17 August 2019 Courier Apr/May 2019

The startup that lets staff set their own salaries

Staff almost always welcome a pay rise – but what’s the best way to assess how much that increase should be? Makers reckons employees themselves should have a say.

Salary negotiations can often be a fraught exercise of push and pull between employees and their managers – or worse, an end-of-year review may pass by with no mention of pay. But what if, instead of this frustrating game of number swapping, companies simply trusted their employees to set their own salaries? That’s what Makers, a developer academy based in London, has done.

‘We’re using the same tried-and-tested process, but we entrust it to the individual rather than their supervisors,’ says Makers CEO and co-founder, Evgeny Shadchnev. Much like many end-of-year reviews, Makers employees are asked to fill out a self assessment form each year, but they’re also asked to stipulate how much they believe they should earn.

The internally created Salary Advice Process (SAP) not only asks employees to answer questions like, ‘what did you achieve in the last year?’ and ‘what are your areas for improvement?’, but to also do their homework and acquire market research on what equivalent companies are paying people in similar roles.

The million dollar question

After employees have completed their SAP, a selection of colleagues – including their team leader and in some cases, the finance director – will then weigh in on aspects of the self-assessment and, most crucially, give comments on the self-set salary. If a colleague disagrees with the amount put down, the employee is then asked to take this feedback into account and adjust their assessment with this in mind. The whole process is completely transparent – so colleagues know who is asking for how much, as well as who is giving feedback on how much money they should take home each month.

In the case of disagreements, Shadchnev notes that the SAP is not the same as a request for a new salary. Instead, it is more of ‘a decision-making process by the individual.’ The whole task can take a number of weeks, but once the individual feels their salary reflects their own assessment of their value, as well as that of their colleagues, the change in pay is usually apparent in the employee’s next payslip. To round of the SAP, employees post their completed form on the company-wide #advice Slack channel.

This level of transparency – as well as the internally developed process itself – is progressive, especially in the UK where talking about salaries remains a taboo subject.

So what are the advantages of sharing salary information? ‘It’s healthy that the financial information is open to the company,’ Shadchnev says. ‘It helps to build trust and gives everyone to get a better idea of how their skills are valued by others and the market.’

Shadchnev says there is no average percentage increase that’s usually requested, and that ‘it ranges from 0% to 50% in some cases’, with the figure fluctuating as Makers has refined the process over a number of years.

Planning for pay increases

How can a company effectively financially plan when individuals are choosing their own salaries? Makers’ monthly financial updates notify upper management of how much they can afford to pay out. If there’s not much cash to spare, the company will slow down hiring or cut down on other forms of spending to ensure that payroll is the last area affected. ‘We’ve never had to turn down someone’s SAP,’ says Shadchnev. ‘If a company can’t afford an individual, the right thing to do is to help them find a new job that can pay them what they seek, so as to make sure the individual is still growing professionally,’ he adds.

Asked whether he’s witnessed any gendered behaviours when it comes to negotiating, Shadchnev says that men can be more aggressive than women. ‘It’s something we didn’t think about three years ago and we should have,’ he admits, noting that the company will be reevaluating the process in the coming year.

Shadchnev cites companies like US e-commerce brand Zappos (now owned by Amazon), gaming company Valve, and the book Reinventing Organisations by Frederic Laloux for inspiring his approach to building the SAP, but believes that what the company has created is unique. ‘Essentially,’ he says, ‘we believe that if we treat people like adults, they’ll behave like adults.’