Digital design agency - Worldwide - 8 'shipmates' - For Profit.

  • M. Professional, scientific and technical activities
  • Global
  • 1-100

  • Profit

Teal Practices

#### Summary

In September 2014, Hanno made the information about all team members' salaries openly available to the rest of the team.

After trialling an algorithm-based model, as of June 2015 Hanno has implemented a self-set salary model, with an advice process. In the words of founder Jon Lay: "As long as we have total financial transparency, respect for the individual, peer review and self-discipline in our process of setting salaries, employees can be trusted to set a salary which works for them and also their team." [1]

Process for self-setting salaries at Hanno

It works roughly like this:

  • To ensure financial transparency, all salaries are published to the team (aka 'shipmates').
  • There is an open briefing every 3-6 months on Hanno's financial status, which advises 'shipmates' on salary direction for the coming period - advice they are at liberty to challenge or ignore.
  • This is followed by rounds of feedback and discussion, before each 'shipmate' submits their proposed salary for the next 3-6 months to an Advisory Process.
  • After further feedback and discussion, each 'shipmate' may adjust (or not) their original proposal.
  • The new salaries are then also published to the whole team.
  • A salary proposal can only be rejected if it is felt there is a genuine risk that it will harm the interests of the company.

Drawbacks of the algorithm model at Hanno

The previous algorithm-based system (based on the Buffer model) used addition/multiplication factors based on Role, Expertise, and Location, as well as a Founder component. Hanno soon found that this model was often either tricky to apply, or produced results that seemed to work against their goals.

It was particularly difficult to adjust the weighting so that 'shipmates' were appropriately rewarded for both investing in personal growth (new skills/expertise) and delivering strategic business value (e.g. networking, business development). In addition, it proved difficult - in such a rigid model - to account for factors such as differing elements of Location, and to ensure that the company remained sufficiently attractive to 'shipmates' with dependents.

In addition, the Founder factor was considered unfair (even by the founder himself), especially as this role had power over the salary formula itself and was therefore somewhat immune from checks and balances.

Further information

Details of this journey and its further evolution are documented in Hanno's online logbook.[2]

Notes and references

  1. https://logbook.hanno.co/choose-your-own-salary/ ↩︎

  2. Source: https://logbook.hanno.co/choose-your-own-salary/ ↩︎