by Aaron Dignan
Ensure that current salaries reflect your own definition of fairness and that you have a rationale or a formula that explains the status quo. (Because you’re going to get a lot of questions.)
Start with general education and discussion about the company’s finances and approach to compensation. Make sure everyone has a chance to understand the theory behind the current approach.
Assess whether your team has the comfort and confidence to voice any concerns that might be raised by freshly transparent salaries. The more open the culture is, the more likely you’ll weather the initial bumps and bruises of opening up.
Ask for consent from everyone involved, and decide ahead of time if you’re looking for total buy-in or majority rule. This is an extremely contentious topic, and you run the risk of losing people if you push ahead irreverently. It’s okay to start with one division or unit that’s willing to charge ahead and prove the model.
Publish salaries in an open and easily accessible forum, and convene a combination of all-hands and active-team meetings to create space for discussion and sensemaking. Encourage anyone and everyone to speak up if they see inequity in the compensation system. Be prepared to make adjustments, provide counsel, and say good-bye to a few people who may not be able to metabolize the new world order.
As the volatility of the initial announcement wears off, ensure that your approach to continual salary adjustment is compatible with your newly transparent culture. Assuming it is, sit back and enjoy the benefits of living open!
Eliminate Bonuses. Incentive compensation is counterproductive. At best, it rewards behavior that was already happening and, in the process, strips that activity of its intrinsic value. At worst, it actually promotes negative behavior in the form of sandbagging, unhealthy competition, and manipulation. To make matters worse, individual performance is a myth. Not because there aren’t heroes among us capable of amazing feats—there probably are software developers that code ten times better than the mean. But being a great player is not the same as winning the championship. Just ask the 2004 U.S. men’s Olympic basketball team. A team consisting of MVPs such as Tim Duncan, Allen Iverson, LeBron James, Dwyane Wade, and Carmelo Anthony lost . . . to Argentina. Why? Because they lacked chemistry. True performance—the kind we ultimately care about—is a team sport. So instead of taunting people with bonuses, pay above market for the best talent you can recruit, and get out of their way. If you really want to reward your team for business performance, do it in the form of profit sharing proportional to their percentage of the salary pool. That metric is harder to game, and it brings everyone together.
Compensation in Change
Because compensation is often opaque and connected to roles and titles, the work of reinventing the OS and shining a light on what’s really going on can provoke anxieties about this dimension. Those who benefit disproportionately from the status quo may be hesitant to be exposed, either out of guilt or for fear of corrective measures. Those at a disadvantage may not even know, but confronting the facts may make them feel undervalued or underappreciated. While not always possible, it can be helpful to provide some downside risk protection for everyone, such as “while we adopt pay transparency and new approaches to compensation, no one will cut your pay without your consent.”
Questions on Compensation
The following questions can be applied to the organization as a whole or the teams within it. Use them to provoke a conversation about what is present and what is possible.
What is our approach to compensation?
What other benefits or services do we provide?
What incentives, if any, do we offer?
How do we define and ensure fair compensation?
What mechanisms have we put in place to reduce bias in compensation?
How are changes in compensation triggered and conducted?
Do we offer profit sharing or equity compensation?
How do our approaches to membership and compensation interact?
What does it mean to be People Positive about compensation? Recognize that compensation is a hygiene factor that should be fair and generous enough to not matter. Keep the focus on autonomy, mastery, and purpose—conditions that actually support motivation. If you can, move to profit sharing (or a similar construct) to connect everyone to the overall success of the organization.
What does it mean to be Complexity Conscious about compensation? Accept that no formula, leveling system, skills matrix, or series of job titles is going to sufficiently capture the complexity of a real workforce. Only transparency, dialogue, and judgment can make sense of what is fair, and even then you’ll be grappling with inherent issues of bias and privilege that will not be easily eliminated. Compensation can’t be solved, it must be tuned.
USING THE OS CANVAS
Now that you’re familiar with the dimensions of the OS Canvas, let’s briefly talk about how to use it. Like many tools, the canvas can be leveraged in a variety of different ways. At The Ready we’ve seen teams use it descriptively, to articulate their way of working (or someone else’s). We’ve seen teams use it diagnostically, to explore a positive or negative pattern they’ve noticed (e.g., why do new hires feel so confused about our onboarding process?). And some use it aspirationally, to imagine ways their firm might evolve.
For our part, we most often use it as a sensemaking tool—to map stories, tensions, and experiments that are happening in the wild—asking the teams themselves to interpret what’s going on. Regardless of method, the canvas has a tendency to produce epiphanies in teams as they begin to think systemically about their way of working. A meeting isn’t just a meeting. It’s a forum for membership. A chance to share information. An opportunity for consent. Or it’s a waste of time. The canvas can provoke that conversation, and that conversation can provoke a change.
READY OR NOT
All decisions involve emotion. When you face a choice, subcortical structures in your brain fire and a range of emotions, instincts, and body sensations unfold, influencing or even arriving at a somatic decision before you’re fully aware of it. This is what is commonly known as a “gut feeling.” This interplay between our various thinking systems is so fast and embedded that we don’t even realize it’s happening. We may cling to the idea that we make most of our decisions objectively and rationally. But it simply isn’t so.
Which is why, at this point in the book, I believe you’ve already made your choice. Somewhere in your mind or your body, you know. Either you believe that we need to change how we work, and you’re going to take that leap, or you don’t and you won’t. From here on out, I’m speaking to the believers. The catalysts. The visionaries. The risk takers. The readers who know in their gut that if we don’t change how we come together as human beings to build and shape the future, then the future won’t be a place we want to be.
So where do we go from here? The answer is easy; the doing is hard. If you hold power over other people—in business, in philanthropy, in education, in public service, in your community, or even at home—it is your responsibility to increase the humanity, vitality, and adaptivity of that system. If you’re with me, here we go.
Part Three
THE CHANGE
Beware that, when fighting monsters, you yourself do not become a monster . . . for when you gaze long into the abyss, the abyss gazes also into you.
—Friedrich Nietzsche
Having had an epiphany about the future of work, it is tempting to march back into the office and announce that things are going to change around here, even before you read on. Because that’s what leaders do, right? They inspire us. They push us into the unknown.
Resist that urge. In fact, do the opposite. Stop.
There is something paradoxical about what you’re about to do. You’re trying to lead your organization to a
place where you’re not the leader anymore, at least not in the way you are today. How do you get people who have been managed all their lives to suddenly self-manage? How do you get a culture that is addicted to planning and control to realize there are better ways to manage risk? How do you get leaders whose identities and egos are wrapped up in status and position to realize that this power is not the source of their value? These questions and dozens more are going to confound you.
In the coming pages, I’ll share a straightforward process for safely and continuously evolving your OS. But first, if you really want to change—if you really feel compelled to reinvent your way of working—then you’re going to need a lot more than a process or a checklist. You’re going to need to forget everything you know about how cultural transformation happens in organizations.
THE CULTURE CONUNDRUM
Faced with so many radical and exciting possibilities, you’re probably contemplating how to change your culture. Yes, culture, that most powerful and misunderstood word that beckons like a siren. It’s at the beginning and end of every deep conversation about organizational success, isn’t it? Everyone says, “Culture eats strategy for breakfast.” More potent than strategy, and yet still so elusive. It’s the one word in business that means everything and nothing. Author Seth Godin defines it as the story we tell ourselves. “People like us do things like this,” he says. It’s that simple, and that hard.
The role culture appears to play in success and failure has led to a widespread belief that it’s something we can and should direct—something we can change. But that’s a fundamental misunderstanding of what culture is. Culture can’t be controlled or designed. It emerges. It isn’t happening to people; it’s happening among people. Author Niels Pflaeging explains the inscrutable phenomenon with a powerful metaphor: “Culture is like a shadow: You cannot change it, but it changes all the time. Culture is read-only.” Nevertheless, every year leaders valiantly attempt a miracle: to fix or change their cultures with PowerPoint and promises. Spoiler alert: these programs don’t work.
Several years ago, I consulted as part of the team that refreshed the values (known internally as “beliefs”) at a global industrial company. The values reflected what we, a team of fewer than ten, believed was right for the other 300,000-plus people who worked there. The output was just five sentences, but the rollout of those sentences took years. Countless hours and millions of dollars were spent trying to encourage employees to live the values. In the end, did everyone “stay lean to go fast,” as one of the values suggested? Not as much as we would have liked. And I don’t blame them. A platitude is not an epiphany. We can’t change hearts and minds with a haiku.
When culture proves too amorphous, we turn to simpler adversaries. Leaders say, “Our people are the problem!” And the people say, “Our leaders are the problem!” And so we attempt a second miracle: changing one another. But again, this is a misunderstanding of human nature. People are complex. We grow and change in our own way, in our own time. As Ben Franklin once said, “Consider how hard it is to change yourself and you’ll understand what little chance you have in trying to change others.”
So, if we can’t change culture and we can’t change people, what can we do? We can change the system. We’re headed into uncharted territory now. Here there be dragons.
Control Inc.
We were three weeks into a project and our sponsor on the client side was looking for the plan.
“I just don’t understand what’s going to happen,” he told me. “We’re meeting with teams and talking about their way of working, but when are we going to start doing the real work?”
“Well,” I said, “this is the real work. We’re asking teams what’s slowing them down or standing in their way. We’re asking them what they’d change if they could. And we’re inviting them to design and run experiments around those tensions and scale the ones that work.”
He looked at me quizzically and took a long pause.
“Right . . . but what’s the plan?”
His company, Control Inc., had reached out to us because they were seeking a partner to help with culture change. The leadership team was under pressure to turn the company around because growth had stalled and employee engagement was dwindling. They had rightly identified that culture was central to their predicament. However, the other partners they were considering—traditional consultants and Agile experts—made us think twice. Those were the kind of partners you chose if you wanted a concrete recommendation. A PowerPoint deck. A proven methodology. A structural reorganization. These sorts of solutions can feel comforting when you’re unsure, but over time they lead to dependence and fragility. When the one-size-fits-all answer doesn’t work (or stops working), what then? We made the case that what Control Inc. needed was bigger than Agile and more nuanced than a reorg. It needed to evolve its operating system.
To our surprise, our pushback won us the project. But since the kickoff, there had been several “lost in translation” moments that made us question our alignment. This latest request for the plan was just the most recent example. It was all the more frustrating because we had really struggled to get dedicated time with leaders and teams to begin the work. We wanted access and volunteers; they wanted a plan.
“Say more,” I said, trying to draw him out. “What do you think the plan should look like?”
“My boss wants to know how we’re going to make this happen. What are the steps? Where will we be by the end of the first quarter? How can we ensure that we’re done on time and on budget?”
These were perfectly reasonable questions, if changing an organizational OS were like remodeling an office. But as you know, changing a complex system is not like changing a complicated one. There are no Gantt charts in OS transformation (unless you’re okay with a lot of rows that say “try things, learn, iterate”). This realization would not sink in at Control Inc. for a long time.
“We have a plan . . . but it’s written in pencil,” I replied. “We’re going to keep inviting teams to take ownership of their way of working. If they’re not the ones naming the problems holding them back, and they’re not the ones suggesting solutions, then you’re not evolving your operating system. We’re going to ask you and other leaders to create and hold space for experimentation. That means making it safe to spend time on this work and safe to fail. I have to tell you, so far we’re not doing great on that front. People are not showing up.”
“I think that’s because everyone is wondering what it is,” he interjected.
“Ah, yes, it,” I said. “You want a destination, but what we’re actually doing is starting a pattern of continuous improvement—a habit of getting better every day. You want a more capable, adaptive, and fulfilled culture. So we have to figure out what to add, in terms of new principles and practices, and what to take away, in terms of organizational debt and assumptions, that will move us in that direction. That’s the ‘it’ you’re looking for. And that needs to happen in your teams, not as an edict from the boardroom.”
I paused to make sure he was still with me.
He looked at me skeptically. “Yeah, I get it, but I can’t go back to the leadership team without a plan.” And round and round we went.
Emergent Inc.
Meanwhile, a company of similar size—let’s call it Emergent Inc.—was approaching transformation in a different way. It too had been confronted by a pattern of slowing growth, but more than that, its people had become frustrated with the bureaucracy and constant negotiation inherent in their culture. Some of the COO’s first words to us were “There has to be a better way!” By the time we met, she had been reading about new ways of working and thinking about specific opportunities within her culture. Could she and her colleagues make faster and better decisions? Could they use transparency to coordinate efforts more effectively?