Do you know your colleagues’ salaries? In most companies salaries are still kept a secret, because it is an emotional topic for people and one that easily breeds distrust and animosity. However, people being people, the more something is a “secret”, the more controversy it generates.
For Titansoft, we have had a transparent salary policy since 2015 which includes salary levels pegged to an internal job grade system, and clearly defined skills and responsibilities of each grade. Upgrade your skills, promote to the next job grade, and you will be up for that pay rise.
It might sound unbelievably simple, but it is. Although only software engineers’ salaries are open and transparent right now, but as a software development company where engineers make up 80% of our workforce, that’s almost everyone. How does that work? How can salary guidelines be fairly and reasonably determined?
1 – Standardised Functions and Job Grades
Titansoft spent nearly 2 years making adjustments to our internal job grading system, with the primary goal of achieving equal salary across the same job function and grade. We did it by drawing reference from industry standards and following international standards whenever possible. Whenever not available, we turn to similar categories and related job scopes with more complete records. In this way, Titansoft outlined the detailed responsibilities and functions of our software engineers, taking into account other logical factors, in our first step to achieving standardisation.
2 – Market Driven Approach to Determining Salary
In order to determine the appropriate salary for each job function and grade, Titansoft consults professional market reports (such as Willis Towers Watson Data Services) as a benchmark and uses the median, the 75th percentile or other gauge according to the specific demand and value of each job position in the hiring market. By comparing these figures, we make adjustments and ultimately derive a common figure for each grade and position.
3 – Separate Calculation of Salary and Bonus
Although salaries are made transparent, bonuses are not. The difference is that salaries are assessed according to a professional function with an open market mechanism to provide the organisation with the talent it needs, whereas bonuses are derived from the profitability of product in the market, i.e. performance bonuses. Therefore, Titansoft’s approach to compensation separates performance-based bonuses from fixed salaries assessed by professional functions and as such, these are not made transparent.
Our performance bonuses are a result of the team’s efforts, which makes sense then, that even though the figure is not made public, its distribution is determined by the team. The team knows best what each other’s contributions are as compared to a manager; they get to discuss within themselves and decide on the ratio distribution of their allocated bonus, or to allow management to make the split. It might seem like a test of team spirit, but it is the best way to ward off suspicion and conflict.
4 – Employee Autonomy in Career Progression
How would you move up the ladder, with salary transparency? At Titansoft, guidelines are clearly laid out so everyone knows our current job grade and what we need to improve on, to move on to the next grade. With the future in our own hands, career progression is self-initiated and Titaners are encouraged to “self-promote”, meaning applying for promotion whenever we feel ready, without having to go through a supervisor.
Applicants prepare a list of the results of their work over the past year and skills they have acquired, to demonstrate that they are qualified for the next grade. This way, we create an environment where Titaners are self-driven and empowered to achieve their career goals.
Senior members of the team are required to participate in a panel appraisal, where instead of having the head of the department calling the shots as in the traditional case, panel members consist of 5 members – the head of the department, a team member chosen by the head, another team member chosen by the applicant, the product owner and a HR representative. These panel members would come together and discuss each individual case, giving feedback on positive areas and competencies which need to be strengthened.
5 – Injecting an Agile DNA!
Titansoft is a successful example of having introduced Agile management throughout the organisation, with a strong emphasis on the importance of “self organisation” from the perspective of Agile management.
Our development teams are self-organizing, and according to Scrum tradition, limited to between 5 to 9 members in order to complete each sprint within an Agile framework. Members within teams are self-organizing and self-directed, with teams deciding their own working hours. There are no team leaders and no subordinates – everyone have an equal say.
In an Agile organisation, teams know how much they have invested into each development cycle and from these figures each month, they know if the value of their work measures up to how much they are being paid. With self-organisation, this systems works in a logical manner, similar to a set of interlocking gears from the absence of a supervisory level, to the transparency of salaries, the autonomy of the self-promotion process, and the bonus appraisal system – all of these combine to form a healthy organisation.
Behind the scenes of our salary transparency is the effort we put into building an environment which supports self-organisation. Of course, in practice, there are still minor details to be refined on, but according to our results so far, Titaners have generally given positive feedback, with a very high percentage of them applying for promotion each year.
For management, it also saves time and effort in dealing with suspicion and discord within the team arising from salary disputes. The process of creating transparency from the inside out is not an easy task, it involves seeking feedback from employees and making improvements on processes and retooling, before starting all over again – iterative improvements which may be painful but ultimately, makes us stronger.