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Using Team-Set Salaries for Company-Wide Compensation

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Team-set salaries (TSS) can be scaled up by doing appraisals across teams where results are automatically calibrated. The scores indicate where conversations are needed. TSS encourages people to learn new skills and adapt.

Klaus Wuestefeld spoke about team-set salaries at Lean Agile Exchange 2021.

With TSS, appraisals are made by team peers using the zero-sum metaphor of "dividing up a pie". It gives everyone a direct say in salary settings. TSS can be used for fair individual compensation in agile teams.

Wuestefeld explained how TSS can be scaled up to multiple teams:

Each appraisal in TSS has a certainty rating between zero and one, set by the appraiser, to indicate how well they know that colleague’s work.

When at least 2 or 3 people in each team are capable of appraising someone in a different team, even with a low certainty rating, then "cross-pollination" of appraisals is strong enough to have everyone in the same TSS round, sharing a single budget, and results are automatically "calibrated" across all teams.

When teams work in silos and know nothing about each other’s work, you have to do a separate TSS round for each team, Wuestefeld said. In that case, the budget (the size of the pie) for each team has to be decided by the company as it would using any other salary setting process.

TSS encourages people to learn new skills, new jobs and to adapt to our changing company’s needs, Wuestefeld explained:

We want back-end coders to learn front-end development. We want front-end coders to learn graphical design and vice-versa. We want everybody to learn about the business, about UX and about anything they feel might be important.

InfoQ interviewed Klaus Wuestefeld about company-wide team-set salaries.

InfoQ: What benefits can team-set salaries bring if you do them company-wide?

Wuestefeld: TSS does not require me to box people into rigid, limiting job descriptions such as "backend developer" and "UX designer" just so that I can compare them to the market.

True collaboration becomes more important than showing off to the boss. Power hoarding becomes less of a distraction. Compensation "calibration" meetings are no longer necessary because TSS results are naturally calibrated across all subteams. People become autonomous. Team boundaries become more fuzzy and less restrictive.

InfoQ: What about cheating? Can’t people simply give favourable appraisals to themselves or to their friends?

Klaus Wuestefeld: People don’t appraise themselves in TSS, only their colleagues. TSS results show me who made appraisals with the greatest "difference in opinion" when compared to the final result by the team. When two or more people disagree significantly with the team in favour of each other, I call them in for a chat.

Normally, they will have valid reasons to hold different opinions from the rest of the team. They will know things about their colleague’s work that nobody else knows and it is great to have their input. Fairness is achieved by being able to perfectly balance everybody’s point of view. But if they stutter and don’t have a good explanation, I can ask them not to appraise each other at all. This seldom happens because people know that cheating attempts become evident.

TSS results indicate what the most important conversations to be had are. I don’t need to have everybody talking to everybody else one-on-one. That’s a waste of time. I encourage team members to hold feedback sessions inviting only the people who are the outliers (positive and negative) in the "difference in opinion" metric regarding their work.

Because of network effects, as the company grows the impact of avoiding stress, performance review drudgery and insipid one-on-one meetings grow even faster.

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