Creative Compensation for Small Businesses

By Crystal Wilson 

 

As Flow Office Wisdom was being developed, one of the things that was non-negotiable was a commitment to pay team members above a living wage. Having worked in  jobs ourselves where we struggled to support our families, we definitely were not interested in being the reason that our team members struggled.

With that as a starting point, we knew right out of the gate that we would not be able to offer pay increases for a long time.  As a new business, based primarily on billable hours, we knew we would have to turn our attention to creating packages, raising our rates, and helping our team members find efficiencies, in order to increase our profit margins and work towards sustainability before we would be able to look at increasing our compensation rates.  

 

Creative Compensation

Image courtesy ofrawpixel

 

In order to express to our team that they are highly valued, we have needed to be very creative about how to provide small increases to our compensation package without draining the well, so to speak.  

The most important piece of this puzzle has been the expectations we have set.  We have been very clear with all team members we have hired that the hourly rate is the same across the board, and that it will not be increasing until specific goals are met company wide.  There are many ways that other companies have developed to improve on compensation without raising hourly rates - you can read a few of them here and here.

We have been successful in making small leaps forward with our compensation, and the most important piece to making it work has been transparent communication with our team.  Every team member has full knowledge of our financial data, and they all know what the next goals are in the climb towards an increased hourly rate. They have always known what is expected of them and what they can expect from us in return.  Here are some of the steps we have taken so far:

 

  1. The first team members who came on board with Flow were only paid for time that was able to be billed to clients.  All of the individuals who took this leap and joined in at the beginning were compelled by the vision for what Flow would become.  April spent time with each one, sharing the vision of what this could be, and if they were moved by that they opted in and were happy to sign on to help build this.  This meant that if there were jobs to be done to help build the business, create content, etc… each team member was invested enough to voluntarily participate in those things. We did what we could to offer non-monetary compensation, such as free training and other things of that nature.  These team members were hired as independent contractors, and after a few years we began moving everyone to payroll, and classifying them as employees. We slowly began paying for more and more of the business building pieces; initiating flat rates for training, assisting with the sales process, and writing blogs, and setting a certain number of hours weekly that certain team members would be paid to complete internal tasks, like project management and marketing. As of 2018 we completed the final piece of this which was to pay for team member attendance at monthly team meetings.  

  2. As team members show definitive leadership skills, and begin to take interest in assisting with the growth of the business, we offer the option to move to a salary position rather than the hourly contracts that team members all begin with.  This provides the team member with a stronger sense of stability, removing the fluctuation that can occur as projects come and go on an hourly pay model.

  3. Not financially relevant, but very important to this, is our commitment to providing our team members with a degree of flexibility in their working life.  We know, based on team member feedback, that this is one of the most valuable aspects to them of their work with our company.

  4. We have in the past offered an opportunity for team members to earn commission on sales that they participate in.  This policy has evolved overtime, eventually becoming obsolete, but during the time it existed, it was an excellent opportunity for team members to increase their financial gain without us increasing pay rates.

  5. As of September 2019 we will be introducing health spending accounts for all team members who have been with us for a prescribed amount of time.  We made the choice to go with Health Spending Accounts rather than a traditional benefits package both because it is far more flexible and will allow our team members to access health and wellness options that align with their values, and also because it means there is a set amount we know we will be spending, so financially it is more manageable for us.

  6. We are in the process of moving away from the “flat” model of pay that we have been operating under, and in 2020 will begin moving to a compensation grid that rewards team members who develop their skills and exhibit those qualities that add significant value.  All team members will have access to the details of each level within the grid, and will be able to set their goals in relation to how much they want to earn.

Balancing our values around employee compensation and the financial sustainability of the business has been one of the most important and complex issues that we have focussed on as we’ve grown Flow over the last 6 years.  We are excited for the big steps we are going to be able to take in the next few years, and we are so grateful for all of the team members who have understood and worked within this non-traditional model.

What are your values around compensation?  Have you been able to live into them within your business?  Let’s talk about it!