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Agile Compensation

Agile Breakfast Luzern

David Baer@davidbaer

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Rechsteiner Martin, Dipl. Informatiking. ETH

Reichert Raimond, Dr. sc. techn. ETH

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Goals

Learning Objectives:

– Show how important salaries are to culture and how it shapes the culture of a company.

– Prove to the audience (by example) that different compensation models are possible.

– There is no easy way to implement this in another context. Therefore I want to help by giving other examples and embedding the topic with relevant literature to give the attendees the capability to come up with their own unique solution for a more agile compensation scheme.

Overview

– What is Agile Compensation?

– A few words on Ergon

– Products

– Culture

– Compensation @ Ergon

– Beyond Ergon

David Baer

@davidbaer

What is #AgileCompensation?

Problems in Compensation

– Bonuses

– Individual Goals, MBOs

– Individual Performance

– Negotiations

– Interview

– Yearly

– Discrimination

Agile Compensation

– Fair

– Transparent

– Participatory

– Profit Sharing

– Self-organized

– Sustainable

– Enduring

– Team Spirit, Company Goals

– Motivating (or at least: not demotivating)

– Attractive

– Culture (fits Company’s Culture)

The Ergon Compensation Model

Who is Ergon?

The company leads the field when it comes to developing custom applications, and it is an established manufacturer of software products

– 250 employees, 9 apprentices – 86% with university degree– 43.8 Mio CHF turnover (2015)

Facts & Figures Ergon Informatik AG

38 %29 %

7 %

27 %

Prix Egalité

2011ICT Education &

Traininig Award

Breakdown of turnover by sector

Core Principles aka. Culture

Core Principles

Our employees’ enjoyment of their work and their determination to succeed are key factors in the success of Ergon.

The culture is based on the principles of grassroots democracy:

– Equality – Transparency – Participation – Profit Sharing

Most of our employees are IT graduates, and all employees have equal status – flat organisational structure – short lines of communication – non-discrimination in all matters

Equality

All company figures and data are transparent and accessible to all employees – This includes all payments to employees (salary &

bonus)

Transparency is a precondition for being proactive and entrepreneurial, acting self-organized without orders from a manager

Transparency

Participation

Full participation and democracy is the core principle. Employees are encouraged to contribute their own ideas proactively.

Every decision of a team leader can be delegated by a majority of the team members to the next level. This includes the executive management.

Employees share in the company’s success and risk – 20% of our salaries are variable. The variable part is paid at the end of the

year, when this can be done without a loss. – A large part of our profit is payed as an additional bonus to our employees.– The performance-related pay is based on the results of the whole company,

not on individual targets.

Profit Sharing

#AgileCompensation @ Ergon

Image: http://www.foodaktuell.ch/editorial.php?id=1312

Salaries Overview

– Transparent

– Calculated

– Bonuses distributed in Teams

– Profit Sharing

– Democratic

Transparent

Percentage FTE

Yearly Salary

Various Bonuses

Total

Transparent

Calculated

Years Experience

0 3 6 9 12 15 18 21 24 27 30

Head

Base Salary = 80% of Target Salary

Target Bonus

Function Bonus Management

Tea

m

Div

ide

nd

Dividend

ca 20% of Target Salary

10

% o

f Ta

rget

Bo

nu

s

10

% o

f Ta

rget

Bo

nu

s

Senior. Salary

Function Supplement (10% of Target Bonus)

max 25% Bonus

Profit Sharing

Democratic

We voted on Parental Leave, Pension Funds

Why does it work?

– Grown

– Culture

– Contract

– Success of company, no individual or team rewarded

Other Examples, Literature

Employees are «really» important to us, that‘s why we are different

Prix Egalité

2011ICT Education &

Traininig Award

Illustrations: www.guedel.biz

David Baer david.baer@ergon.ch, @davidbaerwww.ergon.ch, @ErgonAG © Copyright 2016, Ergon Informatik AG, Zürich

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