Gain control over your salary
Equality in the workplace requires radical transparency and pay freedom
I believe the secret to highly motivated people is creativity and responsibility. Yet there’s one responsibility at work that is never given to us — control over our own reward for the work we do.
Being worth one’s salt
A cool fact — the word “salary” comes from the Latin word for salt, which in Roman times was deemed so valuable that it was a primary commodity in exchange for labour.
To be satisfied with how we are paid, we really need to know our value. When we know our value, we know how we contribute to the success of where we work. And when we know our impact, we understand how we serve and deliver on our purpose. Being able to receive the right salary in exchange for the impact we make is critical — not only to how we see ourselves, but how we see ourselves in relationship to the work we deliver. Worth our salt.
We’ve been sold a lie about salary. We’re told we should take comfort in earning a regular pay cheque, and keep pay confidential. For this feeling of security, we’ve surrendered our value to someone else. A salary becomes a form of control over us. A shameful secret that we are forbidden to share with others.
And as long as there is control over people’s pay, there will be no equality in the workplace.
The fight for equal pay should be an argument for radical transparency
As the equal pay debate heats up in the UK, with new legislation that demands that businesses over 250 employees publish their gender pay gap, its surprising that radical pay transparency has not been covered more in the media.
Or is it? Consider a night out with your friends or family. Do you know each of their salaries? Do you know how much your parents made during stages of their lives? Did they talk about their pay with you as a child? Our culture is not equipped to have healthy discussions about money — in fact it is deemed vulgar to talk about how much you earn. You might feel shame if you earn more or less than others. How then could we expect to easily bring this practice into the workplace?
Senior executives of publicly listed businesses must publish their salary and reward annually. Yet the rest of the organisation’s pay remains hidden. The argument is always that pay is private, and if employees knew each other’s pay there would be issues. I have yet to hear a compelling case for the confidentiality of individuals’ pay. The truth is that managers do not know how to create an open environment where people are treated as adults who can deal with the reality of running a business (or that there is dirty laundry in their payroll …)
The list of companies who champion pay transparency is growing, but it has yet to become common practice. Buffer, Smarkets, Makers Academy — great examples of disrupters who put an emphasis on how self-responsibility in their culture drives the growth of their business.
If we actually want thriving work cultures, the notion of salary needs to change. We know that autonomy and self-responsibility increases individuals‘ well-being. In fact, what we can control in our lives is less stressful to us than the things we perceive to be beyond our control.
So giving salary responsibility to employees could be key to creating a high performing workplace. A business based on self-responsibility must not only have full pay transparency — but should have means by which people can have control over their own pay.
Welcome to pay freedom
In the majority of companies, once we are hired our pay is completely beyond our control. Employee’s pay changes only when deemed necessary by their employer — you are “given” a salary increase. People are benchmarked against the external market, rarely for the value they deliver to the customer. While your cumulative experience may play in your favour (and your gender against you), you don’t really get a say in how much you are paid.
Even performance related pay structures like bonuses are a form of control — manipulation used to drive employee behaviour towards specific outcomes desired by management. The employer sets the criteria, and determines the value of the reward.
What might happen if people could set their own pay based on the value they commit to delivering to the business? Could giving them this responsibility help them to stay motivated, make them accountable for growing their skills, and see them actively involved in how the business works? Imagine how this could unlock the potential of your business.
When I discuss giving people control over their pay with senior leaders I see the fear in their eyes. Their responses reveal how they feel about their people, the level of trust in their business, and their beliefs about themselves:
- “This will get out of hand”
- “People will take more than they are worth”
- “They’ll pay themselves more than we make”
- “People will pay themselves more than me”
Some 21st century businesses have created a system for their pay that allows for equality and transparency. Buffer and Figure 53 use a baseline pay and multiplier that makes clear how pay works, and the value of people based on their responsibility. Profit sharing is also an ethos of both companies.
For larger businesses, budgeting salary by team will be the most efficient way of managing pay freedom. For this to work teams must be able to align on the value they deliver together, and then find their own value within that context.
At Within, we have taken it a step further and have no salary. We are paid based on the value of the work we deliver to clients. Partners (as we call each other) receive fees for work they do, not work brought in, since serving our clients is delivering on our purpose and contributes to the impact we want to make together. Our belief is that by delivering value to our clients we grow our business — so we must recognise our own value in what we deliver to the people we serve.
At times this is really tough. If as a partner you have a month delivering less work, your pay can decrease. However the opposite is also a very real possibility. In fact — there is no ceiling to your earnings. I encourage partners to try to look at their earnings quarterly, to give them a broader financial outlook and break free of the trappings of short-term financial thinking.
Balance is something I am very conscious of in what we have created. Most of our partners have experienced a recent life change (moving home, starting a family), and we all live in cities where the cost of living is high. However, we all value freedom and self responsibility. For someone to determine our salary would be against what we believe in. Each partner is free to work in a way that suits them best. We try to balance potential changes in pay with a culture of support, providing safety through our partnership and encouraging each other to achieve our own goals, not targets set by someone else.
Freedom requires a foundation of support
From our work with clients who champion self-management, and our own experience of operating our business this way, I’ve learned that growing your business through freedom and self responsibility relies on a supportive culture. These elements must be in place for transparency and pay freedom to be embedded:
- The working culture must embrace new ways of making decisions. This could include using an advice process that allows people across the business to be active in decision making.
- People must be able to be heard. The loudest voices must not hold dominance over others.
- The culture must accept that finances are not the domain of accountants and advance the financial literacy of everyone in the business. The whole business benefits when everyone has the ability to make better commercial decisions. This will also help people to feel more confident talking about money, at work and in their personal lives.
- There must be an environment where supporting others to achieve goals is encouraged, resourced and celebrated.
I’m very interested in exploring other case studies of businesses who share the belief that radical transparency and pay freedom is important to 21st century business. Or if you have tried elements of what I’ve outlined here and had difficulty implementing, I’d love to hear what you learned. Please leave a comment or get in touch.
