Because we are major believers in the power of community, when we heard from Crowd Analyzer, one of the thousands of companies on Jobzella, about their open salary policy, we had to hear that story.
Remember when we promised to tell you about Transparency Vs Secrecy in the Workplace and how your company should always be transparent about pretty much everything? Well, we know you probably thought this couldn’t possibly apply to Salaries. But Guess what? You can have an open salaries policy and it works. Buffer did it. Crowd Analyzer did it. And your company can do it too.
So what are Open Salaries?
Having a scheme of Open Salaries implemented in your company means you create a formula which factors in how every employee gets paid annually and how bonuses and salary raises are calculated. Then you make this formula and the sheet that contains the figures for each employee completely PUBLIC and accessible by every member of the company.
The first formula created by Buffer then adapted by Crowd Analyzer is basically the following:
Salary = job type X seniority X experience (+ a fixed annual increase if salary choice instead of company equity)
Let’s create a fictional example to understand how this works.
Ahmed is a graphic designer, he graduated in 2013 (ideally Ahmed has two years of experience), he is great at Photoshop but needs a bit of experience at Illustrator and does not know anything about Coral Draw. Ahmed is in the process of being hired by Company X as a mid senior graphic designer, what remains is the salary question.
Now, let’s say the market range for a mid senior graphic designer is 5000 EGP a month (60,000 EGP a year) and the seniority multiplier is 35% (mid senior) and the experience (skill sets) multiplier is 1.34 (because he is great at Photoshop, not so good at Illustrator and still needs to learn Coral Draw). According to this formula, Ahmed’s salary would be calculated as such:
Ahmed’s basic annual salary is 60,000 X seniority (35%) X Overall Skill set and Experience in 2015 (1.34)= 86,832 EGP (Net salary) annually which translates into 7,236 EGP a month.
Some questions you are probably asking yourself now:
1- What if Ahmed starts going worse at Photoshop or doesn’t learn Coral Draw?
Well, if he still maintains the same levels of work and is valuable to the company, his salary remains the same. If he learns Coral Draw then his skills increase and the weight for the skills will add to the multiplier which in turn increases his salary.
2- Why should his Salary increase anyway?
All management and Human Resources Experts agree that if employees don’t have a path of self improvement backed up by steady salary increases (Raises and Bonuses) then they are more likely to become less motivated and highly likely to leave or remain unimproved for a longer time. Who wants that?
This method has its own way of showing the path to acquiring skills and limiting salary increases to actually working and growing instead of personal performance reviews where the manager can easily be accused of preferential treatment towards employees. With this scheme, you improve you get paid more. It is that simple.
3- But what if the job has no measurable skill set?
We have, at Jobzella, tried applying it. Yes, it takes a lot of work to actually create a measurable skill set for some professions. But we are currently in the process of applying it to Marketing, Sales, Customer Service, Accounting, Development, IT, Creative and Design departments and we have managed to create measurable skill sets for each. Contact us and we can help you with it.
4- This sounds great, but what is the point of sharing it with the entire team?
- a) When it is time to analyze and review team performance, you actually have a bar to measure to. Everyone knows how everyone else is being reviewed and it is not happening behind closed doors
- b) You are being transparent which essentially means no more gossip and no more wondering about who is getting paid how much. It is all out in the open.
- c) Challenges for the win! If an employee feels paid less than a team mate (in the same department) He/She now knows the skills they need to acquire to get the same pay check as that other department co-worker. Let the challenges begin and the entire company’s performance will eventually skyrocket.
- d) Ironically, nothing is really a secret anymore. It can take some digging but rest assured your company employees can easily guess how everyone is getting paid anyway, so why don’t you come forward and share it?