This Company Bets All On Employee Engagement
A stroll through sunny London brings us to St. Katharine Docks—a beautiful location next to Tower Bridge—and HQ of Smarkets.
We have come to learn about an unusual company. And our expectations are high. This company is among the very few where self-managing teams, radical transparency, and self-set salaries are the norm. We can’t wait to learn more.
Smarkets is a betting exchange company founded in 2008 by Jason Trost. It has offices in London, Los Angeles, and Malta. The majority of its 120 employees are in London.
The company doesn’t offer casino games, poker, or bingo. Smarkets offers event betting through a peer-to-peer exchange in which people can bet for or against a certain event happening. In 2017, Smarkets came second in the Sunday Times Tech Track 100.
Employees regularly blog about the company’s unique way of working on their company blog.
Challenging the status quo
Founder and CEO Jason Trost knew he wanted to challenge the status quo—not only in the betting industry, but also in the way organizations are run.
He drew inspiration from companies like Valve and teal became too much of a buzzword), Reinventing Organizations was compulsory reading for everyone in the company. Jason wanted employees to have a better understanding of how he imagined the future of Smarkets.
Inspiration from case studies in the book helped Smarkets to create its own version of a progressive organization. Here are some of their pioneering aspects.
Smarkets’ 120 employees (65% of whom are engineers) work in self-managing teams. Each team has its own functional focus (e.g. back-end development, finance or HR). Plus there is a leadership team.
Teams consist of 5 to 8 people – no more, no less. So each team is small enough to move quickly, and to know who’s working on what. It is also big enough to offer diversity in skills and peer-to-peer learning.
Each team decides how it wants to work. For example, how is team leadership approached? Some teams select their team lead in a democratic way, others rotate the role, and others don’t even appoint a specific team lead and are therefore ‘leaderless’.
Each team decides how it wants to work. Some teams select their team lead in a democratic way, others rotate the role, and others don’t even appoint a specific team lead and are therefore ‘leaderless’.
This might raise concerns about chaos, or lack of alignment with other teams. But this doesn’t have to be the case. At Smarkets, they organize weekly coordination meetings. Each team sends a representative to coordinate with the other teams. Once again, the teams decide who to send.
This approach to alignment in self-managing organizations is common. Examples include group of 50 self-managing companies near Bilbao in Spain. At these, the same types of weekly coordination meetings are held.
The Smarkets approach to self-management is continually evolving. Everyone is invited to challenge the model and suggest improvements. But that it already works is not in doubt amongst the employees.
An earlier quote by Software Engineer Annie Zhang is revealing: “It means being able to decide for yourself what to work on, and having the flexibility, as engineers, to decide the direction of the product. It also allows us to spend more time working independently and communicating with other team members however we see fit — instead of sitting through meetings that might not be relevant to what we’re actually working on.”
Her colleague, Zachary Knowles, adds: “Engineers have total freedom to choose their tasks and the parts of the app that they work on. Several months ago, I chose to take on the task of adding live soccer data to the app. I learned a lot about our live feed of play-by-play updates, the stats that we have for each team—how they’re updated, and how we can display this data in our app. Since making that decision, I have become our team’s point person for anything involving live soccer data — it’s wonderful!”
Another key element of Smarket’s approach is radical transparency. As with other progressive organizations we’ve visited, they believe it is vital to open up all kinds of company information.
Céline Crawford (Head of Communications): “In our previous careers we would spent so much time trying to guess what colleagues earn, and how big their bonuses are, etcetera.”
“At Smarkets we were like: wouldn’t it be better to spend our time on work? So that’s how we got to talk about just exposing everyone’s salary. We talked to the employees before doing that and people were very skeptical.”
“So we set up a ‘salary committee’ to decide how we were going to do this. The meetings were very intense as nobody had ever gone through this process before.”
“We ended up having a review process before creating transparency as we wanted to make sure people felt they were at the ‘right salary’.”
We believe this is one of the powerful effects of transparent salaries. The process forces an organization to review the fairness of salaries. If they’re not fair when disclosed to all employees, there’s a big chance that shit will hit the fan.
At the same time, unfairness is why many companies are scared to open up this kind of information. It’s a clear signal that something is wrong.
When salaries and compensation were revealed on Smarket’s internal wiki, some people felt uncomfortable. After a while, these feelings disappeared and the new norm became an important part of Smarket’s culture.
But transparency comes in many other ways, too. For example, every 2-3 weeks there is a town hall session and a Q&A with the CEO. Plus, on a daily basis, company financials are reported so everybody knows what’s going on. Share options are also transparent within the company.
Returning to salaries, transparency wasn’t enough at Smarkets. They went even further. Now, employees can set their own salaries. Every six months, they can submit a form with the business case for a salary increase. The data includes a benchmark against performance, market rates and peer feedback.
Transparency wasn’t enough at Smarkets. They went even further. Now, employees can set their own salaries.
A salary committee reviews this, provides feedback, and then it’s up to the individual to decide. Whatever the decision, the proposed salary is made transparent to everyone within the company.
Anyone who has a problem with the suggestion can give feedback to the individual—saying why (in their opinion) it is too high or too low. If they can’t resolve any difference, they join in a conflict resolution process.
These practices (the advice, salary, and conflict resolution processes) are very similar to those at Morning Star, the largest tomato processing company in the world. Check out the story we wrote about our visit to them in California: Morning Star’s Success Story: No Bosses, No Titles, No Structural Hierarchy.
So, can’t salaries go through the roof if everyone can set his or her own? Pascal Lemesre (Press Officer): “Not at the moment. The salary committee has an important role to play. While they can’t decide, they can apply pressure. It will be interesting to see how this works when we grow bigger.”
And don’t forget there’s transparency in many other ways. Company financials, for example, are completely transparent. On a daily basis, employees know how the company is performing. With such a high level of financial awareness, people become more responsible. We’ve seen this time and time again.
A continuous exploration
As you can see, Smarkets are not scared to experiment with radical practices. They’ve pushed themselves well beyond traditional and out-dated practices. They have introduced new ones focused on unleashing the full potential of employees.
And it works. In an earlier interview, Mark Miscavage, Technology Coordinator said: “I think the thing about Smarkets’ implementation of self-management is the openness with which every level of the organization operates. At my previous company, the higher levels of the organization were a black box in terms of company direction, finances, availability of C-level staff and so on.
“But at Smarkets everything about the company is open. It makes it easier to operate day-to-day and know that you are doing so in a way that jibes with the current state of the company. Turns out, it’s easier to manage when there are less unknowns to deal with — imagine that!”
And it attracts new talent. Céline: “Yes, absolutely. Every engineer likes the idea of being entrepreneurial and having these levels of freedom. We compete with the likes of Facebook and Google, so we have to offer something more. And it works.”
As you can see, this company is not scared to experiment with radical practices. They’ve pushed themselves well beyond traditional and out-dated practices.
But they’re cautious about becoming overconfident. While it works today, they know that doesn’t guarantee it will work tomorrow. As they grow, they continue to explore new ways of working.
Via experiment after experiment, they are growing toward an ever better workplace.
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In a previous post on Haier's RenDanHeYi forum in Shanghai we shared which speakers we were looking forward to, hoping they would provide “Management Fireworks”. Last year we were hosting the forum, but this year we could sit back and listen. Now it’s time to share with you. So, strap in and enjoy!