Compensation 2.0 - A New Way Of Doing It

The way we currently set compensation is ad hoc and arbitrary and not transparent at all. Why? We have just always done it this way. What a wrong answer.

What if instead of this random ad hoc way we have everyone define the roles that we need to run the company and for each role they set what the minimum skills required to have that role are, and on the other end of the spectrum what skills and abilities the grand master of that role would have. In other words everyone defines what you need to get a start in a role, and what the master of the role should be capable of. This includes roles that are part-time and that can rotate between people. And we also define what the minimum interpersonal and leadership skills(soft skills) are that we need to join the company and what the ninja of soft skills would have. Because let’s face it, if you are fantastic at your role but your soft skills are marginal that means your influence is greatly reduced and as such your value to the company and your peers is less. Especially in a company that has profit sharing for all.

So what if everyone in the company defines this matrix and then we call in an expert in compensation and they help us refine our role and soft skill definitions and then they research what our min and max competitive compensation levels, for both salary and hourly, should be, and what impact the soft skills scale has on those numbers. And we also get them to help us set what the incremental scale between the min and max numbers for a role should be. What are the increments in compensation for that role.

And then we have the problem of who decides if someone has the skills to hold a role and if they do, where they are on that scale, and same for the the soft skills.

Is it up to the team lead, the CEO, a compensation committee? Or do we go completely off the farm and what if the person who holds a role, or wants a role, makes their case to their peers and they state where they believe they fall within our scales. The peers either unanimously agree or not. If they disagree, the person doesn’t get what they want. No arbitrary management ad hoc decisions. Completely open and transparent compensation. And what happens if we find we are overpaying certain people? What do we do then? Many open questions that I think we need to collate and get the advice of everyone on, and, like any good learning company, we run an experiment or two and see how it works out.