Transparent remuneration and salary grids: fact or fiction ?

Marianne Roussel

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13 February 2024

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Are you an HR or Human Resources Manager? On February 7, 2024, the webinar "Transparent remuneration and salary grids: reality or fiction" took place. In this article, we give you an overview of the discussions !

Webinar guests:

Sandrine Dorbes, compensation expert for over 15 years. She has worked for CAC 40 companies. For the past 4 years, she has been running her own consulting firm, How much, to help companies implement compensation packages that make sense for them.

Jonathan Salmona, the co-founder of Shodo, an ESN with over 110 employees that supports customers in their IT project thinking. The two co-founders are driven by the desire to give meaning back to salaried employment, to offer an alternative to self-employment, and to reverse the turnover in their sector, which averages 30%. Their model is based on fairness and social justice, through value redistribution and salary transparency.

If you're an HR or business manager and didn't have time to follow the discussions, here are the points to remember:

Shodo's compensation policy

To give employees back a sense of belonging, Shodo's managers have opened up 34% of their capital to them, and have rebuilt trust by making salaries transparent;

The salary scale is based on the following principles:

annual increments of 5%.
redistribution as a component of their model, so that sales policy serves this redistribution purpose
variable remuneration based on objectives, using a surplus margin system to enhance the economic performance of assignments
women returning from maternity leave receive the same increase as other employees who have stayed with the company
executive remuneration is regulated:"if you get a raise as an executive, it's because you've created the conditions within the company for everyone else to get a raise", says Jonathan.

This policy has led to operational results in terms of staff turnover and Shodo's attractiveness."In terms of staff turnover, we have one departure per year, and on the recruitment side, we manage to recruit without a direct approach, without using recruitment agencies, and without a dedicated recruiter function," says Jonathan.

To exchange views with other HR professionals on topics such as compensation, join the engaged HR community, hosted by jobs_that_makesense !

QUESTIONS & ANSWERS

The capital is open to whom and in what form?

Jonathan - The capital is open to all employees. Our employees hold 34% of the capital. We opened the capital by valuing the shares at par value.

How did you decide to set your executive salary?

Jonathan - I set my salary at 3 times the lowest wage. The decision to frame our salaries is laid down in our bylaws. Why X3? Because we feel that employee remuneration is sufficient to set the cursor at X3 for us. In other sectors, such as investment banking for example, we may need to adjust the threshold. After that, I'd like to make it clear that transparency is not consensus: it's taking responsibility for decisions, as long as you believe they're right. Transparency means being accountable and revealing disagreements with employees more quickly.

If objectives are no longer set on merit, how are performance issues managed?

Jonathan - As a company, we determine what we need to live on in terms of salaries, what we need to develop serenely, and we redistribute everything else. We have fixed remunerations that increase until a ceiling is reached. We have fixed remunerations that increase up to 70,000 euros. This is generally the maximum in Paris. We then re-distribute the excess margin in 3 ways:

⅓ in variable compensation
⅓ in additional vacation days
⅓ in non-billable working days

The excess margin can also be paid back in free time or financial bonuses;

Rather than the notion of merit, we remunerate performance on a mission. For example, the rate that enables Shodo to reach its margin target is €678/day. So every euro above that will be paid back in excess margin to the person in charge of the mission.

How is the notion of performance and merit managed?

Sandrine - The grid is just a decision-making tool. When someone comes to me saying "I need a salary grid", I tell them "no, you need a remuneration policy." You first need to be clear about a set of rules that we apply to everyone. Sometimes, I have managers who tell me: "I want salary to be aligned with merit, performance, fairness." I then tell them:"before we talk about numbers and salaries, you're going to define this for me: What is equity? What is social justice for you? What's your vision of performance and merit?" This provides a foundation for all the policies we're going to build. When we embark on transparency projects, we have to explain our vision of the world to our teams, even before asking for figures. What's important for everyone is to understand our current situation and to feel in control. We also need to project ourselves. When it comes to remuneration, this means understanding why my salary is 50K and not 52K, and understanding how it will evolve over time. I've often met managers who weren't ready to be transparent, and who, two years later, are. They take things slowly. The salary scale comes later. As a manager, you have to be clear in your head first.

How do you identify your talents?

Jonathan - At Shodo, we produce a lot of employer-branded content: there are 30 minutes of reading, we lose 95% of people, but the 5% who have made the effort to read it lead to an interesting conversion. When people apply, they've already discovered us. People who recognize themselves in the culture come and it's very simple;

How are promotions, internal progression and raises managed?

Jonathan - At Shodo, we're a mosaic of small, horizontal structures. We asked ourselves these questions: what will a promotion reward? Does it reward your salary or the role you play in the company? When you're working with a small organization, it's easier to see who can bring value in a different way. To help roles evolve within the company, we've set up criteria to explain why this or that person is suited to a particular role. These criteria are accessible to everyone, enabling them to see where they stand and what they still have to do.

Sandrine - Jonathan's organization is unique, it corresponds to the world the founders want to live in and how they want their sector to evolve. But we have to be careful, because sometimes we project a business model onto our own. If you've got an old, very pyramid-shaped company, you're going to think that what Shodo does is impossible to reproduce at home, so you're not going to move towards transparency. On the other hand, we can learn from Shodo without doing exactly the same thing. The implementation of a compensation policy differs from one company to another. In the organizations I work with, money is the last thing on the agenda when it comes to compensation. There are other things to look at first, such as: how do you define salary? How does it evolve? It's by doing this work that we're able to stand firm in our support for greater transparency.

How do you communicate your compensation strategy with your employees?

Sandrine - When it comes to compensation, you shouldn't try to convince or please everyone. When you talk to everyone, you talk to no one. Sometimes employees aren't open to total transparency either. You start by defining the rules, and then move forward little by little. Since we don't know how people will react, we can release information little by little to take the temperature.

Shodo's business model makes it easy to implement this kind of transparency policy. But how can we do so when this is not the case, in highly constrained business sectors?

Sandrine - For me, there's no link with the market or the business model. We need to define the rules and the path we're willing to take to communicate on the various themes that touch on remuneration, then ultimately arrive at total transparency. Or not. It's a journey, which starts with setting the rules;

8 TAKE-HOME TIPS

1# Define the rules of your compensation policy before talking about transparency.

2# Transparency is not consensus. When we talk about compensation, we shouldn't try to convince our employees, but to make sure they understand.

3# Don't try to implement a compensation policy that will please everyone.

4# Once clear rules have been defined, move forward little by little, depending on what managers are prepared to let go of and what employees are prepared to receive.

5# Take it step by step and surround yourself.

6# To get CODIR and HR on board, it has to be desirable, it has to make people want to do it. You also have to make people feel less guilty about the speed with which it's going to be built. Show social proof. We're more effective at driving change when we can create desire.

7# After 6 months or 1 year, take stock of turnover and the attractiveness of the company.

#8 Develop compensation practices in line with changes in corporate life.