the one thing that CEOs don't see, right?
325
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We see you as a manager and as an executive, and we see your interactions with your peers in the executive team, but unless we happen to be doing a lot of skip levels and spending a lot of time understanding all the people that are reporting to you, it's actually really hard to get a, a sense of what the lived experience of those people is like working for you.
326
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And so you're very much entrusted to, you know, be treating those people well and empowering them to be successful. And so obviously taking great care in that as well is really important. Yeah. Amazing.
327
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I love that answer. That, that's... Yeah, that's really insightful. Um, I don't, I don't have anything else to add to it. [laughs] Trying to think of something witty but nah. [laughs] Um, this has been amazing.
328
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This has been such a, a fascinating conversation. I really appreciate the, the time that you've taken to kinda delve into it, not only the, the philosophy itself but kinda the impacts that it's had across the business.
329
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You know, you're the founder of a successful SaaS company. Any key or lasting pieces of advice for, for a head of people that's, you know, that, that's wanting to join or be part of a company like yours?
330
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I think like all these things, it always just comes back to the basics, right? So if you're the people team leader, your job is help the company make the most of the talent in all of the people that we have.
331
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You know, help us to recruit them, help us to keep them, help us to motivate them.You know, and so like getting too focused on processes and systems and all of those things help, but it kind of has to come from a point of what is the lived experience of the people who are working in the company on a daily basis, particularly the people sort of at the bottom, let's say, of the organization.
332
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You know, like really being their advocates, listening to them, helping ensure that's how we get the most out of the people capital that we have, I suppose. That's the main thing, right? That's the thing that will...
333
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If you can kind of keep that at the core of every single thing that you're doing every single day, you know, that, that will go a really long way.
334
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And yeah, like lean in on transparency too, and I don't think it comes-- Actually, like HR is probably one of the roles that struggles with transparency the most 'cause like by definition, if, you know, Fred has made an accusation about Bob, that's not going on the public intranet, right?
335
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Like that's an HR case, so we're gonna deal with it in a particular way. And, and like pretty much every document HR creates is a private document.
336
00:44:26.572 --> 00:44:36.092
And so like, like they default to a really low level of transparency almost as a... That's how they're trained, you know. But actually, like transparency matters a lot. Yeah.
337
00:44:36.172 --> 00:44:41.842
As a profession, I think it's, it's been born out of confidentiality being a cornerstone of, of what they've done, and so I think that's transitioned.
338
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Personally, that's part of the reason why I think a lot of companies have been slow to, to adopt pay transparency practices even though you look at the legislation that's coming in, you look at early career people.
339
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I mean, it's not... It's a big topic for them. They, they will tell you their salary gladly. They'll speak about it openly.
340
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Um, but I think again, because we're a function that is emerging from that kind of back office confidential policies, that sort of approach. Yeah.
341
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Personally, that's why I think we've, we've seen a, a thoughtful adoption. You're totally right. Like that's the reality, and it's a good thing. Like you should assume that people are talking about this stuff.
342
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Even if you put in their employment contract that they're not supposed to talk about salary or something, I mean, that's just asking them to talk about it even more, right? Assume that they are.
343
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Like really assume they are. M- How do you make those conversations really positive then? Like this is the way to do it.
344
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Be open and transparent so that if people are talking about salaries, it's coming from a, "Gosh, aren't, aren't we lucky to work for a company that, you know, treats us like humans d- worthy of respect and, you know, does the right thing by us?"
345
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Like make that an asset, the fact that they're talking about it, not a, not a sort of liability that you're trying to hush. Yeah. Yeah. One hundred percent agree. Amazing.
346
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Um, before I wrap up, are there any other aspects of this that you want to dive into? I, I... We were in the news a little while ago for like gender pay gap stuff. Yeah.
347
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It was like a giant hornet's nest that I went and hit. Yeah. [chuckles] So like, and I, I don't... I'm actually like happy to, to talk about it.
348
00:46:00.532 --> 00:46:10.472
So let me, let me start by saying so, you know, within Australia, so for those who aren't familiar, we have the Workplace Gender Equality Agency, um, and they, uh, just this year have released the gender pay gap.
349
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So the, the unadjusted, uh, gender pay gap for companies in Australia with more than a hundred employees. And so, um, I'd love to understand your experience through that process.
350
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Um, uh, talk to me a bit about what you think that number represents and, and, and how that could be helpful and maybe less helpful for companies in terms of how they, uh, position it as part of their, um, DEI strategies.
351
00:46:35.472 --> 00:46:45.032
Yeah. It's... I, I think it's a very well-intentioned, uh, thing, but it, it has come with some challenges, and so... And, and they're gonna be different, right?
352
00:46:45.082 --> 00:46:51.972
Like, so when I say that, you might sort of, uh, jump to a particular conclusion about where I'm, where I'm coming from in that, but I'll, I'll try to sort of explain my, my thoughts.
353
00:46:52.812 --> 00:47:02.012
So, um, so the way, the way it works is we're taking all the male salaries, we're taking all the female salaries, we're averaging them up, and then we're looking at the difference between those two things.
354
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That's, that's how it's calculated. And it's Australia only. So we report it in Australia, um, for our Australian employees.
355
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But if I was to take my executive team, for example, um, the three women on my executive team, they're all based in the United States, so they don't count towards the numbers that we report to, to WGEA.
356
00:47:20.452 --> 00:47:27.832
And that kind of ratchets down the organization, right? Where it just... Geographically, we just happen to have people in different countries and, and the balances are different.
357
00:47:27.872 --> 00:47:33.532
And that's not a-- That doesn't seem like something the company should be optimizing for, right? Like we want a diverse team.
358
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It doesn't have to be diverse in a particular country because our teams work geographically anyway, so we want to hire the most talented people, you know, that we, that we can find regardless of which country they're in.
359
00:47:43.592 --> 00:47:55.812
And so, so it has that problematic aspect for it. And the, the way someone explained this to me is like one of the, uh, the challenges with this is like
360
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women for a long time have been in roles that have been underpaid, um- Mm-hmm... like historically underpaid, and there's a very deep sense of unfairness towards that, as there very well, you know, should be.
361
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Um, particularly there's many women will point to experiences they've had working in companies with people doing the same role but being paid more for it, right?
362
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Like that's a visceral experience a lot of women have, uh, have had. And so it's a very emotionally charged topic and not, not for, you know, for, for good reason.
363
00:48:27.372 --> 00:48:35.612
Um, and, but the problem is then it's being rolled up into a statistic, and the statistic is then kind of being used to paint companies or their practices in a, in a, in a particular way.
364
00:48:36.312 --> 00:48:52.512
Um, that, that is important from a society point of view because it helps to drive a really important society conversation, which is, you know, there are, there are career pathways that are predominantly chosen by women and career pathways that are predominantly chosen by men, and they tend to be paid differently, right?
365
00:48:52.622 --> 00:49:00.232
Mm-hmm. And, and is that fair? That's a very good question for like Australian society to be asking and answering and having a, having a debate about.
366
00:49:01.052 --> 00:49:10.232
But then you get down into an individual company and you say like, okay, within Octopus, like I said, you know, we've got marketers and we've got software engineers and we pay them differently because that's the market that we're hiring into.
367
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It's the reality of the market that we're hiring into. Um, and it's driven by a few things.
368
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It's driven by a software engineer can write some code, and I can sell it to one customer, or I can sell it to a thousand customers. It has a huge scalability aspect, you know, of that. It's a hard role to hire for.
369
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There's just not as many graduates as, as the industry needs. It's a bit easier to find people within marketing. But the gender differences going to those two roles are quite different, right?
370
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Marketing's like fifty/fifty male/female. Um, software engineering's, you know, likeBest numbers, maybe like twenty percent, and then it, it drops too as you get further into career pathways.
371
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So at more junior levels, it might be higher- Mm-hmm... but it, as you get later into career, and because we work remotely, we tend to hire more on the senior end, it's, it's harder to find people.
372
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And so, and so then you have this challenge of like when you average those two things up, what you find is like, like if I go and look at my software engineers, male or female, they get paid the same.
373
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If I look at my marketers, male or female, they get paid the same. But when I add my company together, I don't have many marketers. I have a lot of software engineers. The software engineers tend to be men.
374
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The average skews, and so I get a negative number, you know, on, on that. And then we try and unpack it, and we say like, "What does this negative number mean? Like, what does it tell us?"
375
00:50:18.080 --> 00:50:24.340
So if, so if you were to say, like, okay, you've got this pay gap, you know, where is it coming from? There's a whole bunch of really valid questions you'd ask.
376
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You'd ask questions like, well, for people doing the same job, are they being paid the same? Well, firstly, like- Mm-hmm... that's not just like a WGEA thing.
377
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Like that's, that's been the law for like twenty- That's a law... thirty years, right? Like [chuckles] you should be doing that 'cause it's like morally right and it's reprehensible not to.
378
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Um, but of course, people get around it 'cause they have like salary ranges, and they sort of, ah, this person's doing a slightly different role. But like, I think- Mm-hmm...
379
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you've got to be much less granular than that actually to, to feel like you're doing it fairly, so. Um, you know, so there's, there's like that question. Then there's the questions around like how they get promoted.
380
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There's the question of how they're treated in performance reviews and, and those kind of things. Mm-hmm. Now, if you... And, and I think that's the helpful thing, right?
381
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You can come up with like ten questions within your company that speak to the lived experience of women versus men working within your company as far as, you know, do they get the same opportunities?
382
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Do they get the same promotion rates? You know, all of those things.
383
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Um, and if the answer to all those things is like, yes, and generally pretty good or a bit of room to improvement, you know, let's do some stuff next year- Mm-hmm... to make this particular thing better.
384
00:51:21.500 --> 00:51:28.690
Um, but you still get to a point where you have like a large gender pay gap that's just mostly driven by one role tends to be overwhelmingly male compared to other roles. Mm-hmm.
385
00:51:29.260 --> 00:51:35.700
Like I don't, I don't see that as a number that's particularly helpful for me. Um, you, you try and think like, how do I correct that, right?
386
00:51:36.180 --> 00:51:47.460
So what I could do is I could hire, um, more female software engineers at the junior level, um, because that will help get more people in, and I could do some stuff to maybe get more women to choose software engineering as a career.
387
00:51:47.480 --> 00:51:51.750
And there's probably a debate about like, how much should we be... should we be, be doing that or not? Mm-hmm.
388
00:51:51.760 --> 00:51:58.450
But like, even if we do that, that actually makes the gap worse because then we've got like still overwhelmingly male senior engineers and junior- Yeah...
389
00:51:58.460 --> 00:52:01.760
female engineers, and they're being paid less, and so the, the gap actually like widens, right?
390
00:52:02.340 --> 00:52:10.429
Um, and e-if even if you think like, okay, well, in five years, though, they'll all become senior, and it will even out, like it doesn't unless it's fifty-fifty, right? Mm-hmm.
391
00:52:10.450 --> 00:52:17.470
And so then the only way to do it is to hire fifty-fifty at the junior level, but the graduation rates aren't fifty-fifty, and so the only way to do that is to be really- Mm-hmm...
392
00:52:17.470 --> 00:52:24.420
biased in your hiring process, and that's wrong, right? You can't-- I don't think you should be able to... You should, you should do that. Bias in either direction i-i-is wrong.
393
00:52:25.400 --> 00:52:32.520
And so actually, like, then you can start to do stuff like actually, you know what? The trick is you hire just male junior engineers because that will skew the male salary down. But you don't wanna be doing that.
394
00:52:32.550 --> 00:52:33.540
[chuckles] Like that's horrible too.
395
00:52:33.620 --> 00:52:50.560
So the challenge for companies, though, is because this is such a charged topic, what it does internally, like within any company, you've got a, a group of people who care very rightly, very passionately about this, and they want to see the company living up to its potential and its obligations in this space, right?
396
00:52:51.200 --> 00:53:06.860
And so I would say, like, when you think about the systematic approach that we take to this, when I think about, you know, uh, like a lot of the stuff that the, the lived experience that women have probably had working at other companies, like it doesn't exist at Octopus because of how, you know, we're set up and, and things are structured.
397
00:53:06.980 --> 00:53:06.990
Um,
398
00:53:08.260 --> 00:53:20.940
like, uh, ideally, what you'd have then is like those people who care a lot about this topic would really understand what you're doing, would feel really proud of the good stuff that you're doing, and would be telling you for the areas you can improve on, right?
399
00:53:20.960 --> 00:53:29.220
And advocating for those specific areas where like, "Hey, we're doing really good at, you know, these nine things, but this tenth thing, like that's a room to improve." That's where you'd have people engaged.
400
00:53:29.670 --> 00:53:36.429
The challenge, though, is when you get a number like the WGEA report that gives you a big negative number, and you get a bunch of press and stuff around it like, like we had for a while- Mm-hmm...
401
00:53:36.460 --> 00:53:45.350
is like internally, those advocates, they feel a real cognitive dissonance 'cause like, well, I think the company does everything right, but like everyone's bashing it, so you know, maybe we must- Yeah...
402
00:53:45.350 --> 00:53:49.350
be doing something bad. And they actually just disengage, is what we found through that process.
403
00:53:49.370 --> 00:54:08.800
So those people who sort of cared about this topic the most actually became like the least vocal 'cause they were struggling, I think, with that, with that cognitive dissonance and, you know, they care about the people who are outside the company who are not informed about what we're doing, you know, being quite vocal about that, and the people inside sort of didn't wanna, you know, uh, be caught in the middle, right?
404
00:54:08.860 --> 00:54:13.780
Let's say. And so-- and I think that was actually like a bit of a setback. We, like i-in terms- Mm-hmm...
405
00:54:13.790 --> 00:54:22.640
of people who care about this topic actually being able to really engage and constructively help the company, you know, get better as, as we always have room to improve, so. That, that was a bit of a long answer.
406
00:54:22.880 --> 00:54:23.840
I think it's...
407
00:54:23.940 --> 00:54:35.560
No, but, uh, it's, it's really great to hear, you know, from the inside how, how companies face that challenge, and I'm hearing, you know, A, is the fact that it, it is this kind of signposted number that does get put out there, which does affect your employer brand.
408
00:54:35.600 --> 00:54:39.590
I think you'd be crazy not to think about how it impacts people that are considering working for your company.
409
00:54:40.240 --> 00:54:46.940
Um, but I'm hearing that it's also, it's impacting the advocacy that your people in the company have as well and, and maybe quietening them down.
410
00:54:47.370 --> 00:54:55.720
It's so interesting to, to hear it from the perspective of, okay, well, yes, it does only take into account the Australian population, and so for global companies, that can be quite, um, quite a challenge.
411
00:54:56.360 --> 00:55:02.760
Um, and then it's, you know, the, the question around, well, what can you do to, to change that on a societal level?
412
00:55:02.800 --> 00:55:12.080
And, and what are the things or the compromises or, or maybe biases that you have to implement or things you have to do to be able to, to achieve that kind of golden ratio that people are, are looking...
413
00:55:12.220 --> 00:55:16.160
There's-- I think there's a whole conversation here. It's, it's, it's such a deep and, um,
414
00:55:17.180 --> 00:55:22.840
topical area 'cause, I mean, you can go into things like, well, you know, how do you look at internal mobility into some of those areas?
415
00:55:22.880 --> 00:55:31.700
You know, there's, there's people where you might say, "Well, would you be an advocate for, you know, raising the, the average salary for, for those female-dominated, um, professions?"
416
00:55:31.740 --> 00:55:37.199
There's a whole range of ways in which on a purely number basis you can look at, um, look at adjusting it.
417
00:55:37.220 --> 00:55:46.320
But, um, yeah, I think regardless, it's, it's really fascinating to hear what that journey and, and experience has been for, for your company. Yeah, like, and we, we definitely took it like really seriously, right?
418
00:55:46.360 --> 00:55:54.290
Like as, as even before they were publishing the numbers, like we, we would look at it, and we would ask these questions, though, internally around like, "Okay, what does this mean? What is this telling us?"
419
00:55:54.360 --> 00:56:03.548
Because we've set up a system that should be really fair, that shouldn't have these kind of issues. Mm-hmm.Um, so, you know, what can we, what, what can we learn from this? And I think we, where we got a bit
420
00:56:04.468 --> 00:56:12.798
disillusioned, I suppose, was, was sort of like chasing answers to the question. We're kind-- So you, you come up with all these hypotheses, right? And they all start from a fairly dark, negative place- Mm-hmm.
421
00:56:12.828 --> 00:56:14.328
-about bad things the company must be doing.
422
00:56:14.828 --> 00:56:22.548
And as you sort of disprove each of them, though, it's kinda really hard to shake like, oh, but negative seventeen, negative twelve, you know, whatever the number is, is, uh- Mm-hmm. -is a thing. Yeah.
423
00:56:22.768 --> 00:56:31.488
The geographical part is real 'cause you also have, like in our case, most of the people we have within Australia are in R&D, right? So it's like really engineering-centric.
424
00:56:31.528 --> 00:56:37.908
Whereas like my marketing team i-is only like a third of it is in Australia, the rest is in the US and the UK 'cause that's where the customers are. Yeah.
425
00:56:37.988 --> 00:56:42.428
So like it skews, you know, even further, like in, uh, in those respects. So...
426
00:56:42.928 --> 00:56:55.448
I think if I was to advocate for like one thing from WGEA or from, you know, uh, folks who, who care about that, um, conversational movement would be actually, I think, getting some agreement on, like the so what, right?
427
00:56:55.488 --> 00:57:03.858
So if you say like, okay- Mm-hmm. -here's what the number is. So what? You know, what's the hypotheses behind it? What are the ten questions you could ask that would help you- Mm-hmm.
428
00:57:03.968 --> 00:57:13.808
-understand, is this just a result of how the statistics are gathered and how the career pathway gender choices shake up, or is it because of practices the company could be improving on?
429
00:57:13.858 --> 00:57:18.578
'Cause WGEA do ask about a handful of practices you have as a company. Mm-hmm. But, but like they...
430
00:57:18.708 --> 00:57:26.918
I don't think they actually do ask about, you know, of the last performance cycles, who tended to get the high scores, who tended to get... Like, there's actually a lot of really good questions you can ask in that. Yeah.
431
00:57:26.928 --> 00:57:30.388
And I think if companies- That help look beneath the surface a little bit. -were sharing that stuff...
432
00:57:30.488 --> 00:57:37.048
Yeah, and like if the answer to all those ten questions is like the company's doing really good, then you sort of don't need the negative score, and you don't need the sort of
433
00:57:38.468 --> 00:57:44.628
frustration that gets channeled, like the, the, the valid frustration people feel in this space that's being channeled.
434
00:57:45.168 --> 00:57:51.118
You know, 'cause like there's, there's definitely companies with really good scores who you know, right? Like you're in the industry, you know, like these companies have horrible practices. Mm.
435
00:57:51.168 --> 00:58:00.998
And there's companies with good practices that get bad scores and like it's a very imperfect bludgeon, I guess, to be hitting companies with. And it's like, and it's losing allies, I think, is the concern, right?
436
00:58:01.068 --> 00:58:11.208
Like people- Mm. -who care about this space are sort of getting a bit disenfranchised from it as a result. Yeah. This has been really insightful. I very much appreciate the conversation. I love talking about this stuff.
437
00:58:11.268 --> 00:58:18.928
So Paul, thank you so much for, for joining me on this. Thanks. I'm sure there's a future edition. There's about three or four other topics [chuckles] I feel like that we could tackle on this.
438
00:58:18.948 --> 00:58:28.137
So I really, really appreciate it. Yeah, sure. Thanks for tuning in to the Foundation series. Stay ahead in startup compensation by subscribing and joining our community of startup leaders.
439
00:58:28.468 --> 00:58:30.528
Until next time, I'm Matt from Foundation.