Table of contents
- Our Autonomous Compensation System
- How does it work?
- Appendix A: Democratic Process for Company Level Compensation
- Appendix B: Role Base Salary Determination
You work at Multunus. This is our Open culture, tools and process playbook.
We've made the playbook free and licensed it as Creative Commons Attribution-NonCommercial so others may learn from, or use, our tactics in their own companies. While our "plays" have worked for us, we trust their judgment over ours to decide which tools and techniques might work for them, too.
Creative Commons Attribution-NonCommercial
This playbook includes guides for the following systems:
- Our Compensation System
- Our Financial Dashboard [Coming soon]
- Our Delivery Dashboard [Coming soon]
- Basic Financial Awareness: You deserve to be aware of the company’s financial situation. Further, to help you appreciate the company’s numbers better, we will also invest in training you on basic business finance.
Collective intelligence: Put together, the whole team is smarter and more aware of what compensation levels make sense across the organization - than just a few people in the management.
Maturity: You are mature enough to appreciate the importance of ensuring that effective compensation lies at the intersection of what works for both you and the business.
Friendly and Supportive team: We believe that you will use these systems in the best way you can, given your knowledge, skills and and your individual situations. Further, as a team we are here to encourage and guide you to help you make good decisions.
An Autonomous Salary system is one in which each employee determines their own compensation. This is in contrast to the compensation being determined by the management.
A key component of an Autonomous Salary system is that it is also Open. This means two things:
That the salary of every employee is published and shared with every other employee. This information is usually shared on the intranet to restrict access to just the employees of the company - but companies such as Buffer take it one step further by making all of the info public as well.
That the process (or formula) used to determine the salary is also open to all employees.
We don’t compete with other companies on salary. Having said that:
Lower-than-expected compensation is a distraction for even the most committed and engaged employees.
Compensation levels are an indicator of the quality of both the work (that the specific role demands) and the workplace itself. Higher the compensation, better is everything else usually.
Salary = ((Base Salary for Role * Skill Level) + Leadership Component) * Flexibility Component
For more clarity, here’s a snapshot from the spreadsheet:
Some key concepts you need to know:
Role: The Role is your primary responsibility. The "Role Amount" is what we refer to as the “Base Salary” - that is, the primary determinant of the compensation for anyone in that role.
Skill Level: This is the level or depth of expertise that you have in your role. The spreadsheet includes definitions for each of our current skill levels.
Leadership Component: You’re assigned a leadership level if you have significant positive influence on others on the team either:
Directly (for example, you’re playing the assigned role of a "Team Lead") or,
Indirectly (for example, you contribute significantly to the community through your open source efforts)
Leadership at the company is by invite only. We’re always looking for more leaders - so you can rest assured that you will be personally invited to formally join the leadership team.
When will you be invited? When you’ve demonstrated for a significant length of time (usually 6 months or more) a deep understanding of our culture and a desire and skill to grow your colleagues to become better professionals.
Flexibility Factor: While most of our employees are full time, this factor makes it possible for individuals in exceptional circumstances to spend less time working. Use the flexibility factor if you or your manager think you fall in that category.
To ensure that we continue to encourage Sustainable Pace at the company, there’s a cap on the Flexibility factor at 1. 1 is also the default value for this component [since, you will most probably fall into the "quite flexible" category and not otherwise]
For two people with the same Role, Skill Level and Leadership component - there will no difference in compensation - assuming they’re both at least "quite flexible".
It includes key financial data of our company and also the salaries of everyone in the company. So please make sure to protect the confidentiality of the spreadsheet.
Use the spreadsheet as reference to find our current list of Roles, Skill Levels and Leadership Levels. More on this below.
You’re eligible for compensation review in the following situations:
Company-wide review [Yearly] - This happens once a year in the month of March. All of the salary components [See Formula Above] may be revised during this process.
This includes both the actual levels for each of the components and the numbers themselves.
We use our Compensation Principles during this process
This review affects everyone on our payroll
Individual Review [Quarterly] - If and when there’s a change in your Role, Skill, Leadership and Flexibility levels.
This coincides with your quarterly performance review - that happens in the months of March, June, September and December.
However the actual revision to your compensation happens in the subsequent month.
In the month of March, the Company Wide Review process starts after the Individual Review process is complete.
NOTE: The goal of this type of system is to provide you with the opportunity to have your compensation revised multiple times in a year. However, the following is an important caveat:
- We’re a transparent and democratic company. You will need to have the open support of your colleagues to get a compensation revision approved. This is explained in more detail below.
The following elements of the Salary Formula are reviewed at this stage:
The List of Roles, Skill Levels and Leadership Levels:
Are there new items to be added/deleted/changed?
There’s unlikely to be much variation here, year on year.
Role Base Salaries:
We review and revise the Industry Standards for Entry Level Salaries for each role across companies in Bangalore. The results are published within the spreadsheet - and used as an open reference during the Company Level review process.
Refer to Appendix B for more details on this.
Skill Level Multiplier Factors:
- A key thing to keep in mind while revising the Multiplier Factors is to ensure that the final compensation numbers are fair across all roles, skill levels and leadership components.
Leadership Additional Component:
- While recognizing Leadership in the compensation structure is important, keep in mind that the major motivation here is not money.Instead, it is about coaching and mentoring others on the team become better professionals.
All of the above values are reviewed in a Transparent and Democratic manner. Read Appendix A for more details on the process.
This is a 2 step process that happens between the first and second weeks of March, June, September and December:
If either you or your manager decide to change your Role, Skill Level or Leadership Level, then go ahead and update your row in the open salary sheet.
You will need to get 6 votes in your favor (fairly distributed across Roles and Seniority Levels across the company) to get the update approved. This makes the process more democratic.
- Clear instructions are provided in the Open Salary spreadsheet as to how to go about this process.
Thoughtbot Playbook: We are inspired by their lucid writing style and have used a similar style in this playbook.
Buffer’s Open Salary System: We’re deeply inspired by Buffer’s pursuit of transparency at the workplace. Our Open Salary System is to a very large part derived from their system.
Our goal is to make the whole compensation system as Autonomous and Democratic as possible. We made that happen at this stage (i.e. at the Company Level) by making decisions in three stages:
First by senior management,
Then by everyone who’d worked for more than 3 years at Multunus, and
Finally by everyone else.
At each of the above stages, endeavour to keep the "EBITDA" cells in green.
Green, Yellow and Red numbers indicates a high, moderate and low levels of financial sustainability for the business.
To help you use this system effectively, we will provide training on basic corporate finance.
A "stages" approach is perhaps not as democratic as having everyone involved at once, but it has the advantage that whole process can be controlled better and that we were moving forward the whole time - rather than ending up in chaos.
Further, the following steps also make the process more democratic:
At each stage, we allotted time for everyone at that stage to have open discussions by setting time apart specifically for this activity.
If there were significant differences in the base salary between one stage and the next stage - we had a separate set of meetings to understand why and then come to an open agreement on the final number for each role.
The above process was used primarily for the two components (Role Base Salary and Skill Level). Here’s what we do for the Leadership and Flexibility Components:
Leadership Component: Only those folks who are already in some kind of leadership role get involved in revising this component.
Flexibility Component: There are no company level values for this component - only a range from 0.5 to 1.0 (as described above).
Setting the Base Salary is easier for some roles (Programmers), hard for some (Sales Execs) and almost impossible for others (Happiness/Engagement Engineer). For those roles that we could not find enough industry data for, we used the following rules to come up with the base salary:
Irrespective of the Role, a skill level of "Fresh Grad" has the same base salary.
The only exception to the above rule is for those roles which cannot be categorized as "highly creative and affect our brand" (Eg: “Office Admin”)
NOTE: Not all Roles have a "Fresh Grad" skill level. This includes “Product Managers” and “Technology Architects”.