Building a business requires creating and activating a network of Partners, Associates and Employees. We are striving for a healthy mix of people who share a DNA and a sense of purpose, but who might have different needs and possibilites, depending on their personality, the stage in their career, the desire for short or long term reward (cash versus value) and the appetite for risk.
For capable people with skills and ambition who want to be surrounded by people they can work with and learn from and who prefer or require a monthly income, becoming an employee can be the most appropriate choice. We call them intrapreneurs. This relation needs to be formalized in an employment contract. Contracts are not pretty. Despite network organisations, work2.0 and despite all good intentions basically they arrange and exchange of time for money.
The good intentions are that we want all our people to be independent, that is: responsible for their own choices and their own success, we know they are reliable professionals, who do not compromise on quality, and who are connected to a network of peers they like to work with and work for. This is our DNA. The intention is also to make sure they have an adequate monthly income and that there is no limit to what they earn, based on how successful they are.
Now try to stick all that in an agreement. What we did is: we offer all our professionals on the payroll a basis salary, and then we make a budget available that is equal to 50% of what their personal turnover is. Out of this budget they can make choices on for instance education, a company car, laptop, et cetera. The difference between salary plus costs and their personal budget will be paid as a bonus, if a set of OKR’s (Objectives and Key Results) are met. A nice combination of security (for the employee), limited risk (for the employer), freedom of choices on personal development and reward and intrapreneurship. Or so we think.
Of course a contract describing this level of freedom and responsibilities within the boundaries of the labor laws results in quite an extensive document. You would think that the more experienced employees, with several previous employers, would be most critical, especially because in their case the base salary usually is lower than what they were used to – be then the upside is higher than anywhere else. The opposite is the case. Last week we lost a prospective employee, who seemed really talented and a perfect fit, due to this contract.
The base salary was higher than what she earned in her previous job, we explained the model, the role, the responsibilities, the budget, the holidays, the risk, the fiscal implications. All better than where she came from. She did not sign. I am confused. Either she was not what we thought she was, and she did not understand it, or it was too good to be true and she became suspicious that their might be a snag. Or maybe we are a more average company than we think we are, or than we want to be, and people just expect a salary in exchange for their time.
The last option a refuse to accept.
Researchers like David Marsden (Professor of Industrial Relations and a Senior member of the Centre for Economic Performance) at the London School of Economics will tell us that in the Network Economy their is not only the contract between employer and employee, but also the psychological contract and the economic or incentive contract. Maybe I should go to London and try to understand. Or better, let me go to Brazil and visit Ricardo Semler. He did it the other way around in his company Semco, letting his employees choose what they do, where and when they do it, and even how they get paid. He wrote a book about it called Maverick, the success story about the world’s most unusual workplace.
So that’s where I will go if only because the weather in Sao Paolo is more attractive than in London.