Dealing with Salaries in a Flat Organization: Testimonial by Mein Grundeinkommen

Last year, when Johanna applied for a data analysis position at Mein Grundeinkommen in Berlin, she had a little surprise - her first contact with the organization was not a classic interview. Instead, Steven, Mein Grundeinkommen’s CEO, took 20 minutes to give her an overview of the company culture and practices. This way, Johanna had all the information to decide if she wanted to continue the recruiting process or not.

Mein Grundeinkommen’s company culture is indeed quite unusual. Not only did they completely decentralize and distribute their governance in circles and roles (with the implementation of Holacracy), but they also adopted a policy of self-determined and transparent salaries. 

We went to their Berlin office to investigate, and met with Johanna and Steven.

Growing with transparency

Mein Grundeinkommen was founded in 2014, as a volunteer initiative to test out the idea of a universal basic income: they crowdfunded 12 000€, and raffled it out. This first initiative was so successful that they repeated it again, and again, until the founding team had to consider building a sustainable organization to support their livings. Right from the beginning, salaries were transparent. As the team grew, they rejected the idea of having backroom salary negotiations that would hinder the transparency of the organization: salaries organically remained transparent, and self-determined.

Meanwhile, going from 3 to 20 team members made it complicated to maintain the spontaneous governance of the early stages, without any hierarchy. Steven explains:

“At that moment (in 2017) everybody could have an opinion on everything, which drastically complicated decision-making: imagine coming very prepared and proficient on a topic in a meeting, and anyone being entitled to say ‘I don’t think this is going to work’. This was so frustrating that people didn’t feel they could actually do something and take an initiative! We asked ourselves: ‘is it possible to have competency-based decisions, without introducing a traditional hierarchy?’ We chose Holacracy precisely for that.” 

And now, how do you determine your salary?

Holacracy. Self-determined salaries. 2 key elements of the company culture that Steven carefully explained to Johanna during their first interview. Johanna found this interview “reassuring”, she felt that:

“there was a space where we could talk about how we would work together, and not just… do it.”

Let’s see now what happened after the next interview rounds, when they started talking about the “s-topic”.

Johanna used to work for a consultancy, where salaries would be attached to hierarchical positions: the key to salary evolution would thus be promotion. This first experience with setting her own salary was thus a bit puzzling. She received from Mein Grundeinkommen an information sheet designed to help her in this process. On this document she was informed about the median salary in the team, reminded that the organization’s funds where donation-based (company accounts are available on their website), and given guidance on elements to take into consideration when fixing her salary: 

• what you need –  paying for a student loan, saving for retirement…
• what you bring to the table – your skills, the energy you want to put in your job…

Johanna decided what her salary would be, and stated it at the last interview, after Steven had stated that it wouldn’t impact the hiring decision. In the end, Steven says, “your salary isn’t something that will be negotiated, it will be your decision. It is as if you needed to negotiate with yourself.” Your salary is your full responsibility. To face the current situation of inflation for instance some employees raised their salary: wouldn’t the company “impose” this raise to all? No, the conversation was opened, but not everyone decided for themselves in favor of the raise.

Aren’t there any abuses?

Many wonder if this practice doesn’t lead to employees systematically underestimating  their salaries, for the benefit of the company in the end. To this point Steven answered that they do compare their salaries to the ones similar positions get in the for-profit sector: “a transparent salary connected to what you need doesn’t mean what you need as a minimum! It can be a nourishing salary, which is not there just to keep you above the poverty level! It can be a normal salary, comparable to what the for-profit sector pays, which is the case in our company.” Besides, Steven is preoccupied by the gender pay gap: even though self-governed, the organization is aware that it isn’t immune to this problem, and the team continuously works on monitoring and correcting it. 

Another question that pops up when we talk about such a salary system is: what if some people ask for crazy salaries? Steven never had such a case and finds it hard to imagine! “If somebody asked for a crazy salary, we would ask ‘in times of crisis, if we couldn't pay your salary anymore, would you leave the company? or would you be able to cut your salary?’. We would try to see if this person is actually negotiating as in the classic paradigm, to understand what the claimed number actually means. We would also try to figure out if the person understands the role of salaries in a donation-based and non-profit venture that works on the question of financial inequalities in society. Our work is made possible through donations from people who might not earn a lot themselves. It would be a question of cultural fit and mindset rather than a question of exact amount. And, in the end, it has of course to be in line with the legislation for non-profits."

Does that actually work? 

Self-determination of salaries may sound great, but it is extremely demanding, because everybody needs to open up and share things that they don’t usually share.

“People look so differently at salary, it is so personal! What they want to spend their money on, how much they think is right to earn, or wrong. There is so much morality attached to it!”, Johanna adds.

Along our conversation, the benefits of the system popped up:

• A good match for fluid organization

In a holacratic governance model, an employee usually has several roles. These roles can be very different, they can evolve rapidly and an employee can decide to take up new roles while other roles are reassigned or disappear. It makes it complicated to attach salaries to roles! Instead, with self-determined salaries, “your worth as a person to the organization is not only connected to your role(s)”, says Johanna.‍

• Better conversations about roles and expectations

“If you think a team member isn’t contributing enough, you can’t use the instrument of the salary: you have to talk! About the contribution you expect. It is a completely different conversation,” Steven explains.

• Diverse ways of expressing appreciation

Appreciation is one of the company values at Mein Grundeinkommen. How can a company show appreciation for good work without the lever of financial rewards? For Steven and Johanna, feedback is the key. Positive and constructive feedback is given instantly or during a personal review which takes place twice a year (Note: this ritual is currently being revamped, after team members raised concern about it not being a fully appropriate feedback space - work in progress!). “Appreciation can also be a constructive and critical review of an idea you submitted for instance, meaning: I value it, and that’s why I want to dig deeper into it with you. It’s not only about saying thank you and being friendly, but also about having real interest in what you do. This is part of everyday appreciation,” Steven adds.

Poster on a wall of the office

“Our values: Appreciation. Changing society starts with appreciation. We trust ourselves and others. We interact on an equal footing with all. We communicate with respect, empathy and transparency. We practice constructive criticism in order to grow. That’s how we live appreciation, which is also a value at the core of the basic universal income.”

• A free mind allowing to reconnect with your true motivations

Salary considerations don’t take a toll on your brain anymore. “I want to concentrate on my work. I don’t want to play mind games. The question of salary can eat up a lot of emotional energy, nights of sleep! One sometimes even considers going to work elsewhere [for salary considerations] rather than because of the work they actually do,” Steven regrets. At Mein Grundeinkommen, salary, position and performance are disconnected. When considering taking up new responsibilities, one can feel free to reconnect with their intrinsic motivations: do I deeply want to take up this new challenge? Do I want to develop in that direction? Or do I yearn for something different? 

In this article, Joost Minnaar from Corporate Rebels gives a recap of Dan Pink’s study of motivation: “In Drive, Dan lays out the evolution of motivational factors that drive us as human beings. He argues against the old models that were driven by rewards and fear of punishment; models dominated by extrinsic factors. Instead, he argues that human motivation is largely intrinsic, and can be divided into three categories: autonomy – the desire to be self-directed, purpose – the desire to do something that has meaning, mastery – the urge to get better skills.”

Most companies rely on extrinsic motivation (salary, bonus…) to incentivize their employees to do their best. Letting employees determine their salary is a bold bet on their intrinsic motivation.

As Johanna put it,  “we don’t have the golden way to figure it out, it is a constant way of figuring this out.” This example won’t give you the one key to salary self-determination, but maybe Mein Grundeinkommen’s example will inspire you to create your own model? 

If you want to get deeper into the topic of salary self-determination, we invite you to check out these resources:

• Corporate Rebels, Self-Set Salaries: A Practical Guide
• Dan Pink, Drive, the surprising truth about what motivates us
• Marc-Peter Pijper, Why you should separate salary and performance

If you want to learn more about Mein Grundeinkommen’s story, take a look at this article by the New York Times.

‍