Letting Your Employees Set Their Own Salary May Be the Best Business Decision of Your Life

Set your own salary
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Living in the 21st century means changing the way you manage your company. 30 years ago, employees didn’t have a say on their compensation so you would never have heard someone complain about their salary.

However, a few years ago, pioneering executives from Semco had the “crazy” idea of letting their workers choose a suitable amount for their salary. Although it was not popular at the time, the company has been applying this strategy since 1987 with tremendous results.

So if you want to implement this new strategy into your organization, here are some aspects you should consider.

Happy employees, happy company.

Studies show that happy employees are 12% more productive because they feel like they matter and have a say in the company. That’s exactly why it’s important to provide them with a healthy work environment promoting open communication, honesty, and transparency.

Believe it or not, but it could start with you telling them your salary. Set the example and they’ll feel much more comfortable when the time comes to discuss their own.

How it works

Running a business means knowing market prices by doing a competitive analysis, not only on the products or services you provide, but also on the average salary offered for specific positions in your industry.

Conducting this analysis will help you show your team how much their job is worth on the market so they can compare their current salary to that number.

Take into account that technology can be one of your best allies in this difficult task. Some tools will help you calculate a salary that matches their skills and position in the company.

Educate your workforce

As their manager, you should know exactly what your employees are worth, and you should share it with them. This information will make them feel empowered, bringing in better results for the company.

If you want your crew to be honest, act accordingly. Don’t let them believe that you’re underappreciating their hard work. Instead, let them know they’re valuable assets to the organization. You won’t regret it.

Also, take into account that sometimes employees will think setting their own salary is an opportunity to leverage from the company’s money. Let them know it’s not a jackpot but a responsible and informed decision to make.

You may surprised by the huge number of employees intending to leave their job because they feel underpaid compared to the few private companies allowing employees to share information about their compensation. Those figures should encourage you to adopt a new policy in order to stand out from your competition.

Transparency to fight prejudices

If there is something that can make your business stand out, it's diversity. Actually, letting people set their own salary will help clear any concern about discrimination since everybody will know their coworkers’ salaries.

On the other hand, letting your employees have a say in their compensation shows them that your priority is to keep them engaged in your organization, even if it means paying a little more.

Rely on good faith

All your corporate culture goes to the trash if you don’t practice what you preach. We know that it’s not easy to trust that people are going to act as you want them to, and that you might be afraid they take advantage of your kindness. But most of the times you will be surprised of how good people react to this type of policy. If you trust your own judgement, stand by it. You hired these people, so the least you can do is believe in their principles.

Final thoughts

Letting your employees decide on their own compensation can be beneficial to your company. In the modern market it is a good idea to incorporate an innovative policy that will put your company on top of the industry.

Juliana Posada
Online Content Creator