Every organisation has its own salary model. The Swiss Confederation, for example, relies on transparent salary classes. Other organisations set salaries based on criteria such as age, experience, and loyalty. At Dezentrum we were relying on a unitary wage until for some it was no longer sufficient.
If a person can no longer meet their financial needs, there is a high probability that said person will no longer be able to work with us. That is the reason why we came up with a new wage model. It provides an additional needs-based wage for those whose needs are not met through the unitary wage anymore. Due to the little to non-existent public evidence on needs-based wages, we decided to test it for ourselves through an experiment that can be stopped at any time.
All of us have different financial needs. Some of us are doing a part-time degree and some have already started a family or live in subsidized housing, others have already received an inheritance. Need is complex and difficult to measure. Socioeconomic background (family, health, inheritance) and luck directly influence individual needs. Some live in privileged circumstances, while others don't. With our wage model, we want to address these circumstances and fulfill everyone's needs.
This is how our model works
The wages for partners at Dezentrum are the sum of two factors. The first is the unitary salary of CHF 6000 (at 100%). If this does not cover the partner's own needs, an additional requirement of CHF 0 to a maximum of CHF 2,500 is added. Thus, the minimum wage is CHF 6,000 and the maximum wage is CHF 8,500. These amounts were negotiated by the team and are in the range of the median wage of the city of Zurich (CHF 8,000).
The additional needs are to be determined individually by each partner using a guideline. But what happens when two job candidates have different needs? To hire the person with the lower need would be unfair, hence for candidates to have equal opportunities need will only be determined after employment.
How we determine our needs
In usual wage systems, superiors determine wages according to the aforementioned criteria. How can a wage be determined based on need?
We developed a guideline to help us understand our needs and translate them in a similar way. The guideline contains eight questions that will help determine the quantity of the needs-based wage. Here are a few examples: Can you live carefree with this amount? Do you think a higher amount would make you significantly happier? Would you feel valued with the amount?
Once all needs are determined, they are shared with the team. After having heard others' needs, each person has the opportunity to adjust theirs. In the following sections, we will explain why we think an open discussion in the team to determine the needs-based wage is needed.
What is an appropriate need?
It is extremely difficult to judge whether a need is justified or not. This will be illustrated in the following example. On the one hand, let's say I am a passionate cyclist, own several bikes, and regularly travel to Italy. The estimated cost of this is around 300 CHF a month. On the other hand, my teammate Luca (a fictional character) would like to support his parents with 300 CHF a month, since their retirement pension is not enough to meet their needs. Would you accept both needs? Is one need more important than the other? We could philosophize about this for hours and possibly never come to a shared answer. But it is important to open a discussion about it, not for the sake of coming to a solution, but to start to destigmatize the taboo surrounding wages.
In our team, we assume that no one has the intention to take advantage of the others and that everyone will decide on a reasonable amount of needs-based wage. That is why each person is trusted to determine their own needs.
Addressing structural pay gaps
Wages and wage systems are not neutral models. They operate in a complex space of different internalized assumptions of meritocracy, and structural dynamics. One aspect of this complex space is structural gender discrimination, which leads to gender pay gaps1. A factor that leads to the gender pay gap is that women are generally less willing to enter into negotiations2 since they are socialized to be less assertive3. Furthermore, negotiation is a social risk for women, as it goes against the gender attributes of generosity and forgiveness. Moreover, the reluctance to cooperate with workers who negotiate higher wages is on average higher for women than for men4. Therefore, it is important to address the fact that even a needs-based wage is not free of structural discrimination. To counteract this problem and identify injustices, we talk openly about money and actively keep statistics. This way we can ensure that the wage model remains transparent and tries to minimize pay gaps.
What we hope for from the needs-based wage
The implementation of the needs-based wage model is to enable partners to live a financially carefree life and to break down the taboo of wages. We hope to even out unequal financial starting positions in our team and strengthen solidarity.
With this experiment, we want to test our thesis that Dezentrum partners with a needs-based wage are free of financial worries and feel fairly treated and valued. To track whether this is the case, we will regularly conduct anonymous surveys.
By publishing our wage model, we want to make our work accessible to other organizations and expose it to the potential criticism of readers. For almost a year now we are organized under the Sociocracy 3.0 structural model, that's why you may come across terms that are unfamiliar to you.
Download wage model Dezentrum (German)
Did we make mistakes in our thinking? Have we forgotten something important? We welcome input, feedback, and critical questions.