Performance Evaluation and Salary Setting

The key pillars of Gini’s culture are self-organization, autonomy, and personal & professional development. Having built a company on these principles, we truly believe we have created an environment in which our fellow co-workers have room to grow, to progress, and to get involved in topics they feel passionate about. One important precondition is that there are no bosses at Gini — but many leaders. In fact, anyone can become a leader. Either they have a specific skill and expertise that qualifies them to make certain decisions. Or they feel passionate about an area and want to move things forward. Either way, leadership heavily depends on the circumstances and may vary over time. This fact combined with peoples’ desire to advance in their role and therefore their compensation, leads to the following question: How can an evaluation and compensation process look in a company with no bosses?

Many years ago, the topic of a fair performance and compensation model rose. Like most other companies, we had relied on negotiations to do the trick — and failed. Negotiations heavily favored more extroverted people who were not afraid to ask for a raise. More introverted or more shy people didn’t get a piece of the cake. Sometimes not for years, despite their work’s impact on Gini. Having finally realized this, we opted to change to a fairer process. One that would fulfill the following needs that we identified:

• Fairness: We wanted a process that was based on the principle that everyone should be paid fairly, depending on their seniority level and their performance. We wanted to diminish external bias as much as possible.
• Clarity: We strove for a process that was as clear and simple as possible while incorporating all valuable input. Everyone understanding the process would enable transparency and trust in the outcomes.
• Growth: By clearly addressing good, as well as poor performance, we hoped to enable the growth of each individual.
• Safety: By making the compensation setting process clear we want to provide stability which allows employees to feel safe for their livelihood.

Apart from these key points, we wanted the evaluation to be a great feedback process as well. The goal was for every evaluated Gini to receive a report containing valuable qualitative and quantitative data.

A group, consisting of people from various teams, came together and worked on a first draft, researching companies with unconventional processes and suggested which parts could be transferred to our individual process. After about a year of research, the “Performance Evaluation Committee” was formed, consisting of one member of the Finance team, one member of the People team, and the CEO.

We started the first “Performance Evaluation” process in October 2018. The expectations were high — both due to the committee’s own expectations based on all the prior effort, as well as the team’s expectations for a fair process. Were the expectations met? No. The process was still missing important parts that only came to light once we first tried it. The evaluation itself was difficult as we only used google forms and we failed to come up with a fair, objective formula for a salary raise. Based on the feedback we received, we made significant improvements to the process. Giving up on the idea and going back to negotiations was never an option.

Current Process

Preparation Phase

Both teams, as well as individuals, get evaluated. Every Gini’s final, overall score consists of their individual performance as well as their teams’ performance. We want people to not only care for their own performance but work hand in hand with their teammates to push their team forward.

Every Gini indicates their team memberships. They select 3 other teams they wish to evaluate (excluding their own). Every Gini will automatically get evaluated by their teammates in the individual section but can pick additional evaluators outside their teams as well. Everyone puts down their 3 key achievements of the last 12 months as well.

Evaluation Phase

One major change we made over time was the tool we used. In the previous performance evaluation processes, we used Google forms. This was difficult to handle and confusing to fill in. Due to that, we created our very own performance evaluation tool. Once the preparation phase is over, every Gini receives an email for every Gini and every team they have to evaluate. The tool will present them with the key achievements of the team/person (to counteract primacy-recency bias) and then let them rate the performance.

Teams are being evaluated based on their achievements, progress, and impact in the last 12 months. Individuals are being evaluated through many questions, all based on their knowledge, their people skills, and how responsibly they have acted. Apart from the quantitative data we collect, everyone is required to give qualitative comments as well.

Decision Phase

The Performance Evaluation Committee analyzes both the quantitative as well as qualitative data. They create a report for each individual including their quantitative personal scores as well as their teams’ performance. The comments add a qualitative component. The committee uses formulas that were specifically designed for this process. The first formula is to analyze a person’s overall score./span>

(40% Team Score + 60% Individual Score) : 2 = Overall Score

The next step is to research market salaries and specify when a raise would be given (=performance plus). For that, the committee defined seniority levels (in sum 8 levels). For each seniority level and position, the committee identified the minimum overall score. If a Gini has performed above that threshold (=expectation for their position), they will get a performance plus of up to 10% of the market salary. If applicable, a part-time factor can be used as well.

(Market Salary x Performance Plus) x Part-Time Factor = New Compensation

Delivery Phase

The committee schedules one-on-one talks with all participants to walk them through their report.

Every Gini is given all quantitative data as well as the comments in their report for them to look over. Appreciation badges are given out to those who scored particularly high in a specific area.

After the presentation of the individual report, every Gini is informed of what their new compensation will be based on the formula.

In the last step, the committee collects feedback from all Ginis to improve the process before the next iteration.

In all honesty — Is it worth it?

Three iterations after the very start, we look back and ask ourselves: Is it a perfect process that is perfect for everyone? No. Is it time well spent? Yes.

The process will never subjectively be perceived as fair by everyone and in every iteration. There will always be cases in which a person has objections to the results and that is something we accept. We accept that such a process can probably never be perfect and that’s why we aim for improving it constantly. We as a company change, the people change, and if we have learned one thing in 2020 it’s that circumstances can change in the blink of an eye. What can be applied today might not be applicable in a year. And that is why we ask for feedback time after time to make sure the process works for our current situation and iteration. And yet, it continues to be worth every second. As you might have assumed, this is not an easy process. We don’t go through this lengthy evaluation because it’s easy — but because things get easier when we have fair and clear processes at hand. Thus, we will continue in our pursuit of improving this process. After all, the journey is its own reward.

If you would like to know more about how we at Gini promote professional and personal growth, we recommend our blog articles on stewarding, switching roles, or in general how we foster individual growth.

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You’re interested in becoming part of a company that deeply cares about fairness and transparency? Find our open job positions here – we are looking forward to getting to know you.