“Salary transparency has to be there from the start.”
“Salary transparency has to be there from the start.”
Our CEO Johannes Widmann on salary transparency at our company: why we introduced it and how we decide on salaries.
Question: What exactly does salary transparency mean at your company?
Johannes: At our company, everyone knows what everyone else earns — down to the last cent.
We have an Excel sheet for our financial planning, and that includes salaries as well as perks like a company car, a company bike, or a public transport pass. On top of that, we also have an employee ownership model, which Hans-Peter talked about in an earlier interview.
Everyone can access the financial spreadsheet. We also talk openly about salaries — both in one-on-one conversations and in discussions with the whole team.
Why do you have salary transparency?
I’m convinced that a team can only work well in the long run if people trust each other and can talk openly about everything — including money.
It helps us avoid conflict, because issues get addressed right away. It also prevents rumors from building up and creating a bad atmosphere.
Without transparency, trust starts to slip. And that’s especially risky when you’re dealing with something as emotional as salary.
Without transparency, trust starts to slip. And that’s especially risky when you’re dealing with something as emotional as salary.
How do you decide on salaries?
The first step is that Hans-Peter and I, as managing directors, figure out how much we can spend on salaries overall in the coming financial year. If we earn more, we pay out more. Over the last few years, we’ve always been able to increase salaries by well above inflation.
The second step is deciding how each person’s salary should compare to everyone else’s. We ask ourselves how much each individual contributes to the company’s success. The bigger someone’s impact on the company, the higher their salary.
Or to put it another way: the bigger their slice of the overall salary pie.
To be honest, this is ultimately based on our gut feeling.
Some companies let team members propose their own salary. Why don’t you do that?
In my experience, a lot of people find it hard to talk about salary — especially in front of a group. After all, who wants to stand up and say, “I’m worth 1,000 euros more than my colleague”? In reality, many people tend to hold back and undersell themselves.
That’s why Hans-Peter and I take responsibility for making those proposals and then discussing them with everyone.
Many people tend to hold back and undersell themselves. That’s why Hans-Peter and I take responsibility for making those proposals.
So how do you make those salary proposals transparent?
We speak to each person individually about their planned salary, and then we open it up for discussion with the whole team.
Have there ever been real debates about salary?
Yes, definitely. There have been questions along the lines of, “Why am I earning so much less than my colleague?”
When that happened, we shifted the perspective and looked at the whole pie. And the person who raised the question realized that they, too, would have given that colleague a bigger share — in fact, an even bigger share than we had. That would actually have led to an even larger salary gap.
That made our proposal easier to understand, and it was accepted. It’s a good example of how transparency can help bring people along.
That said, this kind of approach only works in a small company like ours.
Hans-Peter always says we’re “long-term greedy”: we want to succeed over the long term.
If salary transparency works well in a small company, why doesn’t everyone do it that way — especially start-ups?
Probably because salary transparency has to be in place from the very beginning. Otherwise, it’s very easy to end up creating big salary gaps.
Let’s say I’m starting out with five people I need. One of them has the confidence to ask for more money and threatens to quit. I give in — but I can’t pay everyone more without putting the company at risk. Just like that, I’ve created differences that are hard to explain later and even harder to undo.
For Hans-Peter and me, it was clear from the start that we didn’t want that. Hans-Peter always says we’re “long-term greedy”: we want to succeed over the long term. And that only works with a team that feels like it’s part of the company and trusts one another.