Open paychecks explained (Fronteer)
A story by Babke Hogerhuis from Fronteer on how their new salary structure works. Originally published here
A few weeks ago, my colleague Hein proudly shared the story of our transition towards a transparent salary system with open paychecks. Since then, we have received a lot of positive attention from various companies and journalists, such as XpertHR Actueel and even the Volkskrant wrote an article on the subject of transparant salary structures.
Being pioneers (we think) in the field of transparent salary systems together with kindred spirits like Viisi, we decided to share a bit more. Because if we’re already being open internally, why not also share this externally?
Linear model
We believe growth is not just defined by labels like junior, medior or senior. Even though you might still be junior in some skills, you might already be senior in others.
We do believe that people always grow; growth is a gradual process. And although one person might develop just a bit faster than others, we trust that everyone at Fronteer always tries their best and works their hardest. To be able to reward people in a way that better fits this philosophy, we transitioned to a linear model.
Many models allow for small salary bumps each year and a big salary increase when you get a promotion. At Fronteer, your salary growth is constant. Each year, you make the same step.
For example: imagine that in a traditional model you would get a €200 euro increase each year and every three years or so you would get a promotion of €600 euros. In our linear model this would translate to a yearly increase of €300. So, if we look at three-year periods your salary growth is the same as in the old model. But you would benefit from the salary growth earlier.
No negotiations necessary
As Hein also mentioned in his post, we no longer negotiate about salaries. Once you have found your starting point on the model, you grow along with the model. No discussions. I can hear you thinking: Ok, sounds amazing. But how does that work? How do I make sure I am fairly compensated (employee)? Or that I am paying my team enough to make them happy (employer)?
We linked salaries to the relevance of your work experience for the job you’re doing at Fronteer. That means that when you start at Fronteer, we have a conversation about how relevant your work experience actually is for the job you’re applying for.
We defined three categories of work experience in order to calculate a relevance factor. This factor then determines what your salary at Fronteer will be.
Matching work experience: This work experience matches perfectly with the our job description and is 100% relevant
Supporting work experience: This work experience partly matches the job description and is considered 50% relevant
General work experience: This work experience does not match the job description, but is nonetheless valuable, and is therefore 25% relevant.
Rewarding for excellence
A question we often get is: “how do you reward outstanding performance within a linear model?”
There are a few ways in which we reward people that are outperforming all expectations. These are the most important ones:
Accelerated growth: When you show outstanding performance throughout the year, it is possible to make a 150% step on the model. For example, if the standard step is €300 euro, you would get an increase of €450 euro. Whether you deserve this accelerated growth is determined by the shareholders, based on feedback from your colleagues.
Personal Development fee: To stimulate everyone in the team to grow and be outstanding, you receive an annual Personal Development (PD) fee to spend towards masterclasses, courses, or other events that you feel contribute to your (and therefore Fronteer’s) growth. Over the past year, people have started language training, copywriting courses and visited conferences to educate themselves. The inspiration and insights that people get from these PD activities are often shared in our internal Fronteer Cafe’s and consequently even inspire the rest of the team.
Sales incentives: For us, excellence is also about helping to grow our business through sales. And to encourage everyone in the team to contribute to this, we have a sales incentives agreement. When you are responsible for selling a project, you are rewarded with a bonus of x% of the sold fee. The percentage depends on the factor of your work relevance, meaning that people with more experience (and thus probably more seniority) get rewarded with a higher percentage.
Team bonuses
Other than these individual rewards for excellence, we do not have individual bonuses. We believe that most of what we do and what we deliver is a team effort and therefore it makes sense to also reward the team altogether.
How we do that? Here are two examples of how we reward the team:
Christmas gift: Every year all team members receive a Christmas gift. And it’s the same for everyone. This year, for example, we received the opportunity to design a custom-made jeans by the coolest of the coolest at Denim City.
Temporary Offices Abroad: every two years, we move the office to a (usually sunny!) location abroad. In 2015 we landed in Lisbon, Portugal. 2017 brought us to Valencia, Spain. During this week-long temporary office we work on our team and company strategy in Mission Teams, but we also have some fun. These temporary offices make our team closer and our people happier, a great bonus for everyone.
If you want to learn more about how this model was developed or want to learn more details about how it works in practice, we’re happy to share! Drop us a line and we’ll talk!