Okay, let’s start it off strong: at Keytoe we are going to decide upon each other’s salary through an app.
In this app, we can rate each other on a daily basis on one score only: how you feel about your colleagues. The score you receive, and the revenue and costs of the company for that month, determine your monthly salary, which fluctuates monthly.
We also think this is a bit Black Mirror-scary, so we are testing it, now, for three solid months. In the test period, salaries are only shown, but not paid.
At Keytoe (45 colleagues strong), we decide upon each other’s salary as colleagues, and have done for almost 3 years. At year-end, colleagues on the ‘salary committee’ (which is open to all), set a salary budget.
They do this through the advice process, which means consulting with colleagues first. The budget depends on how well we did the last year. And we aim to raise existing salaries. When the budget is set, the committee allocates it according to performance. Issues
But here’s the thing. People go up, but never down—even if they do worse than others who earn less. This perpetuates a kind of unfairness.
The second thing we questioned was a colleague who wanted two long vacations, but requested his salary not go down, because he felt it was unfair. We have unlimited holidays, so he shouldn’t had to ask. But, on the other hand, it’s good that he did, and probably more fair. Something didn’t seem right.
Lastly, why do we have employee contracts based on hours, or input, rather than output? So, if someone works 20 hours instead of 40, she will get half as much as a 40-hour person on the same income level. But, maybe the 20-hour colleague contributes more in less time. The whole contract question was raised in a why-why-why session. The outcome? We should determine salaries on output—but how? Output is different for the various disciplines and roles we have. It’s really hard to compare. Then one colleague raised his hand, and asked: What about sentiment?
One score to rule them all
If people judged each other on how they felt their colleagues were doing, it would be as close to fair as we could get. We could compare people more easily. And, as it’s only one score to give, we could rate each other daily, and allow the salary to vary each month.
People could take long vacations, anticipating that sentiment would go down, and thus lower their salary. On the other hand, they would not feel like a fraud to their colleagues. And lastly, we could step away from the contract rates. They wouldn’t matter anymore. Thus, the idea for the app was born.
So how does this work
First, the salary budget is determined each month. It is based on a simple equation: revenue minus costs (like rent, beer, and a margin to keep as a reserve) becomes the salary budget, and is divided based on the ratings people get.
You open the app on your phone, click on the name of a colleague, and push a slider towards the left (worse) or right (better). You can add a comment as feedback. Then push send. You can do this for every colleague, or only the colleagues you know and work with (recommended). To make it less bureaucratic, your score is saved and used in the equation every day—unless you change it.
The score, by the way, isn’t really a score. It’s based on a normal distribution (bell-curve). This means if I give a person an 8, another a 9, and a third a 10, then 9 is the mean. So 8 kind of sucks in this case, even though it’s a high number. So it’s not about the actual numbers, but on a comparison between colleagues.
All the normal distribution scores from different colleagues are collected each day, averaged out over the month, to give a final score for the month.
When your score matches the mean of 0.5 or 50%, your salary equals the average amount, calculated as salary budget divided by the number of colleagues. If you have a higher score you’ll get more. If you have a score of 0, you still get the base-rate of 600 euros a month. Why 600 euros? Because a part-time worker receives a little more than that right now, and since we don’t look at input anymore with this app, we have to account for that. When the minimum is known, we also know the maximum possible salary. This is the difference between the average salary and 600 euros, added to the average salary. As the average salary changes each month, so will the maximum possible amount.
Everything in the app is transparent: salaries and scores. You can see how Lisa rated Jim even if you’re neither of them. Why? Transparency prevents people from giving unfair ratings.
We think that this system is going to be fairer, both for employees, and also for the company. Kind of amazing, but the company will make no more losses with this (unless revenue falls below office rent, which is just plain stupid), and the salary budget goes down when revenue does.
We also think colleagues will become more involved with the financials and sales. Their salary depends on them. Right now, while everything is transparent, these factors do not affect them much—so they don’t always notice. They can buy whatever they want, but do this carelessly, because there is no direct consequence. We hope people will give each other feedback more regularly and talk more on how to improve. It’s not meant as a bullying weapon, but as a helpful tool. We also think this gives you more freedom to adapt your work/life style. If you think you can get a pretty good salary by working for three days a week, that’s fine. You don’t need approval to change pace.
Things we are scared of
Of course we don’t want people getting into fights over this. And we don’t want people unable to pay their mortgage (or rent). We think salaries are going to be quite stable, only fluctuating with our fairly steady monthly revenue. We don’t want people to feel unsafe. And we don’t want them to be demotivated. What I’m most scared about is the shift from intrinsic motivation (people liking their work because it’s fun), to extrinsic (doing it just for the rating and the money). If that happens, I’m pulling the plug myself.
Sentiment about the SentimentApp
All 45 colleagues are excited about this pilot. Everyone thinks it’s interesting. They are willing to try it. About continuing with it after the pilot phase, people are more sceptical. Right now, I think it’s 50-50. Some have even said that they will quit if it is pushed through.
We need, first, to decide about the decision-making process for actually using it. The advice process won’t fit here. It will probably be a democratic approach, possibly with a unanimous requirement. We’ll see.
In the Netherlands, word is out that we are conducting this experiment. News stations are hovering, and sense a scoop. Hearing only the headlines, many people are already against it—and probably with good reason. I believe that in the vast majority of companies this shouldn’t be implemented at the moment. Why? Simply, it could be used in the wrong way.
You first need a company where people trust each other: a place where sharing private difficulties and supporting each other is the default setting; and a place where people are comfortable with openness. We encourage everyone at Keytoe to be themself.
My guess is people will be rated even lower if they are not being themselves. (I think people sense that kind of thing pretty easily). This creates a foundation for using the app. But even then, it’s still somewhat scary.