There has been a lot of buzz about how we do things here at NorthCode, so this might be a good time to give you an idea of what we’re about.
As we put our heads together on what shape we wanted our company to take, it was quickly evident that we felt it crucial to steer away from a traditional model: a model where owners inhabit the top and everything below them caters to their needs and goals. We had all kinds of ideas, some a little wilder and some a little more complex, however none of them felt right.
It wasn’t until we met our wonderful friends from Luoto Company that we immediately knew this would amount to something wonderful. We already knew their way of working was exceptional and that their people truly valued this. It felt special. Early on, we realized we shared the same values and that they had thoroughly considered and implemented their models successfully. So why reinvent the wheel?
At present we have a blossoming partnership with the folks at Luoto Company and they are now our mentors as well as minor shareholders of NorthCode.
So let’s have a look at how our model actually works:
Every Employee is an Owner
When you become a NorthCoder, you will also become an owner of one of our subsidiaries. In practice the employees own 80% of the shares of their subsidiary. This means for example, if you have 20 employees each employee owns 4% of that subsidiary. The rest of the shares (20%) are owned by the parent company, which is owned by Ismo Aro and myself.
Money Flow in a Nutshell
All customer contracts are made between the client and the parent company. When a subsidiary sells their services, 80% of the net sales are paid directly to that subsidiary.
Who Pays What?
Our subsidiaries actually get the majority of the money flow, but only end up paying direct employee costs, e.g. salaries, expenditure on salaries, health care and tools (laptops, etc.). In other words, a subsidiary covers all costs incurred by NorthCode employment.
You may also ask, what do our employees receive when paying a 20% share to the parent company?
All operational expenses are paid by the parent company, including sales, marketing, HR, recruitment, office supplies and expenses, accounting, recreational costs and so forth — all the things that keep our wheels moving, in order for us to be able to do the work itself.
Salaries & Profit Sharing
Employees receive a base salary, with all profits naturally shared between subsidiary owners, i.e. NorthCoders. A subsidiary can also invest a part of the profits, if decided so. It’s important to note that each owner of a subsidiary has full control over profits and the parent company does not issue dividends.
Our Model vs. Normal Employment
This one is easy: more money, more control, more visibility.
Why work for someone else, when you can have the freedom of working for yourself? Our model allows you to exercise far better control when times become challenging. We have to admit, job security offered by large traditional corporations is an illusion nowadays, as it is often broken down by labour negotiations.
Our Model vs. Freelancer / A One Man Company
As a rule, freelancers don’t often enter into direct assignment agreements with the final client. It is likely that an integrator is needed between the freelancer and the client, which ultimately becomes more costly, not to forget the fact that a freelancer may never even get the chance to gain client contracts without an integrator. Even if you’re working directly with the final client, uncertainty is a major factor. Having to give relentless attention to landing the next assignment creates unnecessary stress and can be very time consuming.
Our model offers NorthCoders security on many levels.
Irrespective of fluctuations or unstable circumstances, our subsidiaries always pay each shareholder-employee the base salary, even when things get tough. We believe in cutting dividends and bonuses, because ensuring salary payments is first and foremost to us.
Look at it this way — by investing 20% you are investing in personal job security, bypassing bureaucratic tasks (incl. bookkeeping) and avoiding the day-to-day hassles of running a company.
The NorthCode model really combines the benefits of brand-based self-employment and the security of a much larger organization.