How can you make salary decisions jointly and thus equivalent?
We often get asked how to make performance evaluations or discussions about salary increases more equivalent and agile. In general, also for cases like these, you can use inspect-and-adapt – so, consider what makes sense (the plan), execute, inspect, and then adapt it.
Here’s an example: A colleague of mine, who is the director of a company, reported that they used this approach to make the decisions on salaries more agile. However, it wasn’t the management starting this process (note, any change can start anywhere), instead it was a small group of people who decided on a series of experiments. At first all members of the small group decided to make all their salaries transparent amongst themselves. This created already some discussion both within this group but also in the whole company. Then that group even went a step further and they made their salaries transparent to all their colleagues. More and more colleagues followed their role-model. The discussion that followed triggered the creation of a new process that they changed also a few times and is currently settled like this:
- There is an elected person taking part in all salary discussions (salary representative)
- Before salary discussions start, management calculates how much money is available for increases (increase budget)
- Management defines a set of company interests that are so important that they should be supported by every employee (e.g. the employee helps to achieve both customer and team satisfaction)
- In the salary discussion meeting the following people take part:
- The person under discussion
- Two people the person under discussion invites (typically peers)
- The elected salary representative
- The director of the branch the person under discussion works
- The salary discussion follows a defined process:
- Agreement on the goal of the meeting
- Open discussion which completes the picture about the person under discussion by hearing from all perspectives on the person’s growth, achievements, or under-achievements.
- Everyone decides by playing a card how the person under discussion is doing in terms of the defined company interests. The cards reflect if there are examples that the person has shown the support of this company interest, e.g. if the person has tried to support it, has supported it sometimes, is supporting it many times, is even inspiring others to support that goal, or if there are no such examples. The group doesn’t try to reach consensus on this, it only uses the company interests and the cards for having an in-depth exchange and completing the joint understanding on the person’s contributions.
- Knowing the person’s actual salary, everyone writes secretly on a sticky note the suggested new salary. After everyone has shown their suggestion and provided some rationale, the group agrees on a suggested new salary for the person.
- Only after all salary discussions (with all employees) have been carried out, the management adds up all the deltas of the suggested salary increases and verifies if this is within the increase budget. If the sum of all deltas overruns the increase budget, all deltas are proportionally deducted.
This is a very specific example of applying company-wide agility. Yet, we invite you to look at it as an example probe that you can use -maybe in an adapted way- in your own context. We look forward to hear about your experience!