‘My boss lets me set my own salary’

Cecilia ManducaImage copyright GrantTree
Image caption Cecilia Manduca works at a firm where each staff member gets to decide their own pay

Where Cecilia Manduca works there is a “pay self-assessment process”. In other words, she gets to decide how much she should be paid.

The firm, GrantTree, helps UK business get government funding.

And all 45 of its staff set their own salary, which they can review as often as they like.

It’s the latest innovation among companies that are competing for the top talent and want to show they offer the most attractive employment terms.

For some businesses, that has meant trendy offices or unlimited holiday, but now some are allowing their staff to pick their own pay.

‘No-one says no’

The exact process varies from company to company.

At GrantTree staff first gather information about what others are paid elsewhere for roles similar to their own, Cecilia told BBC Radio 5 Live’s Wake Up To Money, in other words how much the firm would have to spend to replace them.

Then they look at how much the company can afford to pay them, and think about how much they have grown as individuals since they first started.

“Based on this data you make a proposal that is reviewed by colleagues,” says Cecilia.

“This is quite important, because colleagues are not there to say yes or no, or to approve it. They are there to ask questions and give you some feedback.

After that feedback the employee decides on a figure.

“The key point is that nobody has to prove it; once you make a decision that pay now happens,” she says.

What goes up

Cecilia says that two members of staff at GrantTree actually chose to voluntarily reduce their pay after their responsibilities changed.

Image copyright GrantTree
Image caption Colleagues at GrantTree help each other review how much they’re worth

Most companies operating pick-your-own pay schemes have some sort of check, whether that’s scrutiny from colleagues or an upper limit on the total salaries paid out.

The human resources professionals organisation, the CIPD, told the BBC that this way of working can increase pay transparency.

However, it warned the strategy could also backfire without careful implementation, just as unlimited holiday meant some staff actually took less time off than before.

For Charles Towers-Clark, the boss of software firm, the Pod Group, the system seems to work smoothly.

His 40 employees have chosen their own pay for two years now, leading to a 10% increase in total salaries paid and a huge increase in staff retention.

‘Are you worth it?’

If someone at the Pod Group wants to increase their salary, they tell the HR director who appoints six staff to provide feedback.

Occasionally staff have asked for far more than the market rate, he admits.

“It’s not people being greedy, it’s a lack of understanding,” he says.

“A fairly junior person didn’t comprehend that the salary increase she was asking for was too much, she was asking for a 50% increase on her salary, which was far more than the role was worth.

“It was her decision but I told her: ‘you can take it but if you become uneconomical or your value is not justified then that will only end one way’.

“She reduced what she was asking for after that.”

Within budget

Tom Hardman is chief operating officer for Smarkets, where 120 staff set their own salaries. Like the Pod Group, they share data and company information with staff to ensure their salary requests are informed and reasonable.

“A very important part of the salary process is making sure employees understand budgets need to be adhered to,” he explains.

Image copyright Tom Hardman
Image caption Tom Hardman’s firm asks staff to look at whether a pay-rise is within budget

“So as part of any salary process we have a discussion about what resources are available, what cash we have in the bank and how much we can afford to spend on salaries.

“As long as we bring people along on that discussion we tend to find that people are very responsible when given this power.”

Battle over

At the moment, the trend for allowing employees to set their own pay is limited to just a handful of companies, mostly in the tech sector.

But if it is a success, then it could spread, helping to end the traditional workplace taboo against discussing your salary with colleagues.

Certainly for Cecilia, this method of setting pay has transformed her relationship with her co-workers, making it more open and less adversarial.

“The colleagues who give you feedback make sure you are not underselling yourself and that you are getting rewarded for as much as you are worth.

“That doesn’t really happen in a normal company where you negotiate for your salary and you are trying to get as much as you can but the other person is trying to give you as little as possible.”