Imagine letting your employees decide what they get paid.
Conventional wisdom suggests that would be a recipe for going broke, but entrepreneur Jason Trost swears by the practice.
Trost is the chief executive of London-based betting company Smarkets, a business which determines salaries through social consensus.
In a recent interview with Business Insider Trost explained the ins and outs of the extraordinary system, and why he believes it’s actually been good for business.
“I think this is the fairest system,” Trost told Business Insider. “It gives people a rightful sense that they are more in control of their job, more in control of their position.”
The system is more complex than it seems at first glance. Basically, employees nominate how much they’d like to be paid, then their colleagues vote on whether they think the amount is appropriate.
All salaries are published within an internal platform, which can be renegotiated twice a year.
Under this system, those who ask for extremely high amounts will face criticism from their co-workers in a type of “internal court” system Trost believes promotes transparency.
Trost believes his company’s system might be the future of salary negotiation, but there have been some bumps along the way.
One disgruntled employee has previously tried to double his pay as a matter of protest against the pay system, while there have been other “hard conversations” within the business.
Other employees reportedly expressed their support for the system though, applauding social consensus as a method for setting pay for its transparency.
“It’s important for humanity to keep improving these social systems,” Trost said. “I’m not just doing this because I think it’s a good idea — I want Smarkets to be an example company.”