How Transparency Empowers People and Increases Productivity
Why we think it’s important to have transparent salaries
mondora is a company that values transparency of information. We have a flat structure and we firmly believe that people should be empowered to make business decisions inside the company. This works well because people who make choices also take responsibility for their actions and view the company more as “theirs”. In contrast, people that just get told what to do day by day don’t take on much responsibility and are also less motivated to complete tasks well, try new ideas and take some risks: the building blocks of innovation.
In order to empower people to make important decisions inside the company, it is necessary for everyone to have access to all the information required. This includes financial information, and also salaries. The company has been sharing financial information with everyone for a few years now, so that all employees know if things are going well and can make decisions regarding new equipment and software licenses, business travels and so on.
Our flat structured company is organised in self-managed teams that follow all aspects of a project: from initial customer acquisition to project completion. In order to give full autonomy to each team, it is necessary for everyone to have access to all financial information too. In this way each team is able to follow a customer project from start to finish, and also administer its own finances, make business decisions and know if they are performing well or not. In order for each team to make their own balance sheet each sprint (two week iteration with which we work), people must know how much the customer is paying for their time, and also how much their time costs to the company: this means salary information should be transparent to the team.
How we did it
When we first started discussing the idea of making everyone’s salaries transparent internally, many people advised the company against this. Both our accountants and lawyers said it was a really bad idea and that it would have disastrous consequences. But when we asked for some examples or past experiences of these consequences, no one could recall any, it was just an accepted fact that salaries should remain secret. Of course mondora was not the first company to make salaries transparent and we were able to draw on many previous positive cases, especially from US tech companies and startups. However, the general thought pattern was that “you can’t do that here in Italy”, although there is no law against this if everyone gives consent.
As always happens in mondora, the decision was put to the whole team: Francesco, our CEO, started a thread on Loomio, our decision making platform, where he outlined the wish to make everyone’s salaries transparent internally. Many people contributed to the discussion and the decision was then put to the vote with the usual timeboxed process. The result? Everyone voted for salary transparency. What happened next is quite interesting: although we all voted for salary transparency, Francesco still waited. As the weeks went by and salaries had still not been published, a group of people decided to take matters into their own hands and created a google spreadsheet that they passed around. People spontaneously began adding their salary to the spreadsheet, and that’s how we got transparent salaries!
What happened next
Our CEO wasn’t expecting such a level of autonomous decision making, but what happened once we all discovered how much our teammates earn is….nothing. Well, nothing disastrous or negative anyway. People generally accepted their salary level and that of their peers. In some cases, a few colleagues teamed up to ask for a salary adjustment for someone else. The adjustments were however minor and the company has never suffered from disclosing this information.
Although strongly advised against sharing salary information, in mondora we did it anyway and the change was not that impressive! Sharing this information has had a positive effect on the team: people tend to look out for each other more and make sure compensation is as fair as possible. Junior level people have a clear idea of where they can get to over time and more experienced workers can use this information to better negotiate the salaries of new hires too. New people joining the team are informed of this practice during their interview, so that if they decide to take the job they are fully aware of our transparency practices and know what to expect.
The benefits of sharing our salary information
Sharing salary information has enabled teams to become financially autonomous and to try out some entrepreneurial skills, without the risk. Greater autonomy means greater empowerment, which consequently leads to more responsibility and better decision making and management of projects. Teams become more productive and individuals don’t need to spend time worrying if they are being underpaid or not, which is a figure that is commonly misjudged and generates unnecessary negativity. If you are not being paid enough for your level of experience or contribution to the company, your teammates will take care of the issue and ask for an adjustment for you. Finally, disclosing salary information highlighted a slight gender pay gap, and this was also adjusted. So, for mondora, transparency is always a good idea!
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