Compensation principles

not applied to consultants and contractors

Compensations in Agile Lab are based on the following principles:

• Pay top of our reference market
• No speculation on people's cost of life (family situation, residence region, etc.) or other factors (gender, age, etc.)
• Internal fairness, everyone should fit into the ladder.

The salary review process happens every six months because people continuously increase their skills and capabilities, and their compensation must follow accordingly. A salary review is a company-wide process necessary to guarantee fairness, there is neither speculation nor negotiation and no one should expect a salary increase at every salary review.

Reference Market

Our reference market is defined by where our customers are based because our revenues strictly depend on this factor. If we mainly work with Italian customers, our "reference market" is Italy for salaries. When we shift our customer base towards other countries, we will adjust the compensations accordingly. When possible, during the recruitment process (typically after we made our proposal), we collect information about the previous compensation of people we are interviewing to gain a 360 view of the market based on roles and seniority.

Top of the market

At the same time, we measure the effectiveness of our hiring proposals to understand if we are paying top of the market. If we can satisfy candidates in at least 80% of the cases with our proposals, we are on the right path. All our proposals should be compliant with ladder ranges, and as soon we detect that our offers are not compelling anymore, we are falling behind the market. In that case, the ladder and its ranges will be reviewed, and this will positively affect all the people currently employed in Agile.

Fairness

Within each ladder level, we evaluate if people's compensations are balanced and if they are a good mirror of their performances, impacts and contributions. Because new people are coming into the picture each semester, it is essential to re-evaluate the fairness across all the people with the same frequency.

Salary and Ladder relationship

Within each ladder level, we have a salary band. We have a band for each level because it is impossible to be 100% fair and objective every moment we observe the ladder. The positioning of a person in the salary band may not always be a direct proxy of their positioning within the ladder level, and thus the closeness to a promotion.

It's hard to assess real capabilities and impact of a person only through the hiring process. Mistakes are possible, leading to one of the following scenarios:

1. A person is hired with salary at the high end of the Eng3 salary band. Their skill level is far from being considered for a promotion to Eng4.
2. A person is hired with salary at the low end of the Eng3 salary band but their skill level is close to being considered for a promotion to Eng4.

Why can the first scenario present itself? Here's an example: To support our business, we may need to hire a person with Eng3 skills that has already a salary at the high-end of the Eng3 salary band. In this situation, we can only hire this person by offering a salary in the high-end Eng3 salary band. Even if we are aware this is a deviation, we may really need to hire a given person to support our business.

One of the scenarios above may present itself during the earlier stages of your career in Agile Lab. If this is your case, we expect that the next promotion will bring you in a position where your skill and salary level are aligned. Our promotion process guarantees salary and ladder level are eventually consistent in terms of fairness.

Each person has their history, past salary, seniority, and performances that must be considered. What we value is the trajectory, so if a person is making significant improvements, they will have the proper reward in terms of salary increase. No significant improvements, no salary increase.

Salary review process

Involved roles

• BU Lead
• Engineering Director

Accountabilities

Salary increases are proposed by the Business Unit lead links or in fall back (if the person is not part of a BU) by the Engineering Director. Anyway in case there are not at least 2 levels between the BU lead link and the person that is under evaluation, the review will escalate until we are able to match the difference of 2 level. For example, the Eng 4 salary can't be reviewed by an Engineering Lead, but it should be reviewed by an Engineering Director or the VP of Engineering.

The final decision on salaray raise anyway is taken by the Engineering Director after collecting all the evidences and considerations from the BU Leads.

Criteria

The specific person is not involved in the salary review process because we adopt a proactive approach, but in case he/she is not satisfied or there is need for more information, he/she can always reach the person in charge of the review according to previous mentioned rules. Keep in mind that this is not an individual process, and salary review aims also to bring equality across the company, so is not always possible to provide all the information about such process because it is highly sensitive one.

How to decide if a salary increase is needed or not?

Not the case

• They are not improving
• They are not engaged
• They are toxic or negative
• With a raise they would go above the upper limit of the ladder level range

should be considered, but not due

• They are performing good, showing some improvement, but not consistent
• Not getting a salary improvement since one year or more
• Acquired some specific skills valuable for the company

Is needed for sure, no doubt, even if they got a raise six months ago

• They are falling behind the ladder level they belong to
• They are clearly outperforming another person within the same ladder level but with a higher salary
• They demonstrated a tangible performance boost and authentic engagement since the last raise
• They are moving consistently towards the next level of the ladder

These three blocks should be evaluated in this order. In addition to this every year the Engine Lead Link is defining a cap for salary raises, for example 3% of existing salaries, and all the business units should be stick with such cap.

▶️ If you want to understand why you got or didn't get a salary increase, you can discuss this in a 1:1 session with your coach. Don't expect your coach will provide full details about the salary review process. A possible answer could be: "You're doing great, but for fairness you didn't get a raise this time".

Constraints

At the beginning of the year, the engineering director defines a budget for salary raises, typically a percentage quota ( ex. 4% ) that should be managed for the whole year.

The process

1) Each BU Lead, talking with team leaders, create a proposal for salary raises that is compatible with budget constrains

2) Each BU Lead discuss the salary raise proposal with the Engineering Director

3) The Engineering Director take final decision on the salary raise package and communicate to HR to modify the contracts and the employees database

4) Each BU Lead communicate salary raises to the people

Ladder Promotion

Ladder promotion is completely decoupled from the salary review process that is happening independently In case of promotion, the current salary will be automatically moved to the baseline of the reached ladder level.

Further adjustments will be applied if necessary during the salary review. This shall guarantee to fix unbalanced situations during a collective exercise of salary reviews across all the company business units.