A Compensation Commitment

[loietaylor]

MVP Comp Proposal

This proposal aims to solve many issues that stem from haywire compensation in GitcoinDAO, and be an interim state until we have a solid comp framework around the end of S14.

TL;DR Community ownership of a project rests on transparency, and transparency rests on legitimacy. Salary will be transparent to all DAO contributors, we’ll use the same comp logic for all core contributor offers (incl using US market rates for any contributor), and all GTC pay will be denominated in stables.

1. Transparency

What: We state that our default is salary transparency. Each Workstream will arrive at internal transparency by S15. No [name=salary] connections will be externally published outright but we recognize at minimum that salaries are discoverable by DAO contributors.

Why: It narrows the wage gap between identity groups & increases worker solidarity. It is the DAO way & is required by stewards. Stating we have salary transparency matches the reality of crypto pay which is that salaries can be found out by researching docs & block explorers.

2. Global Salary Benchmark

What: We will use the US market rates as a starting point for salary suggestions. We’ll use the 50th percentile based on data from OpenComp, and add a 30% increase from that 50th percentile rate.

Why: Market data provided is base comp, not including healthcare, 401k matching, vesting or equity that is typical outside web3. We have assessed the value of Gitcoin Holdings’ benefits as well as other web2 companies and it’s clear that 30% is a minimum add on to be competitive with web2 jobs. Using this framework also increases equity between workstreams as well as between Holdings & the DAO, reducing the power imbalance/privilege that Holdings folks may have.

3. Saf & Loie are the Compensation Committee

What: This process is followed to arrive at any salary offers for core contributors (20+ hr/wk)

1. An initial rate is suggested (by contributor, the person hiring them, or CC)
2. If not suggested by CC, the rate is submitted as a request for approval from CC
3. A CC member will claim the request, research & confer with committee members, and return a suggested offer within 2 biz days.

Why: Salary offers that were determined using one cohesive process are more fair. Without a legitimate process for arriving at salary offers, salary transparency could wreak havoc culturally in our teams. Salary has been yolo’d across the DAO. We don’t currently have a compensation machine that can be driven by just anybody. (More to say later, but this includes: our own competency leveling framework & better data on dao-space market rates) As we develop that self-driving machine over the course of S14, it makes the most sense for experienced People Operations folks with a view across the whole DAO to be giving these recommendations.

4. Denomination in stables

What: All core contributor pay should be denominated in DAI, as in:

You are paid 5000 DAI/month. On payday*, 1GTC=5DAI, so you are paid 1000 GTC

*or the 20 or 30 day moving average your WS uses

Why: We will lose out on essential contributors if we cannot provide pay that is at least equal at the moment of payout to what was promised in pay negotiations. This relates heavily to DEI in the workplace: societally marginalized folks (who we KNOW are necessary team mates to accomplish our mission) are far more likely to need stable income.

Where is this going in the future?

This is an MVP - let’s think of it as a minimum viable policy. These are actions we can take now.
By the start of S15 we intend to have a Gitcoin-specific competency leveling framework and better market data on crypto industry salary levels, which will enable others outside the Compensation Committee to draft salary offers that are cohesive with the rest of the DAO. (This is something the People Ops team can deliver)
We intend also to have a treasury strategy that allows for more creative comp arrangements including percentages paid out in stables, incentives for GTC pay, etc. (This will require a big lift from Treasury Management)
We intend also to have a clearer framework for sharing salary data openly - either pay bands or something even more transparent. (This will require the participation of workstreams to arrive at defensible comp for all their contributors)
With a competency leveling framework & pay bands it will be clear to contributors how to level up & what skills Gitcoin values folks improving on the most.

How to approach this proposal

What we’re asking for in this proposal is for folks to get on board this voyage to compensation legitimacy. We have mapped out the territory. Most of it is People Ops work but there are pieces (named above) that will only succeed with the dedication of others in the DAO. As you read this proposal you may ask yourself “What would need to be true in my domain to reach these 4 states?” Saying yes to this proposal is saying yes to taking whatever actions are in your domain to achieve what needs to be true.

Additional sources:

SimpleTruth_4.0-1.pdf

Among Self-Employed, Whites and Asians Do More Hiring

Why So Many Minority Millennials Can't Get Ahead

A Full Guide to Compensation and Benefits - AIHR

Should You Share Your Salary With Co-Workers? Here’s What Experts Say

There are many more sources we’ve used which are more internal to our DAO or the crypto space in general. As we research more those will be revealed, but as stated this is a minimum viable proposal.

[krrisis]

Hey Loie,

Great to see this written out here, and thank you for all the time you’ve already invested in this.
Some thoughts that pop up while reading.

This document contains some solid arguments on why we need to be more consistent on how we pay DAO contributors. However, I don’t think this needs to be a proposal of any kind at this point, but I think it’s a great start for a framework and it will help establish the people ops team in DAO Ops as the team to consult for any hire.

DAO Ops is the workstream that services the rest of the DAO in its operational needs and I hope everyone will come to you & saf for support and advice. So to me this is not a proposal, this is just part of your mandate and domain. Workstreams should follow the advice process when it comes to the topic of compensation, but we can and should not impose any guidance imo.

As a reminder for anyone reading this, this is how the advice process works:

It comes in many forms, but the essence is consistent: any person can make any decision after seeking advice from 1) everyone who will be meaningfully affected, and 2) people with expertise in the matter.

Advice received must be taken into consideration. The point is not to create a watered-down compromise that accommodates everybody’s wishes. It is about accessing collective wisdom in pursuit of a sound decision. With all the advice and perspectives the decision maker has received, they choose what they believe to be the best course of action.

Advice is simply advice. No colleague, whatever their importance, can tell a decision-maker what to decide.

I think people will happily seek out your advice but not trying to pass a policy or guidance as a proposal will avoid any unnecessary friction or extra overhead, as this guidance will evolve anyway.

Some thoughts on the 4 points:

1. Transparency, all for it. I think we’re already moving this in this direction and hopefully People Ops can discuss with workstreams to already get to this point by the end of this season. In half of the workstreams this info is readily available, in the other half it is not.

@loietaylor

Without a legitimate process for arriving at salary offers, salary transparency could wreak havoc culturally in our teams. Salary has been yolo’d across the DAO.

I strongly agree with this and tbh I think this is already very much the case. Most salaries are transparent already within the DAO, so I think it’s good to have clearer guidance and a strong advice process.

However the big issue at hand is with this proposal not tackled, how do we deal with the current compensation, for existing contributors, as this is already causing tensions? I shared some of my thoughts on this here and would love to continue this discussion. The idea of bands of payments makes total sense to me, but it seems more pressing to give some clear guidance here, especially in the context of the bear market, as we probably also won’t hire that many people in the near future. We have to however deal now with the internal tensions because of salary inequalities and the existing (partlal) opaqueness of the salaries & logic.

2. Global salary benchmark: this makes sense to me, but I see this as an advice process, so I appreciate that there are some benchmarks available.

3. Compensation committee: yes!

4. Denomination in stables: hell yes. I think except for FDD all workstreams do this. I hope a conversation can be started with FDD to move to this simpler model, until we have some more DAO-wide guidance in place. This reduces complexity in accounting, which also means less overhead for FDD (so more focus) and more transparency across the board. (@DisruptionJoe)

So tl;dr - loving all of this, hope this can be the start of a living document in the people ops hub and that all workstreams will seek out the help of this committee for future hires. Looking forward to more input on current compensation across the DAO.

[DisruptionJoe]

@krrisis

I think except for FDD all workstreams do this. I hope a conversation can be started with FDD to move to this simpler model, until we have some more DAO-wide guidance in place. This reduces complexity in accounting, which also means less overhead for FDD (so more focus) and more transparency across the board. (@DisruptionJoe)

FDD has denominated in $ rates for both contributor pay and our budgets since Season 11. Not sure what you mean here.

[krrisis]

What I understood from the Friday strategy call contributors’ salary is denominated in GTC with an insurance policy in case of downturn of the market, but maybe I misunderstood this.

[DisruptionJoe]

It is paid in GTC, but denominated in USD. The downside insurance is to protect contributors from violent downward price swings which make the spot price more than 10% lower than the 20 day moving average which is what is normally used.

[kyle]

@DisruptionJoe

The downside insurance is to protect contributors from violent downward price swings which make the spot price more than 10% lower than the 20 day moving average which is what is normally used.

Curious if the upside is capped to protect the treasury from those swings too?

[loietaylor]

@krrisis

Denomination in stables: hell yes. I think except for FDD all workstreams do this.

Kris, I think you might have been combining PGF & FDD in your perception here. To my knowledge PGF is the only workstream denominating in GTC. The downside insurance is FDD tho

[loietaylor]

If we need to provide downside insurance and then create a mechanism for softening upside as well because we are using a 20 day moving average, would it then make more sense to just not use the moving average? Simplification. Do spot price on payday the way some other workstreams do?

[DisruptionJoe]

We do soften the upside as well.

Imagine a monthly pay where you Earn $10,000/month.

We will compare each of the following 3 situations using each of the 3 models. (Pay spot, pay 20 day ma, pay FDD downside risk insurance model)

The Situation - How the price moved

SITUATION 1 - You experience a 30% price downswing. Let’s also imagine price had been pretty steady at $10/token the 20 days prior, but the swing really pulled the ma down to 95% of what the price was most of the month.

SITUATION 2 - No price movement

SITUATION 3 - The opposite of situation 1. A 30% upswing bringing the token price to $13 and the 20 day ma to $10.50.

The Model - How we determine the amount of TOKEN to pay

Model 1 - Pay using spot price

Model 2 - Pay using 20 day moving average

Model 3 - Pay using FDD downside risk insurance model

How it plays out - The usd value contributor receives / The amount of TOKEN paid

Situation 1 - $7 Spot / $9.50 20 day ma

(Model = Token value when contributor is paid / How much TOKEN is spent)
M1 = $7,000 / 1,000
M2 = $9,500 / 1357
M3 = $9,000 / 1286

Situation 2 - $10 Spot / $10 20 day ma

M1 = $10,000 / 1000
M2 = $10,000 / 1000
M3 = $10,000 / 1000

Situation 3 - $13 Spot / $10.50 20 day ma

M1 = $13,000 / 1000
M2 = $10,500 / 808
M3 = $10,500 / 808 (Calculate as $10,500 / $13 because it is the higher of the 2 and cost the workstream less TOKEN)

If you used the same model 3 periods in a row that played out this way

($ amount contributor was paid in token at time of payments / How much GTC the workstream spent)

1 month of each situation

All using M1 = $30,000 / 3000
All using M2 = $30,000 / 3165
All using M3 = $29,500 / 3094

3 down months in a row

All using M1 = $21,000 / 3000
All using M2 = $28,500 / 4071
All using M3 = $27,000 / 3853

3 up months in a row

All using M1 = $39,000 / 3000
All using M2 = $31,500 / 2424
All using M3 = $31,500/ 2424

[loietaylor]

Wait, I’m confused @DisruptionJoe . Shouldn’t “Model 1 - Pay using spot price” mean that a contributor is paid their salary amount (10k) according to the price that day? So the Token value when contributor is paid should always be $10,000 in that case.

But what i see here:

Situation 1 - $7 Spot / $9.50 20 day ma
(Model = Token value when contributor is paid / How much TOKEN is spent)
M1 = $7,000 / 1,000
M2 = $9,500 / 1357
M3 = $9,000 / 1286

is that in Model 1 the contributor is being paid denominated with the token price at $10. No?

[safder]

Thanks for this Loie! Want to emphasize the fact that this is a MVP/interim solution to get each workstream aligned on the basic principles of transparency and consistency on comp throughout the DAO. To me, this is a crucial step towards developing procedural fairness in whatever a future cohesive DAO-wide compensation policy could look like.
In addition to the reasons you’ve listed, I think these are both also very important for building trust among contributors and better coordination. Studies show that greater pay transparency makes it more comfortable for people to ask for help from their co-contributors.

A next step once these core principles have been established could be developing and agreeing on what the guiding principles would be for a more fleshed-out framework with greater flexibility, optionality, and leveling up strategies for contributors.

[Maxwell]

Thank you so much Loie for surfacing this idea. Comp is an extremely important and complicated topic across DAOs, and I’m very grateful to see all your thoughtfulness surrounding compensation within People Ops and GitcoinDAO.

The amount of research and care you and Saf have put into this proposal is beyond clear, and I feel extremely fortunate to work alongside you both.

Since this is my first gov post, I’ll give a quick intro. My name is Maxwell and I joined PGF full-time last month as a Talent Lead to help with hiring, onboarding, and contributor experience.

I’ve been thinking a lot about comp since I came onboard, and I’m both supportive and cautious about this proposal. My support comes from the fact that it is an extremely important problem, and one that needs immediate attention. I’m also supportive because I very much trust you and Saf and your respective expertise in this area. As you write,

@loietaylor

Community ownership of a project rests on transparency, and transparency rests on legitimacy.

I couldn’t agree more, and this is the North Star in my mind for thinking through how we might create more effective and equitable compensation policies.

My caution is that this process might create a bottleneck, whereby you, Saf and Loie, need to approve all hires from other workstreams. This bottleneck could create unnecessary friction, and impede on workstream agency. That being said, I do appreciate this framing as a S14 policy, with the goal of having a framework by S15 that would allow workstreams to ‘regain control’ in setting compensation.

I very much appreciate Kris’s framing here as well.

@krrisis

This document contains some solid arguments on why we need to be more consistency on how we pay DAO contributors. However, I don’t think this needs to be a proposal of any kind at this point, but I think it’s a great start for a framework and it will help establish the people ops team in DAO Ops as the team to consult for any hire.

I agree that these solid arguments may be better implemented as a framework that offers evidence-based advice, rather than a policy or mandate.

My other caution with this sort of policy is that it’s essentially a top-down decision made by People Ops. I do, however, appreciate that this is well-within the domain of authority of People Ops.

An alternative I might propose is that a compensation commitment be the result of all the ‘hiring’ folks from DAO Ops, MC, PGF, MMM, and FDD coming together to form a collective framework in a ‘bottom up’ way, based on their unique and contextual experience.

I worry that any policy or proposal around compensation or contributor experience that doesn’t take into account the unique context of each workstream will struggle to receive mass-adoption across all the workstreams in GitcoinDAO. I’m curious about the ways in which this proposal has been co-designed with other workstreams, or alternatively how this proposal could be collectively revised by the relevant folks in each workstream?

I also wonder how we might think of comp variability across GitcoinDAO as a feature, not a bug. There may be legitimate and valuable reasons why compensation has historically been variable between workstreams. I’d love to hear anyone’s thoughts or pushback here.

Ultimately, I think we, as GitcoinDAO, need to do a better job making sure all of our contributors feel taken care of. I’m immensely supportive of any initiative in this direction.

Thank you, again, Loie and Saf, for your hard work here!

[DisruptionJoe]

There is definitely room for subjectivity and I probably messed up the math somewhere here (wrote it up quick at 10pm my time), but the idea is that the prices swings happen quite quickly.

Let’s say the whole month you are working the price is $10. Then at the end of the month we set up the payments. They don’t go out exactly at midnight on the 31st. Let’s say they go out on the 3rd. This is where the discrepancy can be.

It could happen that we put all the payment amounts into an excel, then to a multisig request where it took 24 hours to get 4 signers. Now this situation happens.

Could we increase the latency in paying the contributors? Possibly, but we did this because there were real issues where a few pay periods in a row where contributors where getting screwed by using the 20 day ma when spot price moved from it.

Also, not arguing for it. Just sharing to help you all see the options available.

[DisruptionJoe]

@Maxwell

I agree that these solid arguments may be better implemented as a framework that offers evidence-based advice, rather than a policy or mandate.

I agree wholeheartedly with this. Most policy should start as expert advice which gets adopted by workstreams because it works better. Then, it gets ratified to policy to protect new workstreams from wasting too much time experimenting in a space where we already have seen the experiments play out multiple times.

Also, WELCOME to the FORUM!!!

[krrisis]

@DisruptionJoe

Could we increase the latency in paying the contributors? Possibly, but we did this because there were real issues where a few pay periods in a row where contributors where getting screwed by using the 20 day ma when spot price moved from it.

So tbh I think this is an example of where we can indeed reduce complexity as @loietaylor mentions. I think we now have more than enough people on the team to get things signed quickly and adapt numbers if a payment gets stuck. It increases transparency and we don’t need insurance models or moving averages. We just pay everyone in the same way and stewards understand budgets and payments better because we reduce complexity within workstreams to a maximum.

[kyle]

@DisruptionJoe

M3 = $10,500 / 808 (Calculate as $10,500 / $13 because it is the higher of the 2 and cost the workstream less TOKEN)

I dont quite understand this, but would love to. in this model, 10.5 is not higher than 13… can you say more on this one?

[DisruptionJoe]

You could use the spot price or the 20 day ma. When the price is above the downside risk insurance (10% under 20 day ma), then we use whichever price is HIGHER because it costs the workstream LESS GTC

[loietaylor]

Ok hold on, can we go back to my question re: spot price?
There isn’t actually room for subjectivity around what spot price means… And it would be really good to know if FDD has a different definition of “using spot price” than other workstreams.

What spot price means to me is that in every single situation, Model 1 results in the token value when contributor is paid = 10,000

I think if there truly is up to 3 days between the “spot price” you use to calculate the GTC amount & when that actually gets paid out, then the moving average would be absolutely necessary. Spot price really only works if you can pay out day of.

(please correct me if i’m wrong here but i feel like this hasn’t been addressed and is a crucial definition)

[DisruptionJoe]

I guess it is a time of calculation and time of payment difference. Yes. I agree that spot price would be good if there wasn’t an issue, but we saw this playout multiple times and there were requests to do something about it. So we passed a proposal.

I’m all for using spot price if the payments are denominated in $ AND we know exactly when people will get paid.

Perhaps a reduction of complexity is in order as @krrisis mentioned, but I think it would be less complex to wait until the new strategy is ready before we change things for FDD.

[safder]

Agree with all of this 100%. A few things to clear up:

@Maxwell

My caution is that this process might create a bottleneck, whereby you, Saf and Loie, need to approve all hires from other workstreams. This bottleneck could create unnecessary friction, and impede on workstream agency.

This is a fair point, and I want to make clear that the intention isn’t for Loie and I to work in a silo and provide mandates other workstreams need to follow. I think this could have been clearer in the original post but for this initial framework, the suggestion is that we will work with the Workstream Lead/Talent Coordinator who is doing the hiring for the role - not “approving hires” but offering a service as People Ops “experts” and providing a suggested comp that may or may not be taken up. It wouldn’t make sense for all workstreams to be part of the comp determination process for another workstream’s hire, but we do intend on sharing the process and suggested comp details for all workstreams’ benefit.

@Maxwell

I agree that these solid arguments may be better implemented as a framework that offers evidence-based advice, rather than a policy or mandate.

Yes, that is exactly what it is.

@Maxwell

An alternative I might propose is that a compensation commitment be the result of all the ‘hiring’ folks from DAO Ops, MC, PGF, MMM, and FDD coming together to form a collective framework in a ‘bottom up’ way, based on their unique and contextual experience.

Yes, a more fleshed-out compensation framework that each WS can fork and adjust for their own needs will be built together with the Talent Coordinators/Leads of each WS.

Again, this is a Minimum Viable Product proposal to align on values and offer an interim solution that at least has some coherent logic, which we think is an important step on our way from yolo’ing all comp within the DAO to having a more robust framework that we can point to when making future compensation decisions.