App: Compensation v1.0

Strategy, Recommendations, and Approval

Summary

This App is intended to answer three key questions in defining the company’s compensation process:

  1. What role decides questions of compensation strategy, such as the focus areas for increased or decreased expenditures across geographies, circles, functions, and so on?
  2. How does the company determine the appropriate salary range for employees? What factors are key, what values do we emphasize, and what inputs are reviewed?
  3. What role uses those inputs to place employees within established salary ranges? Does that work have any constraints, process stops, or checks and balances in place?

The App leverages input from sub-circles to adjust compensation appropriately, but limits such input to the sub-circles in which a partner spends at least 25% of his or her time. The intent is to build a scalable model that is transparent to employees, manageable for the roles in charge of its administration, and fair to employees and the company in the results it generates. Questions and comments can be sent to: info@arca.com.

Design Notes

  • References to @Strategy_Council in this app should be replaced to refer to whatever role or sub-circle holds a relevant accountability for setting the company’s strategic direction with regard to compensation.
  • References to @Human_Resources in this app should be replaced to refer to whatever role or sub-circle holds the Domain of Partner Relationships as defined in Section 5.2.5 of the Constitution, or to the role holding an accountability for setting the compensation of employees if the Domain is not delegated from the Anchor Circle.
  • The members of the Compensation Committee, defined by policy herein, should be the role(s) which are best suited to review compensation recommendations.
  • This App contains a Policy that constrains the authority granted to the role of @Human_Resources by defining in advance the factors that the role may consider in making compensation recommendations. Adjusting this policy to fit the needs and preferences of the adopting company should leave the App otherwise adoptable and enforceable while tailoring to the adopting company.
  • The company authoring this App uses the term “employee” in lieu of “Partner.”

Adoption Requirements

  • This app can be adopted as governance of whatever Circle controls the Domain of ‘Partner Relationships,’ as defined in Constitution Section 5.2.5, or by the Anchor Circle in the event that delegation of some portion of the Domain of Partner Relationships does not prevent such adoption.
  • This app was designed for use with Holacracy v4.0; it may not be compatible with other versions.

Core Governance to Adopt

Add Role: Strategy Council

Accountability: 

  • Defining, on at least an annual basis, the company’s compensation strategy and communicating that strategy to @Human_Resources

Add Role: Human Resources

Accountabilities:

  • Offering advice and feedback to @Strategy_Council regarding compensation strategy and applicable laws and regulations when useful
  • Reviewing, on at least an annual basis, the compensation of each employee and making recommendations for adjustments up or down
  • Using a standard and documented process to regularly solicit the feedback of the lead link of any circle where an employee spends at least 25% of his or her time to review that employee’s fit for role(s) and the lead link’s perspective on allocation of available resources within the circle for the purpose of making compensation recommendations
  • Striving to make compensation recommendations between August and October, unless no compensation recommendation has been made for a given employee for fifteen consecutive months, in which case making such a recommendation as soon as practical
  • Providing employees with information regarding their total compensation, including bonus programs and benefits packages, at regular intervals
  • Monitoring for liability as a result of variations in compensation

Add Role: Finance

Accountability: 

  • Serving on the Compensation Committee if required and to the extent defined by GCC policy

Add Role: Country Leader

Accountability: 

  • Serving on the Compensation Committee if required and to the extent defined by GCC policy

Add Policy: Compensation Adjustment Approval

No role in the company may set or modify the compensation to be paid or offered to any employee or prospective employee without the approval of a majority of the following roles: GCC Lead Link, @Finance, and @Country_Leader for the country in which the employee is based. This group shall be known as the “Compensation Committee.” If an employee is based in a country without a designated @Country_Leader, the GCC Lead Link will appoint a third person to serve on that employee’s Compensation Committee from among the @Country_Leader role-fillers. If the role of @Country_Leader is filled by more than one role-filler for a given country, the GCC Lead Link will appoint one from among the role-fillers for that country to serve on the Compensation Committee for that country’s employees.

Add Policy: Compensation Adjustment Recommendations

The role of @Human_Resources must use the following criteria when making compensation recommendations pursuant to that role’s accountabilities:

  1. Recommendations must be consistent with the compensation strategy defined by the @Strategy Council.
  2. Recommendations must reflect the value of the employee given his or her contributions to the organization, as measured by:
    1. The complexity of work the employee is asked to perform on behalf of the organization, based on the expectations of the organization and the talents of the individual rather than the particular roles filled by the individual at any given time;
    2. Objective qualifications to perform core functions; and
    3. All factors required by local law or regulation, including tenure in the organization where tenure is a required factor.
  3. Within the established compensation scheme, recommendations should recognize and reward leadership, communication skills, and teamwork.
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Date: June 2015

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