Holacracy Community of Practice Archive, 2015-2019 Community Holacracy Web Site

Proportions of compensation on base salary vs badges

I am interested in other people's conceptual approaches to how they divvy-up compensation please.

What sort of proportion of salary typically represents base salary / Partner salary, and what proportion represents earning potential through badges?

And, if people have introduced this as a change from usual practice (we have base salary and Company profit share), does anyone have any advice about whether its helpful to stagger the switch over.  eg, first year, make it 70% base salary and 30% badges until eventually it becomes something like 30% base and 70% badges?  Or is it better to do it in one go?

Many thanks

Julia

9 Replies
Douglas Conrad
04/25/2016

Hi Julia.

 

I'm in the same path and looking for strategies to implement.

In the first view I thought work with something like budges for bagdes using as reference the past avarage costs, and let the group decide how allocate resources or split between the group.

However I ran into base salary, especially at a time of transition where some people already feel they receive less than "deserve."

Andrea Faré
04/30/2016

Very interesting topic, I still cannot get my head around the badge system as a whole, in pyramids you basically brake up salaries in a fixed way because most people are trapped in hoping they will make a leap the organization is designed to impede in the first place... (until they leave and new "salary increse dreamers" are recruited)

With badges the game at play is different,  I have always asked my self, how you make sure that the count of badge attribution clearly reflects the hability of the company to make enough money to repay the salary disbursment they require as per their definition?

To my understanding by reading H1 governance policies the base salary is still tied to a set of badges. i guess the first badge set defined buy the compenastion architect would then determine the first salary range, but still the initial question remains unanswered how does he  decide  and adjust  the proportions?

 

 

Gerald Mitterer
05/01/2016

I few thoughts from my side: typically a badge system in my understanding does ideally not tie a certain amount of money to a badge but would rather tie a certain tier (salary level)  to a specific set/combination/number of badges. A certain skillset represents a certain value for the company.

However, I still wonder if the pattern of traditional MbO sneaks in at a certain point in badge systems: people feel "incentivized" to acquire certain badges for the sake of earning more.

We decided for the moment to go for a pure tier system (without badges) that is trying to evaluate market value based on self- and peer-rating backed up by a half-yearly qualitative feedback process of a tier assessment committee. Each member can pitch for a higher ( or lower tier) if they feel treated unfair our sense a misfit. It has served us well until now, working on v2 at the moment to specify criteria of certain tiers a bit better. They are a bit vague at the moment.

So far my thoughts...

Gerald

 

 

rmellinger
06/10/2016

Hi Gerald,

Have you made progress on your v2? I am interesting in hearing the details.

Rob

Karilen Mays
06/11/2016

Julia, I usually first focus on an incremental improvement and get feedback from within and from a Holacracy coach, and go from there. It is difficult to copy what other organizations do since things like compensation or performance and other processes that touch the culture are so unique that organizations usually answer these tensions quite differently. Often an incremental improvement is possible, though maybe you want more. This depends on who has a tension with the current system.

I hope more and more can use something like our badge system; objective, not tied to roles, not based in personal power, transparent to use, flexible mechanisms based on if the organization is profitable. 

If that is too far off for you from where you currently are, you might consider rolling out a full badge system (even simpler than ours perhaps) and allowing some individuals to opt in, then iterating and completing the transition so at least people are using one comp system each. 

We did something like that, and abstractly it makes more sense to me to not do a hybrid system that is in play for one person; it may be okay to have some on the "old" system while you have some brave people who step up to work out the kinks in the new one, or just create a transition period and roll out the new one and get everyone on. If you can find a way to do both at once, I say go for it. Keep us posted!

Timi Szabo
02/17/2019

Dear Karilen,

We are using a badge based system similar to the one H1 using and I see that one of the hardest part in it for us is what you mentioned about making the salary raise system dependable on the profitability of the organisation. This is what we struggle to solve, how to build in a break/limitation in the salary raises connected to the badging because it is now an organically flowing system and we have no control over the mass salary increase.

If anyone has the same problem or have a great idea to solve, please let me know Thank you!

Raëma de Lange
02/19/2019

In yesterdays GCC Governance we integrated a new Earnings Plan policy based on the Encode.org model. The tension came from the fact that we see each other like Partners (and 2 years ago we replaced the eight-page employee contract for an one-page Partner contract) and yet we saw 'fix benefits' as part of the cost center of the Company. Also the time-for-money mechanisme was still our reality. Unfortunately, because after 2,5 year of Holacracy development it was clear that we needed a model that respects equality of People AND appreciate that we are not the same in what we bring to the org. 

Hence we created a model based on a 1)Base Grant, 2)Purpose contribution level (optimiser/builder/distiller) and 3)ten different skill sets that are crucial for our org development and/or have a market scarcity (each skill set having a contribution, competency & mastery level). The model appreciate Partners to bring all they have and develop themselves and the org in the aspects where they are passioned about. Strictly saying it appreciates Governance over Tactical, not because operational is less important (it's our profit here & now), but because organisational development needs consciously spending time on evaluation/reflection. I like to use the example of the woodcutter who reserves time to sharpen his ax. That might just be a good idea for productivity and satisfaction. It wouldn't surprise you that Holacracy and GTD are two of the skill sets in our Earnings Plan.

The Base Grant is 2.000,-. PCO 2.000/3.000/4.000,-. Skill Sets go from 0,- (contribution level that is expected from every Partner like GTD/Holacracy) up to 2.000,- (certain Mastery levels) each. All in Euro's.

I am also honest to say: I wouldn't dare to implement such model in every of the organisations I know. Above everything it needs a clear Purpose and Purpose alignment with the Partners. It also needs clear policies like Leave package, Hiring, Firing, etc. 

Up to the next tension: this whole subject should not be part of the organisational context of the org. Time for a People- and Legal context!

https://medium.com/encode-org/...d-spots-b0b8b052b661

Ivan Matosyan
02/21/2019

[@mention:590444326451884984] 

We have not implemented badge system yet, but I was already thinking about same concer you have in a past. In my opinion one of the valid way will be to set a budget for compensation expenses, it can be dependant on turnover or other financial metric. Then it seems to me that there will be motivation not only to develop my self to get badges I am aspiring for and consequent compensation but to think about organization and their needs. I think that mechanism can support better self-orginized hiring/"firing" decisions as well.

Rachel Hunt
02/22/2019

This thread is fascinating to me. I am planning to expand my staff soon and I feel that now is a good time to re-evaluate our compensation. It looks like a big project though. 
How do you recommend we begin the process?