Pay rises: how some companies are giving staff far more control

It's not quite setting your own salary, but some firms do give their staff far more say in pay rise talks. We reveal how these schemes work and the pros and cons of this approach.

Pay rises are an awkward and murky topic for most workers.

Any increase you might get is at the discretion of the company, and working out whether your salary is fair compared to coworkers is extremely difficult given the secrecy around staff remuneration.

However, there are some companies that do things differently by giving workers more say in pay rise talks and being far more transparent about how much everyone is paid.

But is this actually any better for workers? We caught up with a few companies to learn more about the new ways pay increases can be handled.

'All our salaries are on Wikipedia'

Peer-to-peer trading technology firm Smarkets makes no attempts to hide how much each employee is paid.

Céline Crawford, chief communications officer at Smarkets, comes from a financial background and supports pay transparency, which unfortunately is not a common feature in many UK workplaces.

“All the salaries are on the company’s internal Wikipedia page,” says Crawford, adding that salary reviews happen twice a year.

If an employee wants a pay rise, they need to fill out a form detailing how much they currently earn and how much they want.

Crawford says employees need to emphasise what they have achieved and talk to their peers about their views on their responsibilities and pay.

Employees need to do their research on market rates and explain their reasons for the proposed pay hike.

Thanks to the transparent pay culture, it’s easy for an employee to compare their pay to another colleague in a similar role. However, employees are also asked to take the company’s current success, or lack thereof, into consideration.

Once an employee makes their request, a salary committee, which constantly changes to ensure a fair process, reviews the request in private and decides whether or not to approve it.

There tends to be at most 10 people in the salary committee, including someone from the HR and finance departments. All decisions are made on a case-by-case basis and the reasons for the final decision are given.

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What if someone asks for too much - or too little?

If someone asks for a particularly ambitious pay hike, the employee will be informed and asked to review what they’re asking for – and they usually do.

In some cases, an employee may not agree with the outcome and can get a special review. But Crawford argues this very rarely happens as employees tend to take any feedback on board.

While it may appear that the scheme sets out to curb people asking for more pay, it can actually help those who struggle with negotiations.

“They [employees] may have low self-confidence, or they may just be shy,” says Crawford.

If an employee appears to be ‘lowballing’ themselves, they’ll be encouraged to revise their salary expectations upwards, so they don’t miss out due to poor negotiation skills.

For Crawford, the biggest benefit of a set your own salary scheme is the trust that it builds as the issue of pay becomes less of an issue.

Employees at Smarkets have on average achieved a 10% hike in their salary through the scheme, according to Crawford.

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‘It can backfire’

There can be some downsides as the scheme can take up a lot of time – sometimes up to a month – although this process has become shorter over the years.

And this isn't the only issue to consider.

“When you give people more information, it can backfire,” warns Crawford.

Edgaras Tulauskas, who works in Business Operations at Smarkets, says the scheme has mainly been positive, but employees should be aware of what they’re asking for.

“Some people might ask for a very big amount and there may be disapproval,” comments Tulauskas.

“When you give employees power, you may expect them to act crazy – but this isn’t what happens in 99% of cases.”

He has been successful at getting a pay rise twice – once for a 10% hike in 2018 and again for a 15% increase in 2019 because he took on more responsibilities.

Tulauskas believes that peer feedback is essential for any salary review as it helps shape what you ask for and what is expected if you get a pay rise.

He also says having a co-ordinator during the salary review process is helpful as goals can be set if a pay rise is approved or you can look at how to perform better if you’re not successful.

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‘Companies need a different mindset’

Internet of Things network specialist Pod Group also has a scheme encouraging you to set your own salary, which it introduced a few years ago.

Charles Towers-Clark, chairman of Pod Group, says the scheme was launched when he realised human skills were needed more than ever as artificial intelligence continues to evolve.

He wants employees to use the initiative and this is encouraged in different ways, which extends beyond pay.

For example, there’s no standard holiday policy so employees can take leave whenever they like – as long as it doesn’t impact their colleagues, and they can work from wherever they want.

“We looked at other formulas, but you can’t easily get one that determines someone’s value to a company,” comments Towers-Clark.

“But you have to have a truly transparent environment. Companies need a completely different mindset.”

He believes transparency of pay helps people become more focused and productive.

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How the process works

If someone at Pod Group wants a pay rise, they need to contact the HR director, who will select five or six people to offer advice.

While there’s no cap on the pay rise that can be requested, employees are encouraged to do their research into market rates for their role.

This group will include some people the employee works with closely, and some that they don’t, to avoid bias.

Towers-Clark stresses that these people only give advice – they don’t decide on the new salary, as that decision rests with the employee alone.

He emphasises that if someone is given feedback that suggests they may not be ready for a pay rise, they usually don’t go forward with their request.

And in rare cases, employees request a cut in pay if they want to go part-time or focus on other projects.

For Towers-Clark, a big benefit of this scheme is the transparency of pay and higher retention of staff, as you can save costs by not having to hire new people.

Similar to Smarkets, employees can easily see what their colleagues earn.

While Towers-Clark thinks the scheme has been a success, he points out some employees gave the green light to a pay rise for a colleague – but didn’t actually agree with the decision.

He argues people need to be honest and constructive with their feedback so that everyone can learn something from the process and continue to develop professionally.

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‘No unreasonable pay rises’

GrantTree, which focuses on research and development Tax Credit grants, introduced its ‘Self-Set Pay’ scheme in 2016.

Employees are also encouraged to self-manage and authorise their own holidays.

Nicky Johnson, chief executive officer at GrantTree, says the process addresses employees’ value by looking at their contribution and how much they’ve developed personally and professionally.

“They [employees] also receive feedback on their findings and interpretations from a number of other people – their ‘pay stakeholders’, comments Johnson.

“These are team members who are likely to have a useful perspective on their progression and benchmarking findings, and on the budget impact of their decision.”

She stresses the process is designed to help people make an informed and rational choice about their salary, and flags that no one has ever given themselves an ‘unreasonable’ pay rise.

“The choice of whether to change their salary and by how much, is ultimately up to them,” says Johnson.

She believes there are many benefits to the scheme.

“I think it makes the whole concept of pay much less political,” comments Johnson.

“Who you know and how you advocate isn’t important. What you bring to the company and how you’ve developed, is.”

Similar to Pod Group, a small number of employees have asked for a cut in pay although this reflects a change in working hours or responsibilities.

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‘Women can have a harder time’

Cecilia Manduca, business development manager at GrantTree, says the Self-Set Pay scheme allows her to get a pay rise without waiting for someone else to decide for her.

“I think it stops things like ‘boys clubs’ from forming,” comments Manduca.

“Also, women traditionally have a harder time asking for pay rises than men do. Self-Set Pay removes that problem.”

Manduca says it’s important that anyone considering a pay rise does their research by looking at the market value of their role and the impact a hike in salary would have on the company.

Employees would also need to be open to any feedback from colleagues during the process and consider it when making their final decision.

It’s easy for any employee at GrantTree to compare their salary with their colleagues as the information is freely available.

For Manduca, the scheme helps to incentivise her to develop professionally and also stops a lot of the politics that can occur in the workplace.

She admits employees can abuse their power to determine their own pay rise, but this has not yet happened.

“I think that speaks to how much employees can be trusted to behave maturely, and how effective the Pay Self-Assessment process is at empowering us to make informed, rational decisions,” says Manduca.

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