Is it all about money?
In my humble opinion, I think that money is not everything, this is something that my father told me thousand and thousand of times but don’t be naive, money is important… Maybe in the future we will work in a more altruist way but not now. Money is a sensitive topic, I think that this happens in loads of cultures and countries, because of that not all people feel confortable talking about it.
Surely all of us will agree that this is a very important topic, then who is in charge for? I see two aspects here, managing raises and hiring people. Some companies, let managers to decide who is candidate to give a raise or others help them with assessments. On the other hand, with hires usually managers (again) jointly with HR fix aproximately what salary he/she should has based on market and negotiations. I think theses decisions are subjective and unfair, because you are using managers as unique person judging people work, market could be to much turbulent and you would be rewarding people with good negotiation skills. I don’t want to go on and on about this because there is a lot of ink talking about that so let’s move on.
As I said before salaries are a very important topic and it must turn to a more objective point of view and remove managers from the equation. Negotiation skills might be out, all people must be treated equally, have in mind tacit knowledge he or she has gained after working together inside a concrete team, effort and learning beyond success and overtime, etc. Too much information for a manager, isn’t it?
For these reasons and talking about equations Jurgen Appelo at #Workout talk about a salary formula like this:
S = (C x T x L + A + P + W + E) x G + O + M + N + K
There’re a lot of variable: Category, Tag, Level, Age, Experience, Education, Merit System, Klout score… And this formula has more sense to me.
Where salary is a mix of variables which result as a fair one. In our case, we put this into practice and we started with a more easy formula:
S = (C x T x L + A + P + W)
C → Category: We made 2 categories taking into account how relevant they are for the sake of the business. 1 for OS, 2 for development.
T → Tag: 3 different tags. 1 for team member, 2 for lead people with responsabilities by their own, 3 for team leader who has people in charge.
L → Level: 5 levels: 1 for trainee, 2 for Junior, 3 for Medior (each junior with one year working for the company), 4 for Senior, 5 for Master.
A → Age: Easy, how old are you?
P → Period of time the company have employed him.
W → Work expericen she had before.
Currently we are using the result not as a salary number but as a ranking. We’re improving the formula, jointly with the team, in order to be as fair as we can and be sure all of us are at the same page. For us this is a great breakthrough! Is a very beginning!!
However, we want to be more precise and with this number we are also trying to do something like a stratums. I mean, we want to define a relationship between one result (coming from our formula) to a salay that would be above or below inside a salary table.
Finally, you can find more information about this here at Management 3.0 web site :)