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The Salary Experiment: Breaking Free From Traditional Salary Models

04. Apr 2023

At DDC, we are committed to finding a salary model that aligns with our self-leading organizational structure. Fortunately, we are not alone in this pursuit. In four episodes, Zetland journalist Fie Dandanell reports on our transition and visits four other Danish companies that have already successfully implemented new salary models

Quick insight

In the summer of 2020, we launched our biggest organizational experiment to date by rethinking the DDC itself with a human perspective as the most essential management principle. This major organizational transformation meant goodbye to KPIs, middle managers, and traditional hierarchies. Instead, we’re managed based on values, assuming everyone wants to take responsibility and contribute positively.

Our experiment already shows promising results but has raised some new questions. For example: How do we make important decisions? How should top management adapt? And how do we find a salary model that fits our organizational structure, especially when there is no longer a traditional manager to negotiate salaries with? To address the latter, we have entrusted an internal working group, the “Salary Circle,” with this task. Since last year, they have been meeting regularly to discuss new possible scenarios, ranging from models in which everyone earns the same regardless of their title to models based on transparent and defined salary levels.

Our special salary task force is still at it, and the process has proven to be much more complicated than expected. That’s why we’ve shared our journey with the Danish in-depth news media Zetland, who’s also searching for a new and more appropriate salary model. In a four-part series, journalist Fie Dandanell follows our process and meets four other Danish companies that have successfully introduced new and inspiring ways to pay their employees.

Curious about more? We’ve got you covered with a summary and direct access to the articles.

Episode 1: “In this workplace, everyone earns exactly the same”

In the first episode, our colleague Brian Frandsen shares some preliminary and essential insights into the process and the many factors involved in changing workplace structures, including salary. Also, journalist Fie Dandanell meets with the Danish company Analyse & Tal, which has found a unique and fair way to pay all employees. And in such a way that all employees earn the same every month.

“There can be so many taboos, emotions, identities, and other factors at play that affect everything you do in a workplace or an organization, such as salary. It’s been both fascinating and frustrating.”  – Brian Frandsen, Strategic Designer, and Salary Circle Member, DDC

Listen or read the full article here.

Episode 2: “Here, it is not your boss who decides your salary. It’s an algorithm (and your colleagues) that does”

Yes, you read that right – an algorithm. The Danish IT company Vertica has developed an interesting model based on the assumption that your colleagues can better estimate your salary. Every salary is based on input from your colleagues and a computerized calculation.

“Your boss does not see when you spend time helping others or how you bring your experience into play. And instead of competing with others in annual salary negotiations, you are constantly encouraged to play your colleagues better.” – Mikkel Yde Kjær, Software developer and one of the frontrunners of the salary model, Vertica

Listen or read the full article here.

Episode 3: “In this company, all employees decide their wages”

Abzu, a Danish-Spanish tech company, has taken a rather unconventional salary approach where each employee sets the final number on their paycheck. However, before doing so, they must consult with a group of colleagues and get their opinion. Although it may seem wild at first glance, this model has been successful for Abzu, which, like DDC, operates as a self-leading organization. In fact, the organizational structure has enabled Abzu to implement this salary-setting system.

“People can learn to lead themselves if given accountability, information, and transparency. We are driven by the desire to make people free because we want them to decide for themselves how and under what conditions they want to work.” – Jonas Wilstrup, Chief Operating & Financial Officer, Abzu

Listen or read the full episode here.

Episode 4: “My boss asked me to find a better way to negotiate salary”

In this fourth installment of the salary series, we return to DDC to delve deeper into the process. A process that, among many things, is about meeting the needs of many colleagues: it’s about transparency, it’s about expectations and feelings, it’s about ideology, and it’s about how much it comes through when we try to change something as fundamental as our salary model.

“We thought we could gather a group of smart people, bring in colleagues now and then, and after six months, we could say, ‘ Look, here’s a new model that covers everything we want.’ But that wasn’t the case. We saw that we couldn’t put everything into one concept or one model at once.” – Brian Frandsen, Strategic Designer, and Salary Circle Member, DDC

In addition, Fie Dandanell reveals some exciting news about Zetland’s search for a new salary model, leaving us excited because it could be a game-changer for Zetland and other companies like us that are looking for a new way to manage salaries.

Listen or read the full article here

What now?

It’s still a work in progress for us here at DDC, but we have come a long way. We’re currently looking at two potential models that could fit our organizational values and meet our essential needs as employees in a self-leading organization.

In a forthcoming article on the subject, we’ll look more in-depth at our process and the results of our quest for a new salary model.

Also, we’d love to hear from you if you have any questions or critical insights on this topic. Please reach out to Anne Ravnholt Juelsen or Brian Frandsen.

Anne Ravnholt Juelsen

Journalist & Communications Strategist

Phone +45 5150 0983
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