The Salary Dilemma

The last couple of months my colleagues and I have been evaluating different alternatives for „Personalverantwortung“ (I’ve asked several native English speakers and it seems like there is no appropriate translation, so I will use the German term).

We’ve talked about what exactly we mean by referring to Personalverantwortung at Jimdo and we came up with seven different elements. One of these elements is, obviously, remuneration. People want to get salaries, and there needs to be some kind of mechanism in place to decide upon the salary level. The „traditional“ mechanism for doing this is some kind of line manager who does (mostly annual) performance reviews with individual salary negotiations. Perhaps that’s the best (or the least bad) solution in many contexts, but as I mentioned, we wanted to evaluate other options. So what we did was 1) read different articles on this topic (eg [1],[2],[3]), 2) talk to a lot of our teams about this topic. The conversations were very insightful in many different respects. What I found most interesting was a thought that was expressed in almost every conversation. It goes like this:

„The person/group who decides on my salary need to be very close to me, so that they can evaluate the quality of my work. At the same time this person/group cannot be on my team, because my behaviour towards this person/group will be different as soon as he/she sets my salary. Oh wait a minute...“

This is what I call the salary dilemma: Whoever decides on the salary of a person needs to be close and not close to this person at the same time.

A line manager has to deal with exactly this problem: He/she is supposed to evaluate people. In most cases he/she is either very close to the team and therefore might cause disfunctional behavior (eg people not asking for help when their annual review is close) or he/she is far enough from the team to avoid this kind of disfunction. But then the remuneration will most likely become very similar to roulette („Haven’t heard anything bad about you. What about a 3% raise?“) Both options don’t look very promising. I am not saying that it’s impossible to find a good balance, and I have seen very good managers doing a great job in creating a high-trust environment with their teams. But I believe it’s very challenging.

Of course we can replace the line manager with a different person or some kind of committee, eg a peer group. This might be better in some respect, but the dilemma stays in place.

I am aware that there are many very different models for renumeration like self-selected salaries, uniform salaries, salary formulas etc. And we’ve been thinking about ways to avoid or minimize the effects of the salary dilemma. At this point we are close to run a couple of experiments to learn more about not only remuneration, but the whole topic of Personalverantwortung. I might blog about this (and all the other insighst I’ve had so far) later.

But for now I am asking for your input:

How do you deal with the salary dilemma?

Please leave a comment or send me an email to arne[døt]roock[ät]jimdo[døt]com

P.S. I would like to thank all the smart people with whom I’ve had the opportunity to discuss this topic: Not only my great colleagues from Jimdo, but also Russell Healy, Simon Marcus, and Jim Benson. You guys rock!

References

[1] Open Salaries at Buffer

[2] Merit Money

[3] How salaries, career progression and reviews work in a #NoManager company


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Like this post? Then you should check out my previous post Stop bashing managers! and one of my newer posts Radical Transparency?

Lean Kanban Central Europe 2014

Only three weeks to go before the 4th edition of Lean Kanban Central Europe takes place! Although I am not involved in the organization any more, I am still part of the Board (and proud of it). As Pawel mentioned in this blog post, we are constantly experimenting with some elements of the program. This year‘s biggest change will be that we will have dedicated tracks for different topics: Kanban, Leadership, Learning, Management, and Project Management.

I chose to organize the project management track. The reason for this is that I have met many project managers who realize that the traditional way of managing projects is not sufficient any more. With LKCE we want to show them new perspectives on project managements, provide them with new tools to experiment with and create a forum for sharing experiences with their peers.

I will kick the track off with my talk The Beauty of Problems where I will show that problems are so much more than nasty things we need to get rid of. They are great opportunities for learning and improving the system. The talk will be heavily influenced by the work of Russell Ackoff and contain some of my own experiences.
After the Pecha Kuchas (Keynote style as last year), Martin Jensen will argue that Culture is THE Competetive Advantage Martin is a smart guy with a great deal of experience with change in large enterprises like Tui.com. He is also a very entertaining speaker. If you haven‘t done already, you should definitely watch his talk from last year.




Joshua Arnold will continue with his talk Value and Urgency: The Power of Quantifying the Cost of Delay Anyone who has ever heard The Don (Don Reinertsen) talk will know a little bit about the concept of Cost of Delay. Unfortunately, few people have really first-hand experience with it. Joshua is one of them. Check out his great experience report from Maersk Line.
After his fabulous keynote from last year, Troy Magennis agreed to speak again at this year‘s edition. His topic is Risk Management and Forecasting Using Un-reliable Data Troy is the guy who not only understands statistics, but also is very capable to explain it to others and to show them how it can be used in daily work without being a statistician.
Conference days are long and it can be hard to maintain attention. Shorter talks might do the trick at the end of the day, and therefore I decided to close the track with a couple of Lightning Talks (10 minutes each). Tim Lossen will talk about the Failure Culture at Wooga, and my brother Stefan will share his experiences with participatory decision making models.

Pawel, Klaus, and Markus grabbing their well-deserved Whisky ;-)

Looking at the talks I think we‘ve managed to put together a great variety of good speakers and interesting topics. Thanks to the rest of the board: Pawel, Klaus, Wolfgang, Karl and Markus. You guys rock!

See all of you in Hamburg. If you haven‘t done yet, register today: www.lkce14.com/register


P.S. In case you wonder about this year‘s keynotes: After trying for the last three years, we finally managed to get Henrik Kniberg as well as Tom and Mary Poppendieck. No further introduction required:-) The third one will be Don Reinertsen who will speak about Robustness this year.

Stop bashing managers!

Recently I‘ve heard people say things like: „If we only could get rid of all managers, life would be good.“ Or „A truly agile organization does not have any managers.“ While I agree that many organizations do need a different kind of management, I deeply disagree with the notion of getting rid of all managers. Here’re some reasons why.

It’s insulting

At the Lean Software and Systems Conference 2012 (before being renamed to Lean Kanban North America) I saw a great Lightning Talk which startet with the following, made-up, pie chart (and as you know, I like made-up charts):

What the chart basically says is that in reality we have very much managers, like it or not. And my experience is: Most of the managers are good people. If they do what we consider bad management, it is mostly due to strange policies and bonus systems that were in place and influenced their behavior.

If we say that we need to get rid of management, we will most likely insult all these people – no matter if we intend to do so or not. They will hear things like: „These guys think that I have done a bad job in the last 10 years.“ I don’t thing this is the way to go if we want to change the world of work.

Setting missions and aligning teams

Although I consider myself a pacifist, I am a big fan of the concept of Auftragstaktik and its implications for business. If you haven’t done already, I really recommend reading the book The Art of Action by StephenBungay. You can also find a free interview with him here.

We like autonomous teams that figure out how to accomplish their mission for themselves. They experiment their way forward through unknown territory and they will figure out how to do it. But where do the missions come from? And how do we make sure the missions of our different teams are aligned with each other? Sure, in theory the teams could set their own missions and coordinate them with other teams. My experience just tells me that this is very hard (if not impossible) for teams to do.

Managing interactions  and (re-)designing the system

According to Russell Ackoff, „The performance of a system is never the sum of the performances of its parts. It’s the product of their interactions.“ If we agree with Ackoff’s statement (and I’ve seen a lot of evidence for this at different occasions) then someone has to manage the interactions of our system’s parts. In the Agile world teams are probably the most important parts of an organization. Who is responsible for managing how the teams interact with each other? Again, theoretically it could be the teams themselves. In practice I doubt that this will work very well (and I will argue why in the section about local optimization).

Another aspect that’s relevant when talking about Ackoff and Systems Thinking is the design and re-design of our system. As far as I can tell, Ackoff was not convinced that continuous improvement is always the best solution. My friend Markus Andrezak likes this quote by Ackoff very much: „To be ahead of the competition you need o leapfrog them.“ What is true for product development is also true for our processes. Ackoff’s examples of how to improve organizations contain a lot of major re-designs. Deming argues in a similar way: Because it’s the system that causes the biggest part of the performance (Hi, PawelJ I think Deming talks not only about variability here, but also about performance!), and not the individuals, we need to change the system if we want real improvement. According to Deming, this is exactly what (good) managers are there for.

Recognizing local optimization 

Agile teams are supposed to work on accomplishing their mission with a laser-focus, and thereby with great speed. That’s one of the main reasons why we set them in place. But this focus comes with a price: local optimization. The Don of Lean (Don Reinertsen) argues that we will most likely see local optimization when the benefits and the costs of an action occur at different places in the system (see this great talk by Don for deeper insights). This fits my observations with autonomous teams: They tend to sub-optimize the whole in order to optimize their team’s outcomes. Nothing to complain about here. We cannot expect teams to focus on their missions and take care of the whole company at the same time. And, again, it’s exactly what Systems Thinking tells us (you can probably tell by this post that I’ve been reading a lot of Ackoff’s stuff recently:-): „If you optimize the parts, you will sub-optimize the whole.“ If I get this right, one conclusion of this is that someone needs to have a bird’s eye view on the system to recognize when local optimization is about to happen. Yes, I do think the big picture is important (although it has become a kind of a bad word).

Russell Ackoff - read his books!

Changing the team setup

Teams are capable of doing remarkable things. I’ve seen teams that were considered to be the worst performers in the company improve dramatically and perform really well after some of their boundaries were changed. At the same time it’s true that sometimes teams are highly dysfunctional and that they won’t change without external influence. As a last resort, taking people out of the team, adding new people to an existing team, or even abolishing a team completely can be the right thing to do. Teams have a very hard time doing this without external help. In many cases they will not even realize that there is a dysfunction or, when they do, they won’t talk about it to anyone.

Conclusion

First of all we should not offend all the people with management titles out there.

Further more I’ve argued that we need people who are not part of our autonomous teams. They need a good standing in the organization and mus have a good understanding of our systems. They are responsible for managing the team’s interactions, re-designing the system and observing and acting upon local optimization. And sometimes they need to change the setup of a team. For me, that’s exactly what a good manager does. So let’s stop bashing managers and start working on establishing another understanding of management!

Why I work with Jimdo now

Today was my first day with my new employer Jimdo. For the last nine years I worked with it-agile in different positions, the last three years as a coach/consultant and trainer for Kanban. I‘ve learned so much during this time and and got to know so many different companies - small startups and agencies as well as medium sized companies and some large multinational corporations. I still think it-agile is one of the coolest companies on the planet, and I am really grateful to my colleagues, especially Henning and my brother Stefan.  And if you are into Agile and like to coach and train people, I strongly recommend that you consider applying for a job there!

So why did I decide to leave it-agile then? As you can imagine, it was a very tough decision. The main reason is: I am really curious what it feels like to go to the "other side of the fence" and work with a product company long term. For me, one of the biggest upsides of working as a consultant can also be a big downside: You see a lot of different organizations and talk to so many interesting people. At the same time chances are that you leave an organization and start a new engagement when the first steps are taken (and starts becoming really interesting). And even if you are involved for a longer period of time, you will always stay an outsider - you can participate in the successes of your client, but still you are always the external consultant. So I decided that it‘s time for me to move on and start a new career as an embedded person in a product company.

Why Jimdo? I first met the Jimdo guys back in 2010. Since then we always stayed in touch and one day they asked me to do some coaching with them. So they have been my client for the last three years, and many Jimdudes became my friends quite quickly. When I first visited their office, I felt immediately that this company is special, and there were so many situations where this impression was renewed. Here are just a few examples: Having a Feelgood Manager (watch this video about Feelgood Management (German)), an architect (and I am not talking about a software architect here) and a chef working at Jimdo; a napping room and a fancy aquarium room everyone can use when he/she needs to rest; no time tracking; really self-organized and empowered teams etc.

And these are only the obvious, observable things. Even more important is the really amazing company culture! And of course a great product with a great deal of innovations to come in the future! You might have noticed, that I am quite excited about my new employer;-)


What will I do at Jimdo? Here you can see a clipping from my contract of labor.

For those of you who don‘t understand German: It says that I will be employed in my role as "Dr. Rock" from January 2014 on. What does it mean to work as "Dr. Rock?" I don‘t know exactly, and neither do the founders who hired me:-) The important thing for both parties was that we wanted to work with each other and that there was a huge amount of mutual trust. So we decided to sign the contract and figure out later what exactly my tasks would be. Now you might understand why I wrote that Jimdo is special.

And what did I do on my first day? Started my two day internship at the awesome support team. And as expected, I learned really much about our customers!

P.S. If you are interested in Jimdo, check out the blog post I wrote about the Open-Prioritization-Meeting, the support and our trip to Stockholm