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[[_TOC_]]
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# Introduction
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## Scope of this Document
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This document aims to define the compensation policy
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for software developers, engineers, analysts and other operational staff.
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Management, support staff, design, marketing, and other employees are awarded separately.
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The compensation of students and summer interns is not discussed in this document.
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## Basic Drivers of the Ladder
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There are a couple of core points behind Sinergise's salary policy:
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- employees with similar level of skills, experience and carrying similar responsibility
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should receive the same compensation;
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- the rules should be as objective as possible
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so that each individual is able to assess themselves where they fit;
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- the rules should represent objective criteria and motivation for advancing in rank
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(it should be clear to the employee what they need to do to advance);
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- this information (rank) should be shared with the employee
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(but the ranking is generally not meant to be public).
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When adjusting and setting the compensation amounts,
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we're considering the following general principles:
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- We appreciate the fact that salary is an important reason for coming to work.
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However, we hope that for our employees this is not the most important one —
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that they like doing the work,
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value the results of what they do
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and the value that their work brings to our customers and users.
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- We therefore do not necessarily strive to have the highest salaries in the field,
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but we would like them to be above average.
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Any information about the state in other comparable companies is welcome (as such insight is rare)
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so that we can fine-tune our "offer".
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- Being a "for-profit" company,
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Sinergise does need to make a profit,
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otherwise it will cease its operation.
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Salaries make up the vast majority of the company's costs,
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so we need to ensure that the policy is sustainable.
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- As the company's financial situation is improving,
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so should the income of the employees.
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(the most direct mechanism that demonstrates this is the "distribution of annual company profits to employees").
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Some additional concepts driving the policy:
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- Most of our employees stay with the company for more than 5 years.
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The ladder should provide space for an employee to grow along with their compensation.
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- Salaries should be adjusted for inflation at least every three years,
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if the company's operations can support this.
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- Software developers (including non-programmers in the field) tend to prefer stability to risk,
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even if the latter potentially brings better reward.
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The variable part of the income is therefore limited.
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However, we do feel there is a need to motivate our employees to pursue some goals,
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which are perhaps not achievable by working along "the path of least resistance".
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## References
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The salaries policy is influenced by the following writings:
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- http://joelonsoftware.com/articles/ladder.html
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- http://www.joelonsoftware.com/articles/fog0000000038.html
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- http://dresscode.renttherunway.com/blog/ladder
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We tried to change it according to our type of work (more project based than product).
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## Structure of an Employee's Compensation
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The compensation of a Sinergise employee consists of:
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- monthly salary – fixed and variable part,
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- distribution of yearly profits.
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In addition to these,
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there are other compensations,
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such as travel and food expense, yearly summer bonuses etc.,
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which are all similar as in other companies in Slovenia and are not described further in this document.
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# Monthly Salary
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Salary levels are based on the skills, scope and work experience.
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The Ladder is described in the Appendix 1.
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## Skills and Scope Ranking Procedure
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Ranking — evaluation of an employee's scope and skills level — should be done at least once per year.
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The ranking is done first within the team,
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by all team members (including self-assessment) and coordinated by team coordinator.
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The rankings, together with individuals' goals and some related notes are then provided to CEO,
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who will assemble a group of at least two additional people,
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so that there is a good oversight of the whole company.
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This group will review all rankings
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and make sure that there is general alignment between the teams.
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For new employees, the ranking is evaluated by the people interviewing an individual.
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Their goal is to asses the employee's level of skills as well as the scope of responsibility,
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that the employee is planned to accept in coming months.
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As it is usually very difficult to start a job as a manager
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or similar role with higher scope from the very beginning,
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a staged salary approach will be preferred.
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## Work experience
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Refers to years of full-time experience developing software.
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This includes things like:
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- software development/programming
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- user interface design
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- requirements analysis
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- system administration/DevOps
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- managing software teams
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- software testing using scripting/programming tools
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- marketing software
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- selling software
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It does not include:
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- anything that happens before school or during school
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- technical positions that are not software development
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Penalty:
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- Low level/highly repetitive tasks (rote tech support, manual black box testing) are collapsed into one year. (You don’t have three years of experience, you have the same year experience three times over).
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The maximum work experience one can gather is 15 years. We appreciate collected experience after this period as well, but we expect these to then be mirrored in scope factor.
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Work experience is calculated (and salary adjusted accordingly):
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- at the time of the hire
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- on 1st of July every year
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- at the time of skills/scope change if done outside of the normal yearly procedure
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### Amount of Total Salary
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The company’s board will at least once a year
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discuss about the amounts for each of the ranks
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(i.e. every combination of skills, scope and work experience)
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and decide about rises etc. based on the market information.
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## Fixed and Variable Part
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The total amount of the monthly salary consists of fixed and variable part.
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The share of variable part in the total salary depends on the employee profile
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and should generally represent higher percentage with juniors and lower percentage with seniors.
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The variable part is not meant to be an award for exceptional employees
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but rather to compensate the high standard we expect from each employee,
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and encourage gradual improvement.
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The variable part should not be taken for granted.
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When undesired habits of an individual are observed,
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lowering the variable part should hopefully help to motivate them to improve.
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### Determination of the Variable Amount Using Goals
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The variable amount that an employee receives depends on goals —
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these should be straightforward, generally applicable to all team members,
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in some exceptional cases individually tailored, and easily observable.
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Every quarter, the team should hold a [goal assessment meeting](/salary/Goal-Assessment-Meeting), in which they produce the following:
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- evaluation of goals for the previous quarter using *"met"*, *"somewhat met"*, *"not met"*;
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- new goals for team members for the next quarter.
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When an employee's *salary-impacting* goal is evaluated with *"somewhat met"* or *"not met"*,
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the management and the team shall together determine, case-by-case,
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the evaluation's impact on the variable part of salary.
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### Other Reasons for Adjustment of the Variable Amount
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If an individual doesn't meet the expectations for their skills and scope rank, the management can decrease their variable amount until the expectations are met or until a re-evaluation of the skills and scope rank is performed.
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Management can decrease the variable amount in other special circumstances if they arise.
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### Share of Variable Part in Total Salary
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Share of variable part is based on Scope level:
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- Scope 2 - 20%
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- Scope 3 - 15%
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- Scope 4 and above - 10%
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For example — if variable part is 20%,
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a total of 2 000 EUR gross salary represents 1 600 EUR fixed and 400 EUR variable part.
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Based on past experience we notice larger discrepancy and variation through time
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between “expectations” and “delivery” with junior employees than with senior ones.
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This is why we feel the need to motivate juniors more than seniors.
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Seniors also have to comply with a larger number of “goals” than juniors
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as they have to comply with goals of their level as well as all the lower ones.
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Absolute value of the variable part is somewhat similar with lower and higher scope levels.
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## Mapping the agreed salary to the formal contract
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Slovenia's legislation has some peculiarities, which we have to work with, even though they have not been revised for decades. In order to be able to define the salary policy as we feel is best, and still be in line with legislation, the following will be done every time the salary is changed:
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- salary is defined using above stated steps (fixed and variable part)
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- fixed part is then split into "base fixed part" and "experience fixed part", then variable part is added
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- each employee will therefore have three numbers written in the contract (and pay slips), but in reality this will not change a thing - they will still get exactly what was agreed for.
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# Other Compensation
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## Yearly Profit Distribution
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Some part of the yearly profit is distributed to the employees of the company.
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The owners define the total amount.
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The distribution amongst employees follows these rules:
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- the distributed amount for each employee depends on months of employment in the specific year (Sinergise's business year starts on April 1st and ends on March 31st of next year);
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- if someone has been in the company less than 6 months in the specific year, they do not receive their share that year;
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- if someone has left the company prior to the distribution, they do not receive their share.
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- in case of longer absence from the company during the specific year (e.g. when employee is on a continuous sick leave for more than 30 days, when on paternity or maternity leave, etc. - as a general rule all the occasions, when the government picks the salary tab of the employee), the distributed amount is reduced proportionally.
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## First Year Bonus
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As it is sometimes hard to establish a proper rank of a new employee,
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the CEO can grant someone a first year bonus to compensate the requested salary.
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Thus, the one who is receiving this bonus,
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does not receive any additional compensations that year
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(yearly profit distribution, etc.).
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## Other Awards
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In case someone does something extraordinarily useful for the company
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they can get an additional award.
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We cannot write all extraordinary things here as they are, by design, extraordinary.
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However, some examples:
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- Referring a candidate for positions that are most difficult to find
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(research and development positions) -
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referral award of 1 000 EUR gross after we hire the person (when they begin work).
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# Appendix 1 - [The Ladder](/salary/ladder)
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# Appendix 2 - [Salary levels](/salary/levels)
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# Document History
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| Date | Author | Change Description |
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|2021-05-17| mkadunc | replaced "there is no general "increase based on working years" with "there is no general rule to promote employees after a certain amount of time on the same level" |
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|2021-05-13| mkadunc & tcerovski | changed chapter on variable amount and goals #19 |
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|2021-05-19| gmilcinski | added "Work experience" and "Mapping the agreed salary to the formal contract" chapters, modified the [Salary levels](/salary/levels) | |
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\ No newline at end of file |