Salary is probably one of the most dreadful topics, especially because it is a hygiene factor: earning not enough money will affect your satisfaction greatly, but earning more than you need won't improve your performance equally strong.
What is enough?
Let's talk a little bit about enough: the actual sum that you need to live depends on your fixed costs for basics like food, rent and savings for your retirement. If you have kids or other relatives to take care of, add this on top. Once those are paid you usually spend money on vacation, hobbies, and other activities like going to a concert, eating out, etc. Your enough quickly amounts to a sum that is already greater than the average salary in Germany (roughly €44,000 per year gross). But let's take that sum as enough.
Of course, I don't want to make what is enough but optimize for what is adequate for my position. But how much exactly is that? If we take open salary examples from around the world, many feature a market-average base-salary: developers are rare, thus they will earn more money than accountants. It is easy to get an overview about the typical salary for your market by looking at sites like glassdoor; for Germany the salary overview by Robert Half is very helpful if your industry is IT.
Where you are in the range depends on many factors, mostly experience, but even greater, your ability to (over-)sell yourself has a big impact on your salary especially in Germany, where you rarely find a role which compensation is made public in the job offer. The motivation to make compensations an individual agreement seems obvious: to save the company money, because they can try to negotiate the lowest possible salary for each employee. This is a fallacy, though. Studies show that making compensation transparent and comparable within an organization, will save money.
The gap between enough and adequate is your playing field!
It's important to remember: monetary compensation has no benefit, above the individual threshold that is perceived to be enough. For organizations that hire talent that is in high demand it is important to understand that you need to match this threshold. But: the gap between enough and adequate is your playing field; you can't keep employees below their enough for a sustainable amount of time, but they are flexible in the range above that.
Organizations can even overcompensate here, and this is what this blog post is about. Don't get me wrong, it's not about sugarcoating low salaries by just giving them another name. It's about understanding that the money a company spends on salary can be spent—in parts—in better ways. For companies this can make a big difference, increase your runway (the amount of time until your startup goes out of business), hire more talent, invest more in new products, etc.
I make €101,750 in non-monetary compensation a year
There is real money to make, if you find the perks, that really matter (not foosball tables and fruit baskets). To give you a concrete example, I compiled the list of my non-monetary compensations and assigned a price tag to them.
|Perk||Price tag (€/year)|
|Shares (real shares, not VESOP)||20,000|
|Work where I want (no commute!)||10,000|
|A job with a purpose (we turn organizations into a place where people love to work)||10,000|
|Being my own boss (work self-directed, voluntarily, how and when I want)||5,000|
|No stupid meetings||5,000|
|Working with tech I love||5,000|
|The hardware I want||3,000|
|Conference + Usergroups expenses covered||2,500|
|Getting to meet awesome people||2,500|
|No stupid KPIs||2,500|
|Never wear a suit||2,000|
|Slack (No more emails)||1,200|
|Company Phone Plan||600|
|No time tracking||500|
|Company Credit Card (no questions asked expenses)||500|
The total of the list above sums up to €101,750 per year in non-monetary compensation! Which makes me a happy man to get a compensation in total which is way above the market average for a comparable position.
The tricky part is, especially when talking to developers: they are bird-in-the-hand-people and it will take some effort to have this talk about a lower-than-average fixed salary with them. This will greatly affect your hiring, especially if you are secretive about your organization. Because no one will believe the advertorial speak of a founder because of what I described earlier: they expect tactics to reduce salary behind it. A better approach will be to be open about your culture and encourage your employees to evangelize working at your company. See? Openness and transparency, they are key for the next generation of organizations.
Yes, some of the perks listed above are real spendings for the company, but the net-worth of an Euro spent there is €1 compared to an Euro spent with my net salary will equal roughly €0.49. So in the end, both the company and me will benefit greatly from having this discussion.