Clarity Ecosystem - 19.02.2019
How do you deal with salaries in Self-Organised Companies ?
No it’s not chaotic ! Because in self-organised companies there are still rules. And they are designed to create a transparent and constructive discussion in a peer-to-peer way.
Let’s dig in.
Peer to Peer Rules
As I said, rules in self-management do exist and are essentials to a successful self-organised company. They can be quite simple or take the form of sophisticated processes, but always have the same goal : allowing constructive discussions and clear collective decisions between peers. This peer-to-peer way of doing affects all areas of a self-organised company, as you can see in this overview of Sociocracy 3.0. And compensation is no exception. So how does this approach applies to compensation ?
Assess Your Added-Value
In any self-organised company, the starting point is to take the autonomy of the partner as the starting point. Therefore, everything starts with a self-assessment. There is no evaluation by someone else to get a raise. However, some guidance is often available to the partner doing his or her self-assessment. Depending on the organisation you are in, it can be as simple as asking yourself “what do I want to earn ?”. Or it can be more complex, using more precise criterias and asking yourself “how has my contribution to the organisation evolved ?” and “what new salary can I expect for that type of contribution ?”.
The key here is that emphasis is on the added-value you bring to the organisation, not the function you occupy. Such a separation between remuneration and functions allows to more easily swap roles in and out according to your interests without fear of losing income in the process.
This added-value can be estimated through multiple angles, from the skills you have and how their are valued in your country to the way you do the work (in a positive way, in an organised way, …).
To illustrate this, here are some questions that Hanno provides to help people assess their salary :
- How much do I need to earn, in order to live and to be satisfied with my pay?
- How do the next X months look for me?
- How much can the company afford to pay?
- How much do my fellow teammates earn?
- How much do other people in my city/country earn?
- How much do people with my skills and responsibilities earn elsewhere?
Other self-organised companies will have more detailed guidance. For example at Encode.org the salary you claim depends on how you situate yourself on 3 levels :
- How you contribute to the purpose of the company (broken down into 3 levels)
- What costs you need to cover for being a member of the organisation (travels, …)
- The level you think you have in what has been identified by the organisation as a scarce or key skill.
Make A Proposal To Your Peers
After having considered what your added value is worth, it is your call to submit your desired raise to your peers.
The goal here is to allow clear and constructive discussions to reach an agreement. So it is also the moment when peers can voice their disagreement about that gigantic +400% raise you just asked, thanks to collectively crafted safeguards.
This can take the shape of a facilitated discussion, like at Hanno :
- you make a proposal for a raise.
- you then listen to what your colleagues have to say about it.
- then you decide if you want or not to modify your proposal having heard that feedback. If you don’t, the new salary is set unless one of your peers mentions that there is a risk that this would cause harm to the organisation. If this is the case, the discussion continues until a solution satisfying both parties is found.
This way of doing is purely peer to peer in the way that it allows you to individually determine what you want to see on your paycheck while still managing organisational risks thanks to collective safeguards.
For all of this to work, an important requirement is a high degree of transparency. Indeed, it is good practice that salaries are known by everyone, so that trust and auto-regulation can happen. Indeed, when you know how much everybody is earning you are less inclined to ask for a big share of the pie for yourself without solid justifications. This transparency alone is probably the most effective safeguard there is.
There is no such thing as one-size-fits-all for setting salaries in a self-organised company.
Some will let it managed by a single appointed role, or by a working group. Some will prefer to decentralize everything as much as possible and let everything managed by elaborated peer-to-peer processes.
Some will prefer to take an “engineering” perspective and use clear and precise criterias. Others will claim that putting people in boxes is not what they want, and will opt for a more “human-based” perspective, just by asking everybody which salary they would be comfortable with.
The most important is for the organisation to compensate in a way that is aligned with the values shared in the organisation, and thus what fairness means to them, in a transparent and constructive way.
If you want to know more on how to apply this in your context, feel free to reach out to us.
by François Flamion