October 29, 2021

Self-Setting Salaries: How it works and why we do it

EMPAUA Salesforce Partner

Whenever we tell someone that our salaries are, in fact, not only completely transparent but also self-set, we are usually met with incredulous gazes. Doesn’t that mean that everyone just gives themselves an incredibly high salary and the company will be bankrupt within months? Well, we are still here, so apparently not.

In this blog post, we will explain how it works. But let’s first have a look at why we decided to do it this way: A “traditional“ salary negotiation doesn’t encourage either party to be particularly open and honest – one party is trying to push for the highest possible salary, while the other party is trying to keep it as low as the other person is willing to go. Often, salary raises are not really dependent on actual performance, but on negotiation skills; or – even worse – on gender!

By contrast, our culture is based on trust and we believe in the goodwill of the people we hire.

We think that every person is best positioned to make a qualified decision on their own salary. And what’s even more important, self-setting the salary forces all of us to reflect on the value we bring to the company, also in comparison to our colleagues, whose salaries we know as well. The good thing about our transparent salaries is that inequalities between women and men or other unfair differences are just not an issue! So instead of delegating the responsibility of being aware of the things we are really good at and what we still might need to work on to a manager, we reflect on them and openly discuss them with the people we work with.

That way, we find out if our perception of ourselves matches our peers’, or discover blind spots we have not been aware of. By submitting ourselves to feedback from our colleagues and taking it into account when making a final decision, we further foster our mutual trust. Of course, the process of raising one’s salary needs to be standardized in some way.

This is why we have the Salary Process Facilitator role, who leads everyone involved through the process, ensures that no step is skipped and that the so-called feedback panel is only involved when there is already a well-elaborated salary request available (no one should waste their colleagues’ time with a poor draft!).

So what do we have to do if we would like to raise our salary?

The first step is private reflection: What would an appropriate salary be? What speaks for and against raising it? What is the company’s current financial situation? What do colleagues who are more or less at the same level earn? How close do we come to hitting our targets every month? We can already involve others at this point in time and ask for advice. After coming to a conclusion, we will write a proposal elaborating on the intended change in salary and the reasons why we think it is appropriate.

The proposal should describe which roles we fill and how we prioritize between them, what we are doing well and where we could still improve, giving specific evidence and examples for both. It’s the same process that a good manager would go through, except that in this case, we are doing it ourselves. It is very important to not only concentrate on our achievements: to get the whole picture we need to focus on pain points and room for improvements in the same way we reflect on our strengths. That way, we also prove our self-awareness. To make this a little bit easier, we can consult the so-called Competency Framework as a reference point - it sets out categories for every role and expectations for each competency level within these categories.

In addition to that, we will also elaborate on where we stand in terms of our company culture. For that, we can consult a Cultural Expectations Framework which clearly defines expectations per respective level (entry, mid, senior, expert) in each of these six dimensions: Feedback, Conflict Resolution, Productivity & Personal Effectiveness, Self-Management & Working with Roles, Relationship Building and Personal Growth. Again, both strengths and areas to improve are to be illustrated with specific examples.

Finally, the proposal will contain our professional goals for the next 6 months which should take into account the identified improvement potential.

When our proposal is done, the Salary Process Facilitator will create a panel, usually consisting of three peers, and pass the proposal on to them. The panel members will carefully read the proposal and give their feedback, ask clarifying questions and – if any – voice concerns. The salary requester is supposed to attentively read and reflect upon the feedback, and answer questions. If one of the panel members has a valid objection, it needs to be acknowledged and integrated. But in the end, unanimous approval is not required – keeping the feedback in mind, the salary requester makes a decision on their own and informs the Salary Process Facilitator accordingly.

Afterwards, they will need to make their professional goals transparent for everyone in Kenjo, our employee platform, and give regular updates on goal achievement there. The Salary Process Facilitator will schedule a meeting six months after the salary raise to review if the goals have been achieved (and if they haven’t, challenge them on why not). While there have been some minor tweaks to the salary process in the course of the years, there was never any question of abolishing self-setting our salaries – it actually works very well. 

So what do you think? Now that you know our approach in detail, does it still seem incredible to you? Let us know your thoughts!

Salesforce Partner EMPAUA

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