Fair pay matters a lot. It’s important to our business that we attract and retain top talent, and it’s important to me personally. I care about the Atoms at Atomic; they’re my friends. For them, and for my own integrity, I want a fair and consistent value exchange for everyone at Atomic.
This post is the fourth in a series about addressing unconscious bias and making Atomic a more rewarding place for everyone to work.
- Diversity for Diversity’s Sake? – 9 Reasons We Want to Be Gender Diverse
- Writing a Gender-Neutral Job Description
- Avoiding Bias in Our Job Interviews
- Our Approach to Compensation Adjustments
- Improving Our Support for New Parents
Our Initial Approach
Before 2015, raises at Atomic happened one of three ways:
- Atomic gave everyone a flat percentage raise based on a macroeconomic shift that managers observed.
- A manager noticed that someone was deserving of a raise based on growth.
- Atoms who wanted a raise would make a case to their manager for that raise.
Although individual compensation information has always been private at Atomic, we’ve strived to have a consistent and fair compensation structure across all Atoms. That means compensating for experience and skill, not the ability to self-advocate for a raise. It also means watching the actual pay data to avoid wage compression, and working hard to avoid wage gaps between people with similar roles.
When we were smaller, had a single manager, and only a few people to keep track of, we were able to implement this simple system.
Current Context
Today, Atomic has four offices in three U.S. states:
- Ann Arbor, Mich.
- Chicago, Ill.
- Grand Rapids, Mich.
- Raleigh-Durham, NC
We have 11 managers working with direct reports of various jobs. Some managers share their responsibility with a pair, while others are solely responsible for their team. Many of them manage people with jobs common across multiple offices, while a few manage individuals who may be the only person with that job title in the whole organization.
Managing compensation is undeniably more complicated than it was when we were all in a single office years ago.
Our Compensation Philosophy
To address the needs of our compensation system, we reviewed our already-established compensation philosophy:
- Money is a weak motivator, but a powerful demotivator. We want people to work at Atomic for many reasons beyond just pay.
- Individual compensation is broader than salary and should include benefits such as profit sharing and healthcare.
- Our goal is to be market-competitive and maintain a profit margin allowing us to safely operate and grow without outside capital.
- We should avoid unfairness, real or perceived.
One size doesn’t fit all for compensation philosophies. A company’s philosophy on compensation should be driven by the type of culture and standards that the organization desires to create. Therefore, different companies may choose different philosophies or strategies for compensation. For example, some may choose to underpay or overpay the market; others might decide to focus on direct pay and ignore benefits, etc.
Atomic’s philosophy implies a few key things about our company and the people that we employ:
- We want Atoms to enjoy coming to work. This means we need to have an environment that’s both enjoyable and fulfilling.
- Our benefits need to be top-notch. We need to commit energy and resources to continually reviewing and tuning our benefits.
- We don’t want anyone to stay at or leave Atomic solely because of compensation.
- Atoms need to understand our approach and trust the people who are managing the compensation system.
- Our market-competitive compensation is based on above-average market targets. Our philosophy doesn’t accommodate employees who aren’t outstanding.
Our Compensation Process
Every year we evaluate and adjust compensation for every employee.
The process starts by evaluating the current market dynamics for pay. Next, using a combination of market data and managerial discretion, we adjust each individual’s pay. Finally, we conduct a multi-manager data review step to audit the overall result for fairness.
The process works like this for each Atom:
- Identify the market pay target for the Atom’s title, level of experience, and geographical market.
- Qualitatively identify if the Atom is performing below or above their peers for their level of experience. Use all dimensions of performance (consultant skills, technical skills, cultural and company contributions, etc.). It’s not an exact algorithm. Everyone doesn’t need to hit the target perfectly.
- Evaluate the number that was selected against the Atom’s peers. Normalize the salary data to compare peers in different geographical markets.
- Question the decision: Are we being internally fair?
Our process doesn’t limit someone from making a case for a raise at any time but results in a clear expectation that it’s not required for anyone to receive a regular (yearly), market-driven adjustment without needing to ask for one.
A Good Fit for Atomic
This process takes multiple months to complete each year. We gather and analyze comp market data, model the projected effect of adjustments to our company performance, review every individual with their manager(s), review every individual adjustment again, then re-model the projected effect on financial performance, all before we even begin preparing to meet with each Atom individually.
As a software service company, our product market is broadly the same as our employee market. The two are inextricably linked. Because of that, and as a fully employee-owned company, we continue to believe it’s valuable and vital to ensure all of our employees are always fairly compensated.