Needs-based salaries are upending workplace norms

Anthony Jarrett has worked for Public Interest Research Centre (PIRC), a Wales-based charity where he oversees finance, governance and IT, since 2009. He is also, despite his 30 years of experience, the lowest-paid member of staff. 

That's because of PIRC's "socially just pay policy," designed to "recognize different needs and backgrounds." Every employee gets the same core salary, with additional "uplifts" available to those who have financial dependents or live in a city (since the COVID-19 pandemic, staff can work remotely). Even more unusually, PIRC offers uplifts to staff members who have experienced marginalization, discrimination or oppression — no requirement to explain specifics, they simply make the request. Money is also available to help cover housing or health care emergencies. 

As Reasons to be Cheerful reports, PIRC is among a growing number of organizations challenging conventional ways of paying workers. Implementing such changes requires unusual levels of trust, patience and wholehearted commitment from all involved. But many of those calling for a more equal society see it as a no-brainer — and some mainstream employers may soon be following their lead.

Reversed norms

For many years every worker at PIRC, which helps social, environmental and climate justice movements, got the same salary. But, as issues of racial, gender and other inequalities became more apparent, that flat structure no longer felt right. 

The new policy, implemented in 2022, has "totally reversed" gender pay norms, Jarrett says. He's fine with that, as long as his pay doesn't decrease — in fact, it has gone up, as the charity has been gradually increasing core rates. He also gets a little extra because he has a young daughter. 

PIRC did want to reward experience, but not if it caused significant age disparity. Under initial plans, Jarrett — as "a straight, white male," he notes, "I'm not marginalized in any way" — would have been the best-paid by far. "This was not what this was about," he says. That uplift has been reduced, for now, to just one percent a year, capped after five years. 

PIRC's policy is based on one used for many years by another charity, Platform, but with simplifications. For example, rather than calculating a reduction for employees with inherited wealth, PIRC simply expects that they would decline any increments available. (The aim is to "uplift, not penalize.") 

With just six staff currently, PIRC's policy hasn't been fully tested. It doesn't yet address disability justice, and other elements may be revisited in future, says Jarrett. In the meantime he faces one practical challenge when budgeting for a new position: a candidate's pay could end up, say, 30 percent higher for someone living in London, with children and facing marginalization. That complicates budget forecasts. 

Overall the policy has been good for individuals, he says. It also sends a strong signal to potential employees, and it may have contributed to a more diverse workforce. A few years ago applicants tended to be middle-class graduates. "That's definitely changed," Jarrett says. Now, more people with experience of marginalization are applying for jobs.

Happiness

Greaterthan, a collective of around 20 independent facilitators, consultants, coaches and others, also has an unconventional approach to pay. At the end of a joint project, fees are not distributed solely on hours worked or value produced — even if looking beyond those felt "really uncomfortable" at first, says Francesca Pick, a Spain-based founding partner of Greaterthan.

Instead, they use the "Happy Money Story" method, adapted from an idea developed by the coach Charles Davies. First, each person shares reflections on the project and on their and others' contributions and needs. Then they go away and individually set out how they would split the money. Proposals are shared and discussed until the group agrees on one that makes everyone happy. The whole process might take several meetings, or, when people are more used to it, just 10 minutes. Factors considered might include personal needs, such as temporary upheavals at home, or individual experiences of the project — one may have found it energizing, while another found it draining. But it completely depends on the situation and those involved, says Pick, and a group could also decide to distribute fees in a more conventional way.

That flexibility is "really liberating," says Pick, who has been through at least 40 Happy Money Stories, making up her entire income, over the past two years. Another benefit: It's "a powerful tool" for a healthy team relationship — any tensions arising during the project are surfaced, and participants must consider everyone, not just themselves. Someone who tends to undervalue themselves might even be encouraged by co-workers to ask for more money. 

Perhaps surprisingly, Pick says this payment model makes her feel more, not less, secure. It's a relief, she says, to know that "whatever happens, we will have a conversation, and we will figure out what's going to work. All I need to do is trust the capacity we built as a group. That's something no one can take away from us." 

Pick acknowledges that a Happy Money Story is "pretty out there." It wouldn't work for salaried positions — although Greaterthan, whose work focuses on supporting other "purpose-driven" organizations, has helped one client to test it for allocating bonuses. What's important, she says, is not necessarily that everyone adopts a similar approach, but that workers can design a model that meets their needs. 

Unlearning harmful ways

Employers often keep salary information confidential, paying one person more than another for the same job simply because they negotiate better. Pick argues that this favors people "who already have high self-worth," while those who see themselves as less worthy — "a signal that society gives to a lot of people," like women or ethnic minorities — lose out. 

Berlin-based social entrepreneur Lisa Jaspers agrees. "The way we compensate now usually means that the people who are most privileged earn the most money," she says. That happens even among organizations that exist to tackle social problems. 

To address this, Jaspers and four co-workers within the Unlearn Business Lab, a group that aims to "prototype a just economy that is regenerative, redistributive and collective," undertook a year-long experiment. Through this "compensation lab," they developed a framework that factors in an individual's privilege, the number of hours they can comfortably work (accounting for health issues or caring responsibilities, for example), wealth and other needs. The framework is now used for distributing pay for projects undertaken by Unlearn Business Lab.

For Jaspers it is a question of values — she finds it "really important" to know that she is not contributing to higher inequality. More pragmatically, pay that meets individuals' needs also means that Unlearn Business Lab can retain team members from less privileged backgrounds, whose insights, she notes, are "super-essential to what we do," and who may otherwise need to find more stable and lucrative work elsewhere. 

Not so radical

Doing pay differently isn't confined to the fringes. In 2015, credit card processing company Gravity Payments set a $70,000 minimum salary for all 120 staff. Social media firm Buffer is among those to adopt transparent salaries. Other companies allow employees to set their own salaries. But many feel these efforts don't go far enough. Self-set salaries often come from a more libertarian worldview and can end up reinforcing existing inequality unless there's also "deeper work on power — who has what kinds of it, and who doesn't," says Liam Barrington-Bush, co-founder of UK-based RadHR, which helps organizations to implement "radical" HR processes and policies. 

Privilege or needs-based compensation may yet enter the mainstream. In the past couple of years, Pick says, "new pay" has emerged as a term that people are writing and talking about. Germany's New Pay Collective was formed in 2021 to bring together interested organizations and academics, and more recently a New Pay Community was formed in Switzerland. Significantly, one well-known German commercial company has recently approached Unlearn Business Lab and is considering elements of privilege-based compensation, says Jaspers. She will soon host a "compensation lab" for other interested organizations.

Considering employee needs isn't actually controversial, Jarrett suggests. A business won't do well if staff are preoccupied by money worries. And few would disagree that raising children adds financial pressure. Many would argue childcare and health care support are a government's responsibility. New pay advocates agree — but point out that governments aren't providing it. As for paying certain demographic groups more than others? "I don't see why not," Jarrett says. After all, employers "have been happy to pay men more than women for 50 years."

Still, discussing needs and privileges "is a hell of a can of worms," warns Barrington-Bush. Talking about pay "taps into our insecurities, our fears — whatever version of money scarcity or class position we grew up with." Even among groups pursuing non-hierarchy and transparency, he says, money is usually last to be tackled.

It's easier within smaller organizations, and when trust is already high. Even then, it takes care and patience. "You need to create an atmosphere where everybody feels safe to share certain things," says Jaspers. "You're opening a box that a lot of people, especially if privileged, don't want to open."