How We Started Self Set Pay At GrantTree

While GrantTree has operated a financially transparent environment from the outset, the pay hasn’t always been set by individuals themselves. It took a significant evolution of our culture and internal systems in order for us to be ready to take this step. Here is a quick summary of the process we underwent in order for the company to be able to adopt self-set pay.

A few years prior to going forward with it, we invited people from different parts of the team (we had perhaps ten or twelve staff at the time), and with different levels of experience in the company, to join the pay committee that decided on salaries across the board. Daniel and I purposely stayed out of it as we didn’t want to meddle in the process that commenced. 

Firstly, they researched what was reasonable for a company of our size, with limited resources (we’ve never raised investment and relied solely on client revenues) to spend on salaries altogether. Before we had had a third/third/third model which dictated a third of our profits would be allocated to employee bonuses, a third would be reinvested in company growth, and a third would be paid to shareholders (in practice, most of this post ended up staying in the company so that additional resources could be deployed there). 

Next, the pay committee created a pay matrix, having considered two different models – American, which values performance above all, and Japanese, which favours seniority. It became clear there was a lot of room to play in, and a variety of factors to consider in terms of what mattered to us as a company. The overall metric we decided to favour was “impact and scope”, i.e. looking at how much impact a given individual has on the company and at what breadth that impact is occurring. 

As this proved hard to evaluate, the committee decided to favour the complexity of one’s job and the level of uncertainty they were facing every day while performing it. Typically more senior roles have higher levels of uncertainty where you are likely to face new scenarios with no blueprint more often and be forced to create new systems to deal with things. Aside from the above, the type and level of professional experience individuals have were considered as key factors determining the salary they were to receive.

Later on, a peer review system got implemented where every person in the company, Daniel and I included, was to be reviewed and placed on the pay scale, by three different people in the company, some working closely, and some not, with the reviewed person. And so, every team member wrote three reviews and received three. It was an important task for each reviewer to find out what complexity and uncertainty was involved in their colleague’s role to place them on a scale correctly. (Professional experience both in the field and in the company itself was obviously easier to determine.) The pay committee received and collated all of the reviews. 

All of this prepared the groundwork for the cultural shift required for us to be able to, approximately two years later, adopt self-set pay, and holacracy as governance and operational system, and so give our people ultimate decision power over their future as a company. We learned that we couldn’t expect our team to go through a hugely complex process of setting their individual pay in a vacuum of relevant information, practices, and guidance. 

This is why, when founders ask me for tips on implementing self-set pay, I usually advise them to ponder on whether their culture and current organisational consciousness can actually accommodate the transformation involved in this process. It’s possible to do more harm than good, acting from the best intentions, if you’re keen to press ahead without taking the bigger picture into careful consideration.

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