MAD Mad Money:Deciding the remuneration at RED

Remember the fun times from the Gnostic Centre? One of the most important and
sensitive exercises at the event was creating a preliminary salary structure. This structure had the approval of all team members as it was designed keeping in mind the exponential growth for everyone at RED.

But now, the team had a much more advanced task at hand—to finalise the Level
movement. The following account describes the events that went into completing the task. It carries forward the format from our previous write-ups of answering the obvious and presumed questions.

Days before the lockdown, the team decided to have a meeting (their last office meeting
for many months to come) and sort out the remaining components of the salary
structure. The agenda for the meeting included:

So, did they:find the answers?

Not really. The ideas on the table were either not quantitative or fell short
because of some other reason. In short, Totally.RED had transformed into
Totally.Chaos.
And to add to their trouble, before they could decide on their
next meeting, a lockdown was announced.

One of the biggest
mathematical mysteries
is thenumber called
competitive salary.

OMG!howdid they get through that?

They had more meetings—online

Salary structure

While the chart had a few answers, the
remaining questions still seemed like a
paradox.Level movement would require a
monthly performance evaluation so that
people could go to the next level in 2
subsequent quarters, provided they are really
good. But this would also affect their variable
component. At the same time, the evaluation
needed tobe quantitative for accuracy. This
complicated things further, and there seemed
like no solution even after deliberating for
weeks in multiple meetings.

Can you help me with a better example?

Sure.

If a performance evaluation takes place
every month, it would require a quantitative
framework in place, and an executive to
work on it full-time. And that someone
would bea Talent Lead incase of RED.
Unlucky for them, they didn’thave one yet.

Moreover, RED wanted to have an equitable playing field for everyone,
where putting in the extra effort translated to better compensation. But
this thought led to more unanswered questions like:

  • There are many Levels and types of jobs—How do
    you strike a balance?

  • What if someone grows very regularly and there are
    no more levels left for them?

  • How to justify the entire process?

What happened next?

The meetings were ending inconclusively, one after the other. Around
the sametime,the Head Coach was trying very hard to get the team on
track, but theprocess was stillquite complicated. Fortunately, some new
opinions/ideas started seeping in:

To simplify the process, the head coach announced, let’s focus on onlyquantitativetraits right now. All the team members agreed as they were struggling with the followingpoints:

There was no process to measure creativity—How to judge a logo if it looksbetterto command more compensation?

How do we measure work based on time? Someone
could complete a task swiftly,but a delayed
feedback can make their evaluation suffer.

The head coach came up with another life-saving idea by this time—What if the variablecomponent is based on profits, with a predefined upper-limit on it? This meant that if thevariable percentage is capped at 10% of CTC, someone earning 60k a month can getup to 6k additionally, depending on RED’s profitability.

All the team members agreed to the proposal as it meant:

So what did they do next?

The team started working on a new salary structure with
variable pay every three months. This new structure also
included responsibilities on each Level.

Eligibility for Level Movement (Qualitative + Quantitative)

Hey! Did they forget about the quantitative KRAs?

No no. Not at all.

While the the team was thinking about
Levels and the responsibilities they
entailed, in the process, they also
found a way to have a quantitative
measure of performance. They
concluded that, to go to the next
level, a person should be
contributing to projects that bring
in revenue proportional to their
CTC. It means that a person working
on projects that dont’t bring in income
proportionate to the salary shall be
considered an underperformer.

Other quantitative evaluations included bringing in
Friends of RED (Specified for each level)

As levels move in two directions—up
and down— what if somebody had to
be brought down a level?

That’s a very good question. Exactly the one, the team had to answer next.

It was concluded that if someone is not fulfilling
their responsibilities for an extended period, they
will be notified first and asked to buckle up. But if
they don’t comply, the onus lies on the team
members of the concerned associate, to provide
reasoning on whether that person should be
retained or not. If the majority believes there is
no merit in retaining, the concerned person shall
be asked to leave.

After all this was done, the salary structure was further detailed out by adding
tax-saving mechanisms, with benefits of team members in focus. And this is how
RED’s salary structure came to being.