Here's How We Let Employees Set Their Own Salary
Ellen finished an internship at Corporate Rebels two months ago. We asked her to continue working with us. We offered her a job. But there was a catch.
In true Rebels style, we were not going to propose a salary. Nor were we going to negotiate about it. It was up to Ellen to set her own. Here’s a reconstruction of what took place.
At Corporate Rebels, we push ourselves to experiment with new ways of working. We take lessons from our visits to self-set salaries – a topic we write about regularly.
We have been inspired by companies like London-based betting exchange this Dutch IT company that uses an app to determine salaries.
While many regard self-set salaries as utopian, and a practice that will never spread beyond radical outliers, we don’t think that is true. More importantly: we are fighting this attitude because we believe that setting your own salary is a very powerful way to boost engagement and entrepreneurship.
Obviously, some important conditions need to be in place. This is probably not where you start your transformation. (More on that below.) First, here’s our experience.
This is a very personal experience. So, to understand the multiple perspectives, we’ve adopted a Q&A format. Here are a some questions, answered by Ellen and Pim.
Q: What was the process like?
Pim: "As with many of our decisions, we used the advice process as a basis. The advice process - for us - looks like this:
- Gather information
- Make a proposal
- Ask for advice
- Make a decision
- Communicate decision
It's as simple as that."
Ellen: "To me, the process was like this:
- Look into financials of Corporate Rebels
- Check what Pim and Joost earn
- Do research online into what others in my field with my experience earn
- Add up my tasks and how I feel I score in this. Check with Pim and Joost to see if there are tasks I forgot
- Decide what I feel I am worth in comparison to the field
- Make calls to people who work in the field, or who know me well, to see what they think I would be worth
- Share my proposal with Pim and Joost
- Ask for their feedback and advice
- They agree with my reasoning and advised me to go for it
- Next, the accountant was informed
- Then, I spent the money before I received it
Q: How did you experience it?
Ellen: “Challenging—especially at the beginning. Because this is my first ‘real’ job, I had not much to compare with. The more research I did the easier it became and the more it started to make sense to me that I should decide this. I know best what I do and how much I feel I can do. It makes you think very much about what you actually contribute to the business, what you think you are worth, and why they should pay you a certain amount.”
Pim: “To be honest, it was quite easy from my perspective. My role was quite small as all the tough work had to be done by Ellen herself. For Joost and me it was about giving advice when Ellen made her proposal. So, I experienced it as very easy.
Because we have already been working with Ellen for a year, she knows our culture very well. There was a lot of trust that she would make a wise decision. I can imagine with an entirely new employee it would be a lot harder. The trust level needs to grow.”
A lot of people advised me to aim higher. They expected I would have to negotiate. They really saw it as a “fight”.
Q: Can you describe the good, the bad, and the ugly from your perspective?
Ellen: “Good? You reflect on what you do at work, and what you think that is worth to the company. You think about what you are worth, and don’t have somebody else decide what they think you are worth. Of course, you do discuss this. But, bottom line, you decide.
- Salary is a very private thing and hard to discuss with people whose advice I wanted.
- A lot of people advised me to aim higher. They expected I would have to negotiate with Joost and Pim. They really saw it as a “fight”. They thought it would be good to aim high and end up somewhere in the middle. They didn’t have the same level of trust that I could actually make the decision. To me, that also shows how rotten traditional practices can be.
- Some people advised me to go in low. They knew I really wanted this job and should not risk it over deciding my own salary.
- People advised me not to take my previous work experience into account as they felt it was not relevant.
- Doubting yourself at some moments in the process.
The ugly: Seeing the difference in salaries between women and men in the field. I was so shocked it took me a few days to figure out how ridiculous this was. Why do we take it for granted that there is a gender pay gap?”
Pim: “The good? It saves a lot of time! In a traditional situation, Joost or myself (as founders) would have to figure out what would be the right salary, propose it to Ellen, and negotiate it. Now, most of the work was transferred to Ellen. We could spend our time working on Corporate Rebels priorities. Also, while it seemed to be tough for Ellen it was a great way for her to learn the advice process (and how salaries work). Now, she’s even better equipped to make tough decisions, and she understands our financials better.
The bad: Some people reacted as if we were crazy. Others thought it was just fancy talk and that – in the end – it would still be us deciding. First of all, I don’t think we’re that crazy. Secondly, it’s obvious we have a strong influence on Ellen’s perception through the advice we gave. It would be naive to neglect that. However, in the end the decision is truly Ellen’s. It shouldn’t be anyone else’s.
The ugly: It’s tough to not jump in and support. We saw Ellen struggle. I asked her a few times how she was progressing. While I think the struggle is a good thing, it’s still hard not to support until she asks for it.”
Q: What would you like to do differently next time?
Ellen: “I would ask more advice from Pim and Joost at an earlier point. I felt a bit uncomfortable at some moments talking about money in that way. Also, I would talk about it more often. That’s why this has been so useful. Next time I would approach it even more proactively than the process already is.”
Pim: “Next time I’d spend more time on teaching the process. Especially for tough decisions like this one, it’s good to be fully aligned on the process. The clearer it is, the safer the person going through it feels.
We might have been a bit too relaxed in saying to Ellen: Take your time, use the advice process, and make a decision.
I believe it would have helped if we gave her a bit more insight into how to use the advice process on a touchy subject like salaries. On the other hand, while she might have struggled a bit more, she probably learned more because of that. It’s always a delicate balance between coaching and letting go (in general, we prefer to lean more towards letting go).”
Q: Would you recommend it to others?
Ellen: “Yes: if people are in it for the right reasons and you give them enough information, they will not make ridiculous proposals. Makes you give a good think about what you are worth and what you contribute to the company. When your proposal is accepted it gives you a good feeling that what you feel you are worth others acknowledge.”
Pim: “Depends. I believe it’s a great way to engage new staff from the very start. However, it’s important to have some basics in place for it to work. We have full transparency when it comes to financials (and all other documents). Ellen therefore knew our salaries, financial position, revenues, costs, et cetera. Without this, the process becomes much harder and scarier—the person will just be shooting in the dark.
Also, psychological safety is important. All parties involved should feel safe to share their opinions – even on a touchy subject like salaries. Beside that, it’s important to note that we were in a good position as Ellen understood our culture already. She had experienced it extensively during her 1-year internship. Without this understanding it would have been much more challenging.
I wouldn’t recommend it if your company is still very traditional. Self-set salaries shouldn’t be the thing to start your transformation with! Focus on increasing psychological safety first.”
As you’ve read, we’re very positive about the process and its outcomes. It’s not easy, but to us it’s definitely worth it. We recommend other progressive organizations to find their own way to experiment with self-set salaries.
For those who are far more traditional, start somewhere else. You don’t want to go down this path if you haven’t got other basics in place.
We offered her a job to come work with us. But there was a catch: we were not going to propose a salary. Nor were we going to negotiate about it. It was up to her to set her own.
We’ll report back when we try some other radical working practices.
Very likely, we’ll be back soon!
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That's why we believe a lot in salary transparency. If - for whatever reason - people over- or undersell themselves it will automatically be out in the open. That makes it a whole lot easier to reduce gender (or other) pay gaps.
There are some great companies we've visited who are pioneering this, for example: https://corporate-rebels.com/radical-transparency-self-management/
We first visited Haier headquarters in Qingdao, China in 2017. We enjoyed an extended conversation with CEO Zhang Ruimin. He told us "there is no such thing as a successful company. There are only companies that move with the times". Those words intrigued me. In hindsight, I never truly understood them. Now I think I do. Let me explain.