Description

Matt McFarlane and I met earlier this year on opposite sides of a debate about pay for performance. His team argued in favor and won the audience vote 62 to 38, and a week later he published a piece saying he had never been a fan of it. That opening carries the rest of the conversation: what pay for performance sets out to do, why the mechanism breaks at nearly every link in the chain, and what companies use instead once they stop treating an annual rating as the engine of everything.

Matt runs FNDN, a compensation consultancy for startups based in Australia. He built the pay structures at Oyster that carried the company from 200 to 600 people across 70 countries, and he now hosts the FNDN Series podcast and newsletter and runs the Startup People Summit, a one-day APAC event for people leaders inside high-growth companies. We cover the companies that have taken negotiation out of pay entirely, the grip that benchmark data holds over compensation decisions, the tension between fairness and individual pay in collaborative work, what happens to the manager's role as AI absorbs more of the coordination, and the practical side of leaving a salaried job to consult.

What we covered

• Why Matt argued for pay for performance in a debate and against it a week later
• The three percent merit budget, and what the annual salary survey roundups tell us
• Rewarding a standout year with money, or using it to raise the standard across a team
• Why Matt left the job he enjoyed most in his career to build a compensation practice
• How his client window moved from 50 employees to 100 or 150, and what breaks at that size
• Benchmarking as a source of cognitive closure, and the living wage argument underneath it
• Runn's single rate per role, and the salary trajectory that made their people harder to poach
• Carta, 37signals, Buffer, and PayPal as models that remove the negotiation
• Fairness as a relative judgment, and how quickly a good salary becomes an unfair one
• Why US companies resist narrow bands, and what wide bands say about trust in hiring
• The bad hire label, the myth of the A player, and where responsibility for performance sits
• The player coach, the stretched leader, and ClickUp's million-dollar salary bands
• What Matt tells anyone thinking about leaving a salaried role to consult

People
Matt McFarlane, founder of FNDN
Rowan Savage, co-founder and CTO of Runn
Andrea LaRowe of 37signals, a previous guest on this show

Books
Extreme Ownership, Jocko Willink and Leif Babin

Articles
"How to Become a HR Consultant," Matt McFarlane, FNDN Series #7
https://fndnseries.fndn.com.au/p/how-to-become-a-hr-consultant

Organizations
FNDN, Startup People Summit, Oyster, Runn, Carta, 37signals, Buffer, PayPal, Zappos, ClickUp, Buurtzorg, Gallup, Radford

Find Matt
LinkedIn: https://www.linkedin.com/in/matthewmcfarlane/
FNDN: https://www.fndn.com.au/
FNDN Series podcast and newsletter: https://fndnseries.fndn.com.au/
Startup People Summit: https://startuppeoplesummit.com/

Music licensed through Soundstripe. Code: DLQOKHPSWUMSTCMH.