10Pines, a software company, in Argentina has decided to take on the democratic leadership approach. This allows its employees to participate in decision making, even when it comes down to the amount each employee will receive as a salary.
10Pines is a technology startup launched in 2010 with 85 employees. The Argentinian company writes software for clients which includes top brands like Starbucks and Burger King. Their tasks mainly revolve around designing apps, online loyalty cards and other e-commerce platforms.
It sounds like your average technology business until their unique style of democratic leadership is brought to attention.
Every year, 50% of the profit made by the company is shared among the staff. What makes it interesting is how they decide the amount everyone takes home.
Three "rates meetings" are held every year at 10Pines. Everyone, with the exception of new employees on probation period, come together and decide who should be put up for a raise. Employees or mentors on behalf of the employees can also come forward for a raise, which then is openly debated among the staff.
An employee, Ariel Umansky, had been offered a raise twice in five years, the most recent proposing a 7% raise in December of 2020. Umansky turned it down both times saying that he could not justify it in the presence of his colleagues.
"I felt kind of insecure and exposed about me being close to or even on top of people that I considered had a better performance than me," explains Umansky. "It's easy to feel like a fraud."
10Pines aims to be as transparent with its employees as possible. Monthly meetings are held to discuss matters such as potential clients, expenses, finances and salaries. This allows them to create a flat hierarchy within the company.
"A key aspect [of open salaries] isn't knowing how much everyone is earning," says Umansky, "but knowing who earns more than who - it's the hierarchy, right?"
The company does not have an overall CEO or managers but rather seniors figures who are referred to as "associates" and "masters".
"Since there are no bosses to decide raises, we delegate power to the people," says Jorge Silva, 10Pines co-founder and a "master". "We don't want a salary gap like in the United States."
When a new person goes through the initial interview process, they are introduced to the whole team in the final round. This allows them to explore their interests and gives them the chance to see how things at 10Pines function. New members are also given the opportunity to negotiate their own salaries to a certain extent, as long as they have discussed the matter with the staff within the company who hold similar roles and qualifications.
"I've been on the other side of it and it's uncomfortable, but informal," says Silva. "But we have stopped hiring processes at this stage," he adds. "Even if they are geniuses, we can feel if they will create tension by not fitting into the team."
This approach is named "sociocract" by the members of 10Pines and was initially inspired by a Brazilian businessman called Ricardo Semler. He wrote a book titled Maverick in which he described how he turned his family's manufacturing firm, Semco, into a so-called "agile, collaborative company." It resulted in lower rates of turnover and revitalised the firm's fortunes.
"We took that as our bible," says Silva.
Ben Whitter, author of Human Experience at Work, and the head of employee coaching and consultancy firm HEX Organization in the UK believes that "In many companies salaries can be set in the shadows, and there is a fear that they are decided by 'who you know'. This way makes it clear and accountable."
However, Whitter mentions that this method may have its drawbacks once companies exceed a certain number of employees and the benefits can eventually tail off. It could also prove to be challenging for introverted individuals and encourage a "natural bias of groupthink, where people make decisions they wouldn't normally make as an individual, raising issues about diversity and inclusion".
Despite the obstacles mentioned above, 10Pines believes it can carry on with the approach they are currently using with the help of installing multiple diversity programmes such as the women-only apprenticeship schemes.
"We have evolved the process over 12 years," explains Angeles Tella Arena, an experienced software developer at the company. "For example, we started salary discussions when we had 30 employees and were afraid it wouldn't work with 50, but we just kept adapting. You need to update processes so trust is maintained."
Over time as the company grows, she believes that a second office which adapts to the same strategy needs to be added as an expansion.
"The key thing is to understand there is a difference between equal and fair," believes co-founder Jorge Silva. "We are not all equals, but we try to be fair. We don't want to be like the classic company that tries to control employees and treats them like children."