Our path to a transparent wage system

This blog is translated from German with DeepL.

If you want mature employees, you have to meet them at eye level.

Time and again, there is media-driven discussion about the transparent salary system being forward-looking. I recently read an article by the CEO of XING SE with this chosen subtitle. But as I read through it, it quickly became clear to me, I didn’t really feel the method described was transparent and open.

But what have we done differently at Gimelli Engineering AG? What is the result of our transparent salary system?

I would like to go into these questions in more detail in the following article and it would be my pleasure to make you, dear reader, curious to try something unique. Unique? Yes, because once disclosed there is no turning back. But what’s the point if the result is that employees feel strongly involved and acceptance increases as a result.

We no longer talk about whether and how much more someone will earn in the coming year, and whether that is justified. Instead, we match employee interests and skills with operational needs. And if that need doesn’t yet exist or doesn’t match up? Then we create it, if the market demands it. What role someone fits into and what the design president or organization champion can do to move up to another role is now the focus of a promotion discussion. Salary is essential from an employee’s point of view, but it is a self-evident and fixed part of a role that no longer needs to be discussed.

Bild zum Vergrössern bitte anklicken: Rollenbilder

When I started at Gimelli Engineering AG in 2014, my predecessor told me that we wanted to introduce a salary system. However, this was without knowing specifically what the goal of this should be. It remained in a to-do list for a few years and at the employee appraisal in April 2017, I set myself the goal of introducing a salary system at least as a calculation tool for the management, so that salary discussions are not only conducted according to pure arbitrariness and gut feeling. Although the latter is indispensable in everyday business life and I would not want to miss the so-called “gut feeling” as a management tool. 

Structure and planning

We first thought about what we wanted to achieve with the payroll system and what must not happen under any circumstances within the management in two workshops. One of our most important goals was not to lose any employees as a result of the wage system. Another was that no one should earn less than before. The fact that there were no shocking inequalities in the existing wage structure (wages were in line with regional and industry standards and there were no wage inequalities with regard to men and women) simply enabled us to create transparency. As a desired outcome, we hoped that “troublesome” wage negotiations with employees and within management would be history in the future. We had a well thought-out rough concept in our drawer. Then we asked ourselves the crucial question: How do we achieve employee acceptance? During this phase, we also looked for companies that had already taken this step. 

Having an expert on our side gave us the necessary confidence to proceed. The next step was to get the employees on board. So we organized two team workshops in which the entire workforce participated. We even invited two future employees. After all, it was important to us that the system was supported by everyone. The first workshop was mainly for the workforce to learn about our mission, hear about the expert’s experience and then work out initial concepts in small groups. Transparency was important to us right from the start.

A project group was then formed with representatives from all areas and wage classes. This project group worked out a salary system within a “sporting timeframe”. I was in this project group as a representative of the management. It was a time of heated discussions, the clash of employee interests, business interests and one’s own opinion. We often stood together with our heads held high. It often got loud and emotional until tempers calmed down again and we continued to tinker.

I got to know many of my colleagues in a completely different way during this phase and was also confronted with my own fears about whether the system was sustainable for me personally and whether I could still make progress in terms of pay. After all, the idea of still earning the same at age 60 as you did in your mid-30s is not exactly inspiring, as long as you stay in the same role. For me, it was the time when we realized in depth that our heart beats for this company and that we are all striving to create valuable employment conditions here that are sustainable and with which everyone can identify. Now the quiet critic in you may emerge, saying, “Everyone can identify with this, it sounds nice, but I can’t really imagine it.” To be honest, neither could I at first!

The finished concept of the project group then came back to the management. Now I had to change my role and examine what I was working on as an employee in the project group from a corporate point of view. We severely neglected the company interests in the project group, and so each member of the executive board began to create a fair concept for himself from the company’s point of view and to combine this with the existing material of the project group. Looking back, I would do this part differently. We did not know enough in the project group what the “owner framework” was and in the end it was not an easy process even for Michel Perret, our owner, how much of the company result would be distributed again.

Our wage system at a glance

So what characterizes our wage system? All of our employees share in profits and losses. Loss sharing is at the heart of our pay system. In good times … that’s fast and popular. … as in bad times! That makes all the difference to us. We only feel really related when we can feel it. And we feel it not only in our wallets, if we get a 13th month salary, but also emotionally, in our hearts.

Thus, all by itself and from within the employee, the motivation to do a good job, to acquire and to use resources sparingly increases. We don’t have to learn it or educate it – and I am convinced – we can’t do it at all. Values and attitudes always come out of the individual employees themselves. Even if we as a company try hard to move the workforce in one direction, we will fail. Change can only come from the will and motivation of each individual. And when things go very well, our employees share in the profits. Other important aspects for us were fairness and equality. We created a system in which every employee receives the same percentage payout – regardless of whether he or she is a beginner or a manager. This means that it is not an individual bonus system, but a transparent and fair pay system. And it is an incentive for new employees to say at the hiring interview: “Yes, at Gimelli Engineering AG you can earn up to a 14th month’s salary.”

Introduction and acceptance

We completed all the planning work within the project group and the subsequent finalization by the management in just one month. Looking back on this phase, probably the most stressful time here at Gimelli. At the same time, we were massively “unproductive”, which I then felt in accounting terms when I did the liquidity planning. But the date for the second workshop day with the staff was already set and since we really wanted to have EVERYONE there, we stuck to that date. I can still remember exactly: my presentation for the staff was ready five minutes before we left for the seminar location. At the workshop itself, things got exciting and we got down to the nitty-gritty. We asked each employee individually if they agreed to have their current salary disclosed in the salary system presentation here. Everyone said YES and was delighted.

Then followed the presentation of the numbers, the thought structures, the so-called role model, possibilities about promotion potential, etc. Because we did not want to force any employee to make a decision as a result of a group pressure that had not been expressed, we set a deadline of 6 weeks after the appointment. We handed out the documents and the employees had time to digest the presentation, ask questions to the project team and discuss it with their family. After this deadline, each employee was supposed to tell us if they were willing to sign an employment contract on this wage system. It was a commitment with no legal obligation. Within the management, we then had the task of integrating the new wage system into the budget planning, creating a guideline and defining for the first time how this 14th month wage could be achieved.

All this work was then presented to the Board of Directors, which was delighted to approve the wage system. Now nothing stood in the way of the new employment contracts. What made me particularly happy from a personnel point of view was that, thanks to the good communication and the time taken to reach a decision, signing the new employment contracts was no more than a formal act, and on the same day I had the signatures of the workforce together. At this point, I thought for the first time, “All the work was truly worth it!” And it was confirmed that everyone could identify with it.

Wage system in practice

In 2018, we are in the phase of gaining experience with practical application and implementation. If we notice that something is not working out, we will adjust. Now we are faced with integrating the first new employees into our payroll system. To do this, we have also changed the entire application process. That, too, is an exciting process that I will be happy to report on another time. The initial feedback from candidates has been thoroughly positive and I am confident that this system will enrich us in the future – in the truest sense of the word.

If you are curious now, only a phone call or e-mail separates you from contacting me. It is my pleasure to accompany and competently support you in the decision-making and introduction phase to a modern payroll system. I look forward to working with you on a forward-looking project.

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