workbery.com – The world of work is changing a lot, including when it comes to salaries. More and more companies are trying out new payment models. This is called New Pay and ranges from a standard salary through transparent team negotiations to the desired salary. We present the most common approaches – and companies that have tried them.
New Pay: what is it actually?
People in Germany don’t talk about money: companies often don’t even give a salary range in their job advertisements. In interviews, pay is usually addressed towards the end, often after two or three rounds. “Many people don’t even talk to their partner about their salary,” says Nadine Nobile. “That urgently needs to change.”
This is exactly what Nobile is working on. She is co-founder of the New Pay Collective – a network of people and organizations that are rethinking pay. They coined the term New Pay for this.
More and more companies are experimenting with payment. “The spectrum is wide – from the desired salary to a standard salary,” says Nobile. The digital agency Business Unicorns advertises the salaries and lets applicants make counter-proposals. The Berlin startup Einhorn has tried several approaches – and documented the whole thing in detail. It quickly becomes clear: New Pay is about much more than just money.
The term New Pay is derived from another trend term: New Work. This stands for a change in values in the working world – towards more personal responsibility, eye level and flat hierarchies. “We work in a more self-organized manner. There is often no formal manager at all,” says Nobile. New Pay aims to reflect that. “Employees want to understand and have a say.” Also when it comes to salary.
Earn what you want: The desired salary at Wigwam
You can do that, for example, at the Berlin communications agency Wigwam. There, each employee says what he or she would like to earn. In 2016, the agency was converted into a cooperative, currently with 27 equal partners. Instead of management, there is now a board of directors and a supervisory board, which are elected anonymously. “We have always worked in a self-organized manner,” says Eugen Friesen, who is responsible for conception and strategy.
That should also reflect the remuneration. For this, everyone has written a sum on a piece of paper. “It was a social experiment for us,” says Friesen. The result was an amount that was 20% over budget. “We thought: It’s quite realistic to get there,” says Friesen.
In the meantime, only 8% are missing from the sum of all desired salaries. “We were already at 100%. But the desired salary increases every year,” says Friesen. Once a year there is a round of adjustments, and no one comes out with less. In addition, a minimum salary of €2,500 per month was set.
“We always talk openly about the money,” says Friesen. In each round, there is discussion in small groups – then the employees enter their wishes in a table that can be viewed by everyone. That takes courage and mutual trust. Overall, it was worth it for Wigwam: “The internal processes can sometimes be exhausting. But it is the best model we have found so far.”
The same for everyone: The standard salary at Quijote Kaffee
Quijote Kaffee from Hamburg takes a different approach. The standard salary applies to the coffee roasting company, based on the average wage in Hamburg in the manufacturing and service industries: 5,200 euros for full-time employees. “That’s enough for all of us,” says the founder Andreas Felsen, also known as Pingo. “And it’s more than in most coffee roasters.” You just have a luxury situation – your coffee is always sold out.
At Quijote, further training is also paid for – and explicitly desired. There are also allowances on request: an additional 300 euros for each child, as well as for those who have to look after their parents. Employee needs take precedence over profit maximization. “Quijote isn’t just our hobby, but we’re not aiming for a Ferrari either,” the website says. The profits, apart from the necessary reserves, are donated by the roastery or reinvested.
The uniform salary is a logical consequence of Quijote’s non-hierarchical way of working: “We are both bosses and employees,” says Pingo. All decisions are made by consensus. “If someone comes along and wants it different, we would discuss that,” he adds.
| Apply for job | Add a job postion |
The salary formula: At the Ministry Group, the team awards points
The Ministry Group has also redesigned the remuneration of its currently 40 employees. “Before, the management decided that we wanted to get away from it,” says Managing Director David Cummins. “We needed a comprehensible process.” Working groups researched different approaches for two years. They decided on a salary formula.
“It was terrifying at first: so sterile,” says Cummins. The salary at the Ministry Group consists of several components: self-assessment and external assessment, commitment, responsibility, further development or mentorship. The teams meet twice a year to rate everyone using a point scale. Salaries are increased once a year or remain the same – nobody should earn less.
Salary rounds were suspended during the Corona period: working from home and short-time work made face-to-face meetings and salary increases difficult. “But we’re picking that up again in a couple of months,” Cummins says. He now sees the advantages of the salary formula: “People have an influence on how the system works. That’s worth a lot,” says Cummins.
Companies need to become more transparent
Very few companies are still embarking on such experiments, says Nadine Nobile. “Lots of people watch and are amazed – or keep saying that it’s not possible.” But the number is growing. Even large corporations like Bosch or Deutsche Bahn are taking part. At Deutsche Bahn, employees can choose between a higher salary or more vacation each year – or reduce their working hours.
“Soon companies will no longer be able to afford to continue as before,” says Nobile. “Especially in view of the new legislation.” The EU Parliament recently approved a guideline for more wage transparency. Among other things, companies should indicate salary ranges in job advertisements and disclose gender pay gaps. We will therefore have to talk about money much more often in the future – fortunately.
