Empowering team members to control their own compensation
What happened when we let a self-managed team evaluate its own performance and decide on each member’s pay
We consider ourselves an agile company, and therefore, every team inside UruIT is self-managed. This applies not only to development teams, but also HR, marketing and finance. Members of these teams take ownership of how their work is done by planning and managing their day-to-day activities without any micromanagement from above. There’s no boss sitting in an ivory tower, but instead, responsibility is distributed across all members of the team.
At UruIT, salaries are reviewed twice a year (in January and June). Like most companies, raises are given based on performance. But, if there are no “bosses” and everyone shares the responsibility for the teams’ results, who should evaluate employees’ work? Wouldn’t it be better if your teammates were the ones who evaluated your work?
The context: a self-managed team
Approximately a year and a half ago, our company decided to try and see whether empowering teams to self-manage their own salaries would be a good idea. Of course, this was not something that could be applied overnight. Instead, we had to start small, with maybe one or two teams who were willing to be the guinea pigs.
The experiment was very simple: during each salary review, the team would have a certain amount of money to divide among its members. This amount would be decided by management based on multiple factors, such as the period’s revenue. How this distribution would take place was entirely up to the team; management would not weigh in, in anyway, on their decision.
At that time, I belonged to a team of developers including Andrés Báez, Waldemar Lopez and Gustavo Clemente. We had been working together for almost two years, but had known each other for much longer than that. It was safe to say that we really trusted each other and would be able to discuss without taboo such a sensitive topic as salaries. But most importantly, we all agreed that our effort would be better evaluated by our peers, after all, it’s they who see us work and progress on a daily basis. So, with this in mind, we decided to go through with the trial of this experiment.
In this post, I’d like to share how our experience was when applying this experiment to our team and what we learned from it.