New Work – New Pay Framework

The intention of the New Work – New Pay Framework

“Flash Company” is a New Work-New Pay framework for a corporate culture based on freedom, joy, performance, fairness and team spirit, designed for scalable service companies and agencies. This framework builds on radical transparency and fair basic principles of the economy as well as our social society and has anchored principles that everyone knows from daily social and economic life. The framework clearly distances itself from the “old-conservative and intransparent top-down organization” which is no longer appropriate in the context of “knowledge work”. We consciously promote different characters in the various areas of responsibility and form truly agile and goal-oriented teams that complement each other.

Goals of Flash Company as New Work Framework

Flash Company is a framework that should and can NOT be adapted 1 to 1 to every company. It also does not have the claim to be perfect. Flash Company as New Work Framework was initially developed for a service company and is specially designed for it. The framework serves as such and can be freely adapted to other companies. It is a New Work Framework, which should give ideas how a company can be managed economically on the basis of common values and how this can be implemented systematically. The New Work Framework “Flash Company” will be continuously developed and improved through feedback from other companies. Flash Company involves a change process, which must be accompanied by experienced change managers and coaches.

Value of the New Work Framework for employees

A company that works according to this New Work Framework should give employees absolute freedom in their decisions, self-determination and encourage them to take their lives into their own hands with full responsibility (ownership) in order to make the best out of it. It enables employees to grow personally, professionally and economically, while putting the interests of the team before those of each individual. This means that the values as well as goals in the private sphere (freedom, profitability, joy, performance, fairness and team spirit) should be aligned with those of the company (profitability, growth and stability) and with those of the customers (profitability, quality, cooperation). Everyone in the team should see a clear sense in what he/she does. The company should encourage and support everyone in the team by creating the necessary conditions to gain new experiences and skills. Mistakes are explicitly allowed, but not repeatedly accepted. Discipline, ambition and determination are seen by everyone in the team as essential prerequisites.

Sport as a model: The basic principles of Flash Company

The whole team works according to the principle as you know it from a sports team. A strong team for a common goal, common values, fair rules and full transparency about the current score. There is a common goal (to become world champion, stay in the game and get better every year), everybody knows that this requires hard training with a lot of discipline and that you have to win one game after the other and improve year after year. If you don’t do that, the consequence of losing is clear to everyone and measures are taken, guided by the coach, to bring the team back on the road to success. It is essential that everyone in the team pulls together and there are no “followers” who do not contribute to this goal or even prevent it. Training and effort are not perceived as a negative burden and necessary evil, but rather as a promising purpose to achieve own goals as well as the goals of the team, the customers and the company – this is how we see in our job and in our private lives the daily personal training that takes place outside the comfort zone to promote the development of everyone in the team.

Core principle 1: The level of freedom is on the same level as the level of responsibility and discipline to do what needs to be done to stay free. In particular: No freedom = No responsibility, Full freedom = Full responsibility. To bear responsibility means to bear the consequences to the same extent. Asking for help is explicitly desired and encouraged. Not asking for help if necessary harms the team.

Core principle 2: Remuneration and all decisions are based on the principle of “fair and economical” and promote and consider the values of the team, our customers and the company.

Core principle 3: There are no secrets, everything in the company (salaries, P&L, data, facts, feedback etc.) is freely accessible, except for topics whose transparency endangers the private reputation and well-being of an individual or the goals of the company or violates legal restrictions.

Core principle 4: Daily independent learning, gaining new experiences and leaving the comfort zone are essential.

Core principle 5: Effort is valued. For success, however, only results count. Results must be clearly measurable and transparent for all (we use KPIs and OKRs for that purpose).

The own private life is harmonious and relaxed, if also the job is going well and the finances are in positively balanced. Fun and a good atmosphere at work is created by meaningful activities, a great team with a common vision and successful results on the way towards this vision. This is achieved through clarity regarding goals, performance, cooperation, discipline and personal responsibility. This means private satisfaction and professional success form the basis for a happy relationships at work and in our private life.

Objectives of the Flash Company Framework

• Happy, enthusiastic, motivated and success-oriented employees who keep their interests in their life and their job in alignment and see the company they work for as an enrichment for your life.
• A fair and economical handling regarding resources (money, time, salary etc) in the team as well as fair recognition for good performance.
• A flexibly scalable service company that operates profitably in all economic situations. Its flexibility provides security for all stakeholders and consistency for its customers and employees.
• Maximize the amount of employees who see great advantages in working in this culture.

 

Basic rules of the New Work Framework “Flash Company”

• There are no managers who manage other people in the team We rely on having only people in the team who have enough initiative, experience and know-how to make decisions themselves based on transparent data and facts or in cooperation with a coach or mentor. Problems are solved where they arise without escalation chains.
• Everyone in the team works constantly and with discipline to learn new things and to continuously improve themselves and their results. This is achieved through continuous and unfiltered feedback.
• There is absolute transparency in all areas, there is nothing hidden. Problems, conflicts as well as praise and recognition are clarified without mediators, directly between the people involved, preferably in a way that is visible to others so they can support it. If desired, a mediator can be consulted in case of conflicts.
• Everyone in the team is aware of what their added value, their contribution to the goals of the team and their financial impact of costs, both to the team and to everyone personally.
• Everyone in the team is keen on fairness and on contributing a large part to the common goal
• Efficiency of all work is the basic prerequisite for success, prosperity and fairness in the team
• Poor performance must be prevented where possible in order not to block or even neutralize good performance – or a conscious decision is made to subsidize poor performance if this results in other benefits.
• Through full transparency and increased awareness of fairness, efficiency and the effects of decisions, it becomes possible for everyone in the team to make decisions independently and autonomously
• Instead of bosses monitoring the activities and the presence of individual employees we provide coaches, trainers and mediators and responsible employees for specific areas with the aim of meeting KPIs or OKRs that are designed to add value to the team – but not with the aim of telling others what to do. We promote accountability and result-oriented work , we prohibit micromanagement.
• Everything that is done must offer clear added value for customers, employees or the company and be economical.
• There is as much vacation as you want, as much as you can take while keeping your commitment to your goals, the goals of your squad and the goals of the company
• There is no tracking for working hours or vacation days, unless a team or squad decides to implement it for themselves, unless required by law.
• Economically, studies have shown that smaller units work significantly more efficiently than large and complex units. Therefore it is a goal of squads to set them up as lean and effective as possible so that increased complexity does not lead to a loss of efficiency.

Definitions and processes

• A squad is a team that must be economically self-sustaining, through customer sales (Client Squad) or through internal sales (Internal Squad) by internal squads supporting customer squads.
• Squads have customer success and profitability as their goal. Therefore it is in the best interest of all participants in the squad to establish a good and personal relationship with customers and to understand and serve their needs in the best possible way. Customer success is the key to squad success, the Customer Success Manager is Accountable for customer satisfaction.
• Squads can request that he/she does not want to use certain internal or external services and that 3 months notice is given so that we can adjust capacities. Services are Support Squad, Service desk, Marketing etc. Services can be maintained if the squads that want to support the services bear the costs. Otherwise the costs have to be reduced or divided among fewer squads that want to maintain the service. Alternatively, the services will be dissolved.
• A squad has to be economically self-sustainable to ensure a fair and above-average payment for all people in the squad. Everyone in the squad sees the economic situation of the squad as well as the other squads at all times in the accounting system and reports this to everyone on a weekly basis to raise awareness.
• Each member of the squad may determine his or her desired salary per squad member as well as the fixed salary component. The squad sees which goals result from this (revenue and profit goals) and which costs have to be covered monthly.
• Each person in the company must be assigned to a unit (squad) or must form a separate economically viable unit (squad).
• Client squads are financed by customer revenue and the gross profit from working with virtual freelance teams. All other squads are financed through internal billing and are supported by the client squads. If a customer squad books resources from another (internal) squad, the overhead share is reduced by internal billing and shifted to the booking squad. The internal allocation is represented by a cost center and a profit and loss statement.
• New employees or employees who have not yet found a squad apply to a squad with the added value that they can contribute to the squad’s goals and the fixed salary and target salary that they want to earn. Through its current profitability, sales forecast and reserves built up, the squad sees directly what effect this has on the squad’s goals and on the goals of each individual.
• A squad consists of at least one person, a customer success manager. In the case of a single person, this single person can be supported by virtual team members and freelancers or can instruct HR to find a new local employee. The squad then has to cover the costs.
• The CFO uses a financial controlling system to ensure that every squad gets full transparency over their financial performance. This budget already takes into account that all other internal capacities are allocated and all overhead costs are covered. If a squad does not have enough budget for virtual teams, it must ask for resources internally, if available to utilize them properly and cover their costs.
• If a squad generates an absolute negative result (including reserves of the squad), the squad is no longer profitable and is not economically self-sustaining.
• New squads will be supported by the company’s profit with a maximum budget of 20,000 EUR from the start. After that the squad itself must be economically profitable.
• Revenue is booked to the squad when an invoice is issued or when a billable service has been performed that has not yet been invoiced (cost accruals in the month). If a payment fails, there is a loss of receivables, which is posted as a cost to the squad that issued the invoice and reduce their profit.
• If a squad is not profitable and falls into a negative overall balance, it can ask other squads for financial support from their retained earnings (internal loan). If no squad agrees to this support, the squad remains unprofitable. A squad’s profit is determined monthly on the basis of a monthly correctly accrued profit and loss statement in the accounting system (each squad has a cost center). If a squad cannot compensate the loss with its own profit, it must ask other squads for profit compensation and obtain their consent.
• If a squad is not profitable and is not financially supported by other squads, the company can provide support from retained earnings. If no one wants to provide financial support for the squad, the squad is dissolved. In the event of dissolution, the current loss incurred by this squad and the costs of dissolution are divided equally among the other squads as overhead costs. Individual rules for the distribution can be defined between the squads.
• When a Squad is dissolved, individual members of this dissolved Squad can form their own Squad or apply to other Squads. An employee can also work in 2 or more squads, whereby each squad bears a share of the costs. Customers who become free by the dissolved squad are “requested” by other squads. The squads decide among themselves who takes over which customer. High priority is given to the fact that the contact to the customer should not change. If a customer is not claimed by any squad and the company has no objection, the customer will be terminated if the contractual framework allows this. If this termination is not contractually possible, the employees must take over this customer into the new squad and make this necessary transfer of the customer transparent to the new squad when applying for the job and obtain their consent.
• Employees of one squad can leave the current squad on a part-time or full-time basis and apply to another squad. This must be done in such a way that no projects in the squad are negativly impacted. The squad is responsible for this.
• If an employee applies to all squads and no squad is enthusiastic about the applicant’s value-added/salary ratio, in order to include him/her in the squad with the consequence of additional costs, the employee must leave the company. The application phase may last a maximum of 4 weeks, after which the decision is made. The costs for this 4-week transition phase are distributed among the squads as “overhead costs”.
• Every role (yes, this also applies to the managing director etc.) and every person in a role can be questioned at any time. If a squad believes that an employee in the squad does not contribute to the common goal or the distribution of performance, remuneration and effort is not fair, a vote can be taken on whether the employee should leave the squad. In this case, the employee is free and must apply to other squads or form his or her own new squad if the company supports this with reserves.
• The fixed salary per squad role may not be higher than the maximum level that is confirmed by past performance and if the future sales and margin targets (forecast) based on this performance appear realistic. A higher fixed salary must be justified before the other squads, as they will have to subsidize the new squad with high fixed costs in case of unprofitability.
• A person in the role of “Squad Keeper”, if not otherwise assigned by the CEO, has a veto when a squad is recomposed. Every change in the squad is communicated to the Squad Keeper so that he can veto it. For the transfer of employees or customers to other squads, the Squad Keeper is responsible for accountability.
• The squads are free to define internal hierarchies or other rules that the squad wants to follow. This concerns the overwriting of vacation rules, working hours etc….
• Global roles that are not used in client squads only exist if other squads agree and consider them useful and value-adding. The same applies to global investments that the squads are expected to share via overhead cost allocation. The new person in the global role to be filled announces what he/she would like to have in the way of additional monthly salary for this job, others include these fixed costs proportionately in the squad and decide whether the costs can and want to be covered and whether this makes sense through a fair and economic cost-benefit ratio.
• A squad can sell / buy services to another squad with internal revenue / internal costs. This revenue is included as “Internal revenue” and “Internal costs” in the calculation of the two squads.

• If a squad has made a profit (15% of sales (EBIT reserves for the company) + personnel costs in the squad + non-wage labor costs and other personnel costs + fixed cost portion – project profit correctly delimited = profit for the squad), the squad is paid this profit (profit corresponds to the employer’s gross profit, i.e. the total costs incurred by the company through the payment). It is up to the squad to decide what to do with this money.
  FOR EXAMPLE:
  • • Distribute to members (profit shares per member are determined by the squad itself)
    • Investment in additional sales / marketing or other things (laptops, training etc.) of the squad
    • Consciously support other squads so that they do not have to dissolve
    • Carry forward profits to offset future losses or support other squads

The New Work Framework “Flash Company” was developed by Bright Solutions. The development is documented in a TEDx Talk.

For questions about this framework or for an extended exchange of experiences, please contact me via my LinkedIn profile.