First humans, then workers
When Consensus began, we were 4 equal partners doing roughly the same work, and generally equivalent levels of skill and experience. We all pitched in to run the company, while billing as many client hours as possible to keep the lights on.
As we’ve grown, we’ve managed to find a balance between paying ourselves a fair wage and being able to cover expenses. Strategically, we’ve aimed to generate some profit with which to fund our longer-term goals, but not at the expense of a decent salary. Above all else, we are humans first, with families to feed.
We’ve always understood Consensus as a company that builds software products. We’ve had a few in mind from the very beginning, and more ideas have emerged along the way. We’ve also been committed to bootstrap our SaaS business line through client consulting, rather than seek venture capital or other such funding.
This has presented us with some common problems, for which we’re experimenting with some uncommon solutions. Read on to find out how we’re thinking about a compensation model that’s genuinely equitable & transparent.
Quarterly adjustments
From the start we recognized that we’d need to find an ongoing balance between the desire to increase our take-home pay, and the organizational goal to pay ourselves to build SaaS products. We built a simple paycheque calculator spreadsheet that took our expected schedule of working hours and translated it into paycheques.
This soon morphed into serving various functions, one of which was to implement a “quarterly salary adjustment” process. This essentially formalizes the flexibility to set our own schedules, and allows us some agency over how much we take home.
Once per quarter we review our timesheet reports, calculate how many hours we worked on a weekly basis, and then set our next quarter’s paycheques to correspond to that schedule.
For example, suppose I work 35 hrs/wk consistently for the first quarter of the year. At the end of that 3 month period, we set my paycheque for the second quarter based on 35 hrs * $X/hr. Further suppose that in the second quarter, I have some family matters to attend to, and I average 30 hrs/wk. In that case, my third quarter paycheque would be calculated based on a 30hr week.
We’ve found this approach has a number of benefits, but the key aspects of note here are flexibility and agency, from the perspective of a human worker with a full life outside of work. If I need to handle some personal business, there’s no need to ask for time off; if I want to increase my weekly schedule, there’s no need to adjust employment contracts, etc.
Hiring and other Luxury Problems
Many times over the last 4 years, we have reflected on the challenges we’ve faced alongside the success we’ve enjoyed and remarked: “that’s a luxury problem, and a good one to have!”
- Too many clients to easily manage? Luxury Problem!
- Need to hire more people to cover all the projects we’re taking on? Luxury Problem!
- Found a whole other kind of role we can do? Luxury Problem!
We’ve been blessed to find excellent clients and partners to work for and with. We believe we are also fairly talented at delivering high-quality, professional work, and have had many such clients come back asking for more.
All of this has led to quickly growing our team over the last couple years. We are still fewer than 10, but we have doubled in that period, which in turn has stretched our compensation model to where it needed revisiting.
Partners vs. Employees
When we first faced the challenge of hiring a new team member, we were lucky to find people much like ourselves, both in terms of expertise and competencies, but also in values and outlook. However, we recognized a disparity in the effort and risk we “founding partners” took on, starting a new company; this is commonly referred to as “sweat equity”.
Whereas the partners might be working many overtime hours or unpaid to get a proposal delivered or some internal project complete, we could not expect the same of employees. Given this distinction, we felt it was reasonable to differentiate pay scale on that basis.
As we’ve continued to grow, we’ve paid each new employee on par with everyone else, in an effort to have a rough equity at least. This was feasible at first, especially since we were hiring for very similar Drupal Developer roles.
This became challenging for a couple of key reasons. First, we find ourselves trying to fill different roles, so there’s a need to differentiate on a finer scale based on skills, competencies, level of experience, and responsibility.
Second, the weight of the founders’ sweat equity has decreased, and we needed a way to recognize the effort of our awesome new team members. Increasingly, the effort of the whole team keeping Consensus healthy is balancing out the initial bootstrap effort.
Consensus Compensation Calculator
In most functional terms, we collaborate as a team by consent-based decision-making. Which projects to pursue, what clients to take on, as well as organizational decisions, operational and strategic. Except where required for financial or legal reasons, the partners (as Directors of the Corporation), we strive to collaborate and find consensus in everything we do. Our salary calculations should reflect as much of the value each of us brings to the whole.
(Related: we are also shifting our governance structure to address these exceptions.)
Considering the above, and knowing what we do about pay equity (gender gaps intersected with racial gaps, along with socialized negotiation bias), we sought to define our compensation model in terms that suit our values. As much as possible, we want it to be:
- Transparent and accessible to all workers
- Fair and objective, applying measurable criteria to all workers
- Humane and respectful toward a diversity of workers
- Reflective of the breadth of skills and competencies we rely on in our work
- Flexible to change as needed, with market forces or internal dynamics
Beyond seeking transparency (so everyone knows roughly what everyone else is making), and equity (so everyone knows they’re being paid the same for doing the same work), we also understand this as a way we can increase our individual agency as workers.
Iterating
Using an iterative process we will review and re-evaluate each person’s score on the various metrics which define the calculator. This ensures we regularly assess the stated goals, equalizing across similar roles and responsibilities. It also creates an opportunity to review the things Consensus values in our workers, and adjust our calculator to reflect them.
Essentially, the salary calculator criteria become a guideline for professional development, providing advice on how to improve my wage. If I want to increase my value to the company, here are some concrete things I can work on, with objective metrics by which I can self-assess.
Further, if I feel I am bringing value to the company outside of what’s captured in the current model, I have some agency here as well. I can engage in the review process whereby we re-evaluate and consider new factors to incorporate into the model.
Of course, the devil is in the details, and we are in the process of hammering out the details of this process as we speak. We wanted to share some of our thinking to this point, primarily because our research has yet to reveal any prior art with the goals we have in mind. We’ll post more as we progress.
Further iterations
Beyond this, we are seeking to build a model that can align our values as workers with the work we get paid for as a company. We aspire to get paid to do those things we are most passionate and excited about.
We have noticed that asking potential recruits what they’re good at and what they’re excited about working on has been instructive. When we’ve been able to find projects that play to each person’s strengths, things go well! If we can establish that we like to work in similar ways on similar kinds of projects, the details of what we work on becomes somewhat less important.
Got ideas?
Have you tried to solve these problems? Do you know of some research we should consider in our process? Perhaps you’re excited about this idea, and want to talk to us about it? Get in touch!
The article Consensus Compensation Calculator first appeared on the Consensus Enterprises blog.
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