Self determined salaries

We have recently finalised a round of self determined salaries at Dev Academy and it was one of the most effective and powerful experiments in self management that I’ve experienced. 
freedom_2_by_sevCANNImage Credit

The Problem

The default setting in most organisations is that salaries are private and negotiated directly between an employee and a manager. The information asymmetry helps funnel power up the pyramid and this also results in people who are good at negotiating getting a better deal than those who aren’t.

Ever since first reading Maverick I have been struck with the idea of staff having the ability to set their own salaries. Stumbling across the The Morningstar Self Management Institute in the early days of Enspiral and reading about their work in the space locked in my commitment to self determined remuneration.

This was really easy when we were just a collective of contractors and everyone would set their own billable rates – if customers were happy to pay that rate then it must be good enough. Even when negotiating rates for internal work it was along the lines of “What do you think is fair? Well let’s do that then”.

But fast forward to the end of 2014, Dev Academy had just turned one and when I reflected on our remuneration process it was obvious we had unconsciously slipped back into old habits. Rohan (my co-founder) and I had agreed upon compensation levels with each new hire as they joined the company and traditional power structures and information asymmetries were starting to emerge.

This was yet another reminder for me that self-management processes need clear definitions and constant reinforcement.

For example, while everyone in the company was onboard with the idea of financial transparency we hadn’t put energy into making our remuneration data easily accessible so the only way for a new person joining the team to find out how much everyone was being paid was to ask each person individually or trawl through our xero account. As you can imagine this didn’t happen too much.

So we fixed things.

our Process

Getting started

The first step was writing up a document [extract below] outlining the thinking behind self directed salaries and passing a Loomio decision to try it out. We established a remuneration team to facilitate the process and act as an initial point of contact to help point people in the right direction.

Individual round

We each filled out a remuneration template and the REM team updated a central spreadsheet while acting as a sounding board when asked. For folks who needed extra support someone from the REM team would sit down and work through the details with them.


We collated the salary data and normalised it for time (e.g. how much would this person be paid if they worked full time for a year). This helped us compare apples with apples and made it easier to tackle the heart of the problem which was how much should we pay this person compared to everyone else.

This data formed the heart of an anonymous survey which we sent to everyone in the company with two questions for each person.

a) What do you think of this salary: too high, too low, just right or no opinion?
b) Comments?

We shared the responses with everyone the day before our weekly meeting the next day went through a facilitated session to collectively process the information. This took a fairly simple form of

  • Setting the tone for the session and emphasising the delicacy and importance of this work.
  • Going around the circle with each person talking through their thinking behind their suggested salary and their thoughts and feelings about the anonymous feedback.
    • The feedback for that person was projected on the wall before their checkin to provide a shared context
    • The person opposite in the circle was responsible for looping back what they had heard to shake out any initial clarifications
    • After the looping the circle was open for comments and responses from the whole group

This was an amazing session that helped clarify our understandings of each others roles and was a valuable part of building our culture.

Lock it in

After the “digesting feedback” session we had a few days for people to reflect further and then had a cut off point at the close of business on friday to lock in the compensation levels.

The main points of this were

  1. You were free to ignore or incorporate the feedback from the previous session as you liked.
  2. There was no one who would approve your salary, what you asked for is what you got.
  3. If there were any disagreements on monday it would be handled through our
    conflict resolution. (There weren’t any)

Those final two points where Salaries are approved by default and exceptions are managed by a peer initiating a conflict resolution process are the real magic in the system. It is stepping beyond a company where you have a lot of influence to a company which you actively control.

It’s all about the culture

I have tried lots of experiments over the years to help people realise a sense of ownership and empowerment and this was definitely one of the most powerful. At the end of the day setting salaries is pretty common sense stuff and when you give people all the information they will make common sense decisions.

It definitely requires a strong sense of trust amongst your team and a willingness to give and receive challenging feedback. But if your team isn’t up for that then helping them get into a position where they are should be your top priority.

[Extract from the initial document outlining the process]


Self Determination individuals set their own pay which colleagues provide feedback on but the ultimate remuneration decisions rest with the individual. Significant differences of opinion are resolved by our conflict resolution process.

Transparency – all compensation packages are visible to everyone in the company in a simple and accessible format.

Risk Adjusted – if a staff member puts some of their compensation at risk by deferring payments and accepting Fairy Gold instead of cash then they receive a fair compensation for that risk.

Intrinsic Motivation – we eschew individual performance bonuses and rely upon people’s intrinsic motivations to do a good job. Any performance bonuses are paid out across the whole company.

Adjustable – Individuals are free to adjust their remuneration at their discretion (e.g. if the type or amount of work they do changes) but are required to update their individual agreement at least once per year.

Trust & Integrity – are at the heart of Dev Academy but especially present in the work of setting compensation levels. We assume that each person is striving for the fairest outcome they can envision for themselves and their colleagues.

Self determined salaries

Variable Contributions at Enspiral

Enspiral was built on some pretty simple ideas. Some were there from the beginning, others emerged over time. A few were only obvious with hindsight.

Filter for values then trust people absolutely.
Decentralise money, information and control.
Put the relationship before the deal.
The community carries the business.
Do what you love, find someone else to do the rest.
Use rich information systems to make collaboration easy.
Easy to join, hard to stay.
and lots more.

None of the ideas were particularly unique or revolutionary but it was their unique blend that I found useful. All of them were inspired by ideas from somewhere else, some of them were blatantly copied. This post outlines one of the latter: Variable Contributions.

everything-is-a-giftImage credit: David Joyce

Our financial model was very simple from the beginning. We were a group of programmers who would band together on contracts. 20% of our revenue would go to the collective, 80% to the contractor. It would have been much easier if Cobudget had of existed back then, instead I would just talk with people and then decide how best to spend the 20%.

20% was a pretty good number. For folks coming out of traditional employment it meant they could charge clients lower rates and get paid more than their old salary. For people coming from contracting backgrounds it felt like a fair margin to pay to the collective for winning the work. It also gave us a reasonable amount of money to fund the core.

When we transitioned into a collective of ventures we went with a similar model and had our services businesses (Legal, Accounting, Programming/Design) contributing 5% of their revenue to the Enspiral Foundation.

But there were also issues. For independent contractors who had their own customer base and wanted to join Enspiral, contributing 20% was a big hit. Or if someone was heavily discounting their rate because a client didn’t have much money then it didn’t feel right either. Over time the 20% started to become a barrier to collaboration and occasionally felt like an unfair tax.

So we changed it. I had read about Graniterock’s short-pay idea in Good to Great years before and it was a direct inspiration for our next step. At Graniterock when they sent customers an invoice they would have a short note along the lines of

If you are not satisfied with any item on this bill for any reason,don’t pay us for it. Simply scratch out the item, write a brief note about the problem, and return a copy of this invoice along with your check for the balance.

This acted as a strong feedback mechanism for identifying problems and improving quality. People get pretty motivated when a customer decides not to pay. You can read more about some of their thinking in this blog post Just Say Yes.

The solution we went for was simple and had a powerful effect on our culture:

  • A venture sets its own contribution rate to the Enspiral Foundation and can change it at any time. 5% of revenue is common but each company creates its own formula.
  • An individual contractor working through Enspiral Services contributes 20% by default. They are free to change it on an invoice by invoice basis and only need to notify people of the change.

We trialled variable contributions for 3 months in August 2012 and there was a general sense of ‘scary in a good way’ when we made the decision.


I think it was one of the best things we ever did. People’s relationship with financial contributions to the collective changed dramatically. It was no longer something that was done to you. It was something you chose and if you didn’t think it was fair then you could just choose something else.

If people or companies dropped their contribution rates it would often solicit a response from their peers. Were they hurting financially? Did they not value the collective? Could we do more to help them?

New cultural norms emerged. People in Enspiral Services often now contribute 5% when working on internal contracts for our other ventures. Also in Enspiral Services, we started to send 1/8th of contributions back to the team that people were based in. We used tracking codes in Xero to fully automate the contribution process for contractors.

But ultimately it was about trust. It feels like we spend so much time in our professional lives protecting ourselves from each other. Our whole legal system is designed to stop people hurting us. There is real power in a group of peers saying to each other “I give you the power to hurt me”. It leaves an unmistakable impression on the culture and I think we are much better for it.

Naturally variable contributions are no panacea but they are worth considering for anyone designing organisations, particularly ones with membership based financial models like Enspiral.

Variable Contributions at Enspiral

Book Review: Exponential Organisations

exponential-organisationsOne of my goals for this year is to average a book a week and share my thoughts on the more interesting ones. Despite my mother’s somewhat malicious suggestion to start with War and Peace I actually kicked off with The Warrior of Rome Series while travelling through Italy. I found Historical Novels a great resource if you are that way inclined.

But here is the first serious book of the year Exponential Organisations by Salim Ismail.

Summary: Lots of good ideas but steeped in an outdated value set of the role of business in society.

The key concepts were grouped into two acronyms of SCALE and IDEAS

Staff on Demand: contractors and casual workers instead of full time employees.
Community & Crowd
: building large online communities around the venture.
: automate everything, the server runs the business.
Leverage Assets
: don’t own things, use other people’s things.
: make user experiences fun and addictive.

Interfaces: simple ways for people to find what they need in the system. 
Dashboards: manage large amounts of data through real time dashboards.
Experimentation: make it cheap and easy try lots of things.
Autonomy: create the space for people to choose their own adventure.
Social Technologies: help people connect with each other.

Coming from folks behind the Singularity University it had a good overview exponential growth, particularly how unintuitive it is for people to grasp. Despite being quite predictable it always seems to take us by surprise.

LakeMichigan-Final3Source: Mother Jones

I often evaluate books by the ‘how many ideas do I want to copy’ metric and Exponential Organisations had a reasonable amount of this. It was first recommended to me because of the amount of case studies and  whether it was reading about TED scaled to 12,000 events over 5 years or how Github became the backbone of the open source community there were lots of useful nuggets.

Despite that I found the overall language of the book quite toxic and embedded deeply in the business mentality of ‘if it is big and makes money it must be good’. Ugh. I think the heart of my distaste was that a lot of the strategies had the explicit intent of externalising costs from a business onto society and a lot of the case studies celebrated companies which had done that well.

For example, in the Staff on Demand section a case study was given on how Allstate (insurance) ran a competition on Kaggle with a prize of $10,000 to rewrite their claims algorithm. The winning entry had a 271 percent improvement which was estimated to save the company tens of millions annually. “Quite an interesting ROI” as the author put it.

Kaggle describe themselves as “harnessing the ‘cognitive surplus’ of the worlds best data scientists” which makes me wonder who is paying for generating that cognitive surplus if Kaggle’s customers aren’t. Whether it was Uber or Airbnb, time and time again the book highlighted companies which had grown very fast and made their shareholders very wealthy by externalising costs onto society and clipping the ticket on virtual marketplaces.

The case studies were biased towards a ‘growth is good’ mentality whether the thing growing was cancerous or beneficial. I guess that is fair enough given the topic of exponential growth but I would love to have seen more discussion on the consequences and downsides of these types of organisations.

I suspect the authors would say they are explaining a phenomenon that is morally neutral and can be used for many purposes. That this is a book on the techniques of sword fighting, not the morality of warfare. But just like sword fighting will lead in a certain direction I think a fair number techniques in this book lead to companies which steal value from society rather than create true value.

Despite that there are lots of practices which are just plain better and useful for anyone who is interested in making an impact. The book clearly describes a new breed of organisation which is pretty important to understand.


Book Review: Exponential Organisations

Mastermind: setting strategy together

One of the processes we have been playing with at Enspiral is how we set our collective strategy. A team of us ran the first Mastermind process to come up with our 2014 Enspiral strategy and we are just winding up our one for 2015. Teams within Enspiral are also picking up and adapting the process which is often a sign there is something in the idea.

Mastermind, set strategy together.Image by Maz Hermon

I initially had a strong aversion to setting a formal strategy for the network, it seemed much more important to focus on our culture and let the direction emerge naturally from people’s actions. However, I’ve found that the process can be a strong culture building initiative in its own right and having a formal strategy gives people context when they are making decisions in Loomio and Cobudget.

I came to the conclusion that it is important to hold the strategy lightly and realise it is just a snapshot of the network’s intentions, but it’s better to have a snapshot than nothing.

The top level process is pretty straight forward.

  1. Gather as much high level information as you can and consolidate into a digestible format to share with the whole group.
  2. Focus on divergent thinking through individual and group processes to build up a list of possible strategic directions.
  3. Look for common themes and build a consolidated list of possibilities, use dot voting to prioritise the most important.
  4. Have a small group use this information to create a proposed strategy and run through a normal Loomio decision making process to finalise it.

Gather Information > Divergent Thinking > Convergent Thinking  > Summary & Approval

This has lots of elements I like such as

  • An iterative nature to give ideas time to develop
  • A balance between whole group, small group and individual activities
  • A balance between creativity and focus

But I also see it as just a baseline and that the true power of the process lies in future iterations. For example, at Dev Academy we are experimenting with a two step approach of

Individual Mastermind:  each team member is invited to think about their personal strategy and direction for the year.
Regular Mastermind:  we collectively think about the team as a whole with the additional context of  each person’s strategy and intentions.

I really like this adaptation as it doubles down on culture building and also builds a stronger personal reflection process. Personally, I found it really useful to sit down and think about where I should be heading and how best to communicate that with others. It was that process which led me to start blogging again.

I can imagine a truly fractal process where each team at Enspiral has a clearly articulated strategy which can provide context for our whole of network thinking. By having a similar name and process at different scales of organising we reduce the cognitive load for participants and we can also reduce the transaction costs for engaging by automating the information systems.

It also evokes the possibility of truly living strategies that respond to change in real time. At the moment a full network strategy is quite expensive in terms of engagement. Would it be possible to design processes so that the strategy evolved through lots of small alterations as the context changed? Could we build a strategy that is a real time reflection of our collective intent that mirrors a traditional swarm?

Currently we orient ourselves with information from other people’s actions and crude, somewhat outdated snapshots of our collective intent. That’s analogous to swallows bumping into each other to correct their individual paths using images their eyes collected 2 hours ago. What if instead we could orient ourselves based off the accurate, explicit intent of individuals and teams of all different sizes?

If we make forming, updating and sharing our strategic direction cheap enough and ubiquitous in an organisation I think we could unlock elegance that would make the swallows envious.

Here are some of the documents I’m working with if anyone feels like hacking on the process and I’d love to hear of any similar work going on.

My personal strategy
Individual Mastermind Template
Review of 2014 Mastermind Process


Mastermind: setting strategy together