Show Me The Money, or: How to pay in an Agile Organization

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Talk was presented at the Scrum Gathering in Paris and deals with the issues that arise from establishing an agile organisation and having to adapt the principles of paying your employees.

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Show Me The Money, or: How to pay in an Agile Organization

  1. 1. Show Me The Money How to Pay Employees in an Agile Organization Christof Braun Manage Agile! Network
  2. 2. Why do you work?
  3. 3. Would you work without pay?
  4. 4. If you won the jackpot in the lottery?
  5. 5. If you received a monthly allowance to cover your basic needs?
  6. 6. Why is an agile organization different regarding salary? Teamwork rather than individual contributions. Flat hierarchy. Transparency. Embracing change rather than following a plan. Trust rather than control.
  7. 7. Basically – it‘s a trade: But instead of goods for goods It‘s compensation for work.
  8. 8. com·pen·sa·tion noun ˌkäm-pən-ˈsā-shən, -ˌpen- : something that is done or given to make up for damage, trouble, etc. : something good that acts as a balance against something bad or undesirable : payment given for doing a job -- Merriam-Webster Dictionary
  9. 9. Three categories of "compensation" Fixed and unconditional salary. Variable and conditional salary. Bonus pay (variable).
  10. 10. Fixed salary is Contractually assured. Generally guaranteed. Stays the same unless contract is changed (e.g. pay raise). Unconditinally payed. because….
  11. 11. Pay is not a motivator. -- W. Edwards Deming but: If you don‘t pay enough, people won‘t be motivated. -- Daniel Pink
  12. 12. Pay enough to take the issue of money off the table. -- Daniel Pink … then do everything in your power to help them put money out of their minds. -- Alfie Kohn
  13. 13. How much is enough?
  14. 14. Who is the judge? Ask her!
  15. 15. Consult available stats for your region and the position.
  16. 16. You must achieve fairness across your organization.
  17. 17. Do it now: Promises for later are risky and mostly feel contingent.
  18. 18. Consider: Age. Tenure. Role. Family / social obligations. Contribution to value generation.
  19. 19. To assume that fairness always requires that people should get what they earn, that the law of the marketplace is the same thing as justice is a very dubious proposition indeed. -- Alfie Kohn
  20. 20. Who decides how much? (Line)Manager Employee Peers
  21. 21. Experiment! Mock It! Game It!
  22. 22. Transparency creates Trust Salary Groups / Ranges Complete Transparency
  23. 23. Variable Salary Incentivizing: using extrinsic motivation Do this – get that
  24. 24. "Do this and you'll get that" makes people focus on the "that", not the "this“.
  25. 25. Merit pay kills intrinsic motivation. The work to be done is an impediment to getting the money. Doing something in order to receive an extrinsic motivator makes us less interested in what we are doing. -- Alfie Kohn
  26. 26. Control Merit pay is for the benefit of the person who pays, not the recipient: It is easy. It makes people do what the payer wants. It fortifies hierarchy. Its purpose is to manipulate.
  27. 27. Threat There is a stick in every carrot.
  28. 28. Abolish pay as incentive! If you can‘t…
  29. 29. Use small amounts of variable salary. Involve employees. Use company, department or team goals NOT individual. No competition. Frequent adjustment (agile). No incentives on learning/self- development.
  30. 30. Bonus pay Lets employee participate in success of organization.
  31. 31. Celebrate success
  32. 32. What about Failure? Celebrate that too! It helps you learn!
  33. 33. Make it unexpected
  34. 34. Make it frequent and small
  35. 35. Make sure it is not a reward
  36. 36. Consider: Participate in organizations earnings. Participate in organizations ownership.
  37. 37. Summary Transparent, fixed salaries, ideally determined by employee or peers, take the money issue off the table. Merit Pay/Incentives should be abolished if possible. Let employee participate in success of organization via bonuses.
  38. 38. Christof Braun christof @ manageagile.com www.manageagile.com @christofbraun

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