Nadine Nobile explains what is new about New Pay
Posted: Tue Feb 11, 2025 6:15 am
New Work needs New Pay: Stefanie Hornung Quote
This is how the term "New Pay" was created. It describes an alternative, individualized approach to developing a new compensation system, taking into account various aspects that play a rather minor role in traditional compensation models. These include, among others, the holistic interactions within the company as well as the principles of transparency, participation and fairness.
Franke adds approvingly: "New Work has always left out the issue of remuneration. We have learned from New Work that organisation, structure and culture are all connected. We are introducing remuneration as a new aspect because we are convinced that New Work does not work without the issue of remuneration."
What salary models are there and what is new about New Pay?
New Pay is not a blueprint or a ready-made model that companies can simply adopt and apply to their operations. Instead, each company should analyze existing structures to find out what the next step towards more participation, more transparency and accountability might look like.
At the end of the day, it is of course always about paying salaries and adequately compensating employees, but the path to this with New Pay is different from that of traditional remuneration models. New Pay aims to replace rigid and often one-sided salary models and offer a holistic approach. This should take into account the perspectives of different stakeholders, the company as a whole and also non-monetary remuneration aspects. Often, employees are not concerned at all with the salary, but with completely different factors in the remuneration of their work, such as working conditions or recognition, which cannot be compensated for with a salary increase. At the beginning of their New Pay journey, companies can ask themselves questions such as "What is something worth to us and how much?", "What are the differences that make a difference for us and that should be reflected in the remuneration?", "Do employees receive positive feedback in addition to monetary remuneration, such as appreciation for their value contribution?"
Quote Nadine Nobile: New Pay is perceived as fairer by employees
The New Pay concept is particularly focused on these seven dimensions, which together represent the holistic approach mentioned above:
Participation: Employees are involved in the design of the remuneration system
Transparency : Transparent processes or salaries (transparent in the sense of traceability)
“We” thinking: focus on team and overall performance (what type of compensation supports team thinking as opposed to compensation for individual performance in a classic compensation model?)
Personal responsibility: co-determination in performance evaluation and remuneration
Flexibility: Consideration of individual needs
Permanent Beta: A continuously evolving compensation system
Fairness: procedural and distributive justice
Fairness is the most important dimension around which all others revolve, because the other principles remain ineffective if the employee does not feel fairly treated.
In stark contrast to the New Pay concept are classic salary models that are developed at management level and implemented in the company using a top-down approach. The main distinction is made between three remuneration systems: performance-related (quantitative and qualitative performance of the employee), social (factors such as age, marital status and number of children) and success-related remuneration (success of the company as a whole and not of the individual).
According to the experts, these traditional models can often be perceived as opaque and, south africa telegram data as a result, unfair. This can be because employees cannot understand the conditions under which an existing system was designed. Another reason for this perception can be the lack of opportunity to participate in the design of the system.
Does this mean that the performance-related remuneration model is dead? Not at all, say the experts.
Payment for performance: a relic from the past?
Performance-related pay originally comes from piecework. In this system, wages were not based on the time spent, but on the work results achieved. This mainly refers to classic production jobs in which goods are manufactured. Since the number of parts manufactured is the deciding factor in this type of employment, it is very easy to track the performance achieved. However, there are fewer and fewer jobs in manufacturing, which requires a rethink in the definition of what counts as performance.
Franke explains: "We have nothing against performance-based remuneration. But the question is: what is performance? 80% of our customers cannot define that. For the remaining 20%, the challenge is to define suitable criteria for measuring and evaluating performance."
According to the three founders of the New Pay approach outlined above, performance-based pay has not become obsolete, but a new basis for defining and measuring performance is needed. This can only be achieved with clear criteria and with a stronger focus on team performance rather than individual performance.
This is how the term "New Pay" was created. It describes an alternative, individualized approach to developing a new compensation system, taking into account various aspects that play a rather minor role in traditional compensation models. These include, among others, the holistic interactions within the company as well as the principles of transparency, participation and fairness.
Franke adds approvingly: "New Work has always left out the issue of remuneration. We have learned from New Work that organisation, structure and culture are all connected. We are introducing remuneration as a new aspect because we are convinced that New Work does not work without the issue of remuneration."
What salary models are there and what is new about New Pay?
New Pay is not a blueprint or a ready-made model that companies can simply adopt and apply to their operations. Instead, each company should analyze existing structures to find out what the next step towards more participation, more transparency and accountability might look like.
At the end of the day, it is of course always about paying salaries and adequately compensating employees, but the path to this with New Pay is different from that of traditional remuneration models. New Pay aims to replace rigid and often one-sided salary models and offer a holistic approach. This should take into account the perspectives of different stakeholders, the company as a whole and also non-monetary remuneration aspects. Often, employees are not concerned at all with the salary, but with completely different factors in the remuneration of their work, such as working conditions or recognition, which cannot be compensated for with a salary increase. At the beginning of their New Pay journey, companies can ask themselves questions such as "What is something worth to us and how much?", "What are the differences that make a difference for us and that should be reflected in the remuneration?", "Do employees receive positive feedback in addition to monetary remuneration, such as appreciation for their value contribution?"
Quote Nadine Nobile: New Pay is perceived as fairer by employees
The New Pay concept is particularly focused on these seven dimensions, which together represent the holistic approach mentioned above:
Participation: Employees are involved in the design of the remuneration system
Transparency : Transparent processes or salaries (transparent in the sense of traceability)
“We” thinking: focus on team and overall performance (what type of compensation supports team thinking as opposed to compensation for individual performance in a classic compensation model?)
Personal responsibility: co-determination in performance evaluation and remuneration
Flexibility: Consideration of individual needs
Permanent Beta: A continuously evolving compensation system
Fairness: procedural and distributive justice
Fairness is the most important dimension around which all others revolve, because the other principles remain ineffective if the employee does not feel fairly treated.
In stark contrast to the New Pay concept are classic salary models that are developed at management level and implemented in the company using a top-down approach. The main distinction is made between three remuneration systems: performance-related (quantitative and qualitative performance of the employee), social (factors such as age, marital status and number of children) and success-related remuneration (success of the company as a whole and not of the individual).
According to the experts, these traditional models can often be perceived as opaque and, south africa telegram data as a result, unfair. This can be because employees cannot understand the conditions under which an existing system was designed. Another reason for this perception can be the lack of opportunity to participate in the design of the system.
Does this mean that the performance-related remuneration model is dead? Not at all, say the experts.
Payment for performance: a relic from the past?
Performance-related pay originally comes from piecework. In this system, wages were not based on the time spent, but on the work results achieved. This mainly refers to classic production jobs in which goods are manufactured. Since the number of parts manufactured is the deciding factor in this type of employment, it is very easy to track the performance achieved. However, there are fewer and fewer jobs in manufacturing, which requires a rethink in the definition of what counts as performance.
Franke explains: "We have nothing against performance-based remuneration. But the question is: what is performance? 80% of our customers cannot define that. For the remaining 20%, the challenge is to define suitable criteria for measuring and evaluating performance."
According to the three founders of the New Pay approach outlined above, performance-based pay has not become obsolete, but a new basis for defining and measuring performance is needed. This can only be achieved with clear criteria and with a stronger focus on team performance rather than individual performance.