A few basic principles for P2PU compensation and hiring

-- DRAFT, for feedback, 27 May 2011 --

[Please note: this draft version was developed with input from a few community and board members to help P2PU define some principles around compensation. It has not gone through legal review, hasn't received community input, and is not an official policy or guideline for P2PU.]

The key to success for P2PU is to have good and happy people in the community. Paid staff members are an important part of the community, and while compensation is only one of the motivating factors for P2PU staff, it is an important one. That's why we strive to be fair and transparent regarding our compensation practices, and involve the broader community in the process.

Principles:

• P2PU is built on flat structures and hierarchies, and this applies to compensation as well. [PS: review wording]
• We strive for equal and fair treatment of all staff, while taking into account and making affordances for individual differences and preferences.
• The community can give input to the hiring process, helping shape the paid positions required, and finding the right people to fill them.

Operational:

• We offer market rate salaries, compared to similar non-profit organizations, located in the US, and working in the open and education space.
• Staff and contractors working at the same level (defined by responsibilities, expertise, experience) receive similar levels of compensation, in terms of cost to the organization. 
• The highest paid person at P2PU makes no more than twice the salary of the lowest paid staff member. [PS: might have to be less specific. See discussion below]
• We pay don't take into account the physical location of our staff when determining their salaries. Even though cost of living in some countries may be higher, usually these countries also offer more benefits – such as security, access to quality health and education services, etc.
• As much as legally permitted, we try to accomodate individual preferences to work as employees (with employment benefits) or contractors (with ncreased freedom and flexibility.)
• Job descriptions are posted to the community list for feedback before we fill positions. Community members (and board members as needed) are invited to participate in interviews and the hiring process.
• P2PU needs to raise funds to sustain its operations. We reward acquisition of unrestricted funds through bonus payments over and above the agreed salaries.

Feedback/Questions

Does this mean that salaries are going to be public too? (this may conflict with privacy laws in some countries, should check. i think in the US only the highest salaries are mandated to be public for nonprofits)

• (Philipp): It's correct that we cannot publish salaries. I am not sure if 501(c)3 organizations have to disclose their top employee salaries [the IRS form does ask about this - employees making more than 50k] but annual reports usually only contain the total amount for staff (not broken down by individuals). We will follow the legal requirements on this question. But the idea is to pay people at the same level, the same amounts (so they will know what each other makes).

Benefits are mentioned. Are these things like conference/travel or more like health benefits? Also what determines whether a person gets benefits or not?

• (Philipp): Benefits as in employment benefits (health care, social security, etc.). Some people will prefer to be an "employee" (which comes with these benefits, but pays out less money) and others will prefer to be a "contractor". As much as the law allows (not every position can be a contractor position) we will try to accomodate those preferences. 

How do you gather the salary comparisons of other like companies? How often are they updated? Are salaries shifted to match or just get a [annual?] potential raise?

• (Philipp): We usually ask around when we have to hire a new person, or create a new position. We'll try to keep all salaries in line with this - but it's hard to shift downwards (even if the economy suggests that makes sense). 

"We reward acquisition of unrestricted funds" -- confused me. Does this mean that if an employee gets a grant for P2PU then he or she is given a bonus or that everyone is?

• (Philipp): The idea is to pay a bonus to the person who brings in these funds (and there will be a limit on how much bonus someone can get this way). It's important that these funds are "unrestricted" - unlike most grants, which are awarded for a particular purpose or activity. This will exclude myself, as it's my job to bring in funds ;-(

What's a flat hierarchy?
I don't think any org is completely flat. Also flat isn't efficient. Flat can be bad. Maybe we use different wording here.

• (Philipp): Would love a suggestion.

Will we get a list of those that are already on staff and where the new positions will go in relation to them? What about volunteer positions?
We should have an organizational chart.

• (Philipp): Yes, good idea. Mental note for the future, but will do this independent of these principles. 

Note: 1&2 below are about understanding, not disagreeing

1. We don't take into account the physical location of our staff -- How was this principal selected? Why? +1 +1 +1

• For what it's worth, this makes sense to me since it's working remotely.
• (Philipp): 
  • Two main reasons -> It's fair and simple. 
    • Paying two people who do the same work different amounts, only because one lives in a region that has a lower standard of living (and hence lower cost) is not fair.
    • It's really hard to calculate international differences in the first place. What if someone moves while they are working for P2PU - do we need to adjust her salary? What determines the appropriate local rate? For example, UN workers in Sudan make much more money, than their local colleagues. Which one is the local rate?
  • How: This was first discussed and agreed when we had to hire the first person (at the Open Ed meeting in Vancouver). The council then adopted it as a policy - this was before we even incorporated. Now is a good time to come back to this, as we are hiring more people. 

2. The highest paid person at P2PU makes no more than twice the salary of the lowest paid staff member. -- How was the ratio selected, why? Could just be an arbitrary number
This sounds reasonable to me. In the U.S. entry-level nonprofit salaries can be in 30k range while high level mgmt can be 90-100k+. <-- double 30k is 60k, half 100k is 50k... 

• I'm not sure this is necessary, but If its included in the document there should be another sentence about *why* this is this way.
• (Philipp): The idea behind it was to avoid a huge gap between "management" and "staff". The ratio was chosen more or less randomly, and is probably on the extreme side. I don't know any organization that has such little difference between entry level and highest level salaries. It might make sense to be a little less specific in the principles, but I would be interested to hear if people feel this is a good idea overall, or if we should just scrap it.

How do community members get involved in doing interviews?
I don't think it's a good idea for community members to get involved in doing interviews unless they are paid staff. Maybe get involved at a late point in the process as more of a meet n greet and sanity check. Otherwise, this would be opening a can of worms. Paid staff are the ones who will have to work directly with incoming staff - not volunteers. Joe: lol what? And how does one determine which volunteers get to interview? etc. 

• (Philipp): Ultimately, I have responsibility to the board for hiring good people (and the board has responsibility for P2PU not to waste money.). So, this is not about an open vote on who we should hire, but designed to help with the process. For me it is extremely helpful to be able to ask some community members to participate in interviews. For example, when we hired the tech lead, John and I did most of the interviews. He is a community member who knows the area we were hiring for very well. Having his expertise was great. It's also important that people "fit" into the P2PU culture, and the community creates that culture.

Great Start Philipp! 

Joe: It doesn't seem possible to talk about pay rates in a practical way until there is at least a sketch of what the roles in the organization are going to be (how many, what are they doing, etc.).

• (Philipp): These principles are not designed to go into the detail of actual rates, but to create a set of guidelines we can follow as we determine rates and hire more people.