You may have heard of the minimum $70K salary strategy that some companies are implementing. We’d read about it, discussed it, and debated it for a while. And then, in August 2021, we presented the idea to our executive team: to implement a minimum salary of $70,000 for every single F12 employee.
“My reaction, was, are we crazy?” says Devon Gillard, Chief Marketing Officer. “Has anyone done the numbers? Can we afford this?”
THE CONCEPT OF THE MINIMUM $70K SALARY
It’s a bold idea, one that few companies across North America have adopted. You may have read about Seattle-based Gravity Payments; their CEO Dan Price who, in 2015, famously decided to raise his company’s minimum yearly salary to $70K, taking a $1-million pay cut himself.
At F12, we weren’t going to cut any salaries. Instead, the idea was to work closely with our new hires to fast track them to success, because the sooner they succeed, the sooner we succeed as a business. And the compensation for getting them to the level we desired was a promise of a minimum $70K base salary by the end of the first year. In addition, our new hires receive immediate benefits, a healthcare spending account, flexible work arrangements, and paid overtime—everything they need to be able to fully commit to F12 and feel like we are fully invested in their growth within the company.
SO WHY DID WE IMPLEMENT THE $70K MINIMUM SALARY PLAN?
“Any business will say how vital their people are,” says Gillard, “but that’s never so true than in the service business when the product you’re offering isn’t F12 so much as it is our people.”
Our Chief of Staff, Leanne Yeatman, points out that F12 is an organization built on a philosophy of true care and empowerment for its people. “That’s why I’m still here twenty-one years later,” she says. Yeatman explains that the pandemic reminded them how very important their people are. “We looked at ourselves and asked if we were getting off track.”
The Great Attrition is no industry secret: large swaths of employees are leaving their jobs, and those companies are striving to retain their talent. Here at F12, we’ve historically had a high retention rate, but over the last few years, we faced challenges when it came to keeping quality employees. So our longer-term strategy became to attract people interested in investing in their careers and developing themselves.
WHY DOES THE $70K MINIMUM SALARY PLAN WORK?
A 2021 Mercer study of Canadian employers discovered that the top two reasons for employee turnover were compensation and career advancement (or lack thereof)—so we buckled down to address that. We knew, however, that this was a complex issue with no simple fix. That’s when we brought in HR guru David Johnston, an experienced consultant who had worked with many large companies and had a wealth of ideas for compensation plans as well as concrete strategies for developing people.
“This is a big initiative,” Johnston says, “but it’s a sincere, strategic initiative. It’s designed to do more than just give increases. Yes, we’re trying to attract and retain the best, but it’s also about fairness and concern for our employees—ensuring that they have a wage that allows them to live.” The economist Daniel Kahneman’s famous 2010 study correlating money to happiness indicates that the capacity for optimal emotional well-being rises when one’s minimum yearly salary is around $70,000. If our employees are feeling satisfied and happy, they’ll have the emotional capability to be collaborative, kind, and genuine at work.
But it’s also about good business. By valuing our employees more highly, our team members become “committed, not just compliant,” says Johnston. Any business with engaged and enthusiastic employees will find their long-term goals and strategies supported. By raising the minimum salary, we’ve been able to hire and retain people who contribute and perform at a higher level. As a result, we don’t need as many resources to accomplish the same amount of work—which leads to growth and sustainability.
F12 is a customer-service business, and growth is reflected directly in how we engage with our clients. By essentially removing our lowest tier on the pay scale, we’re giving the customer a better user experience because now, the employee assisting them is more capable and experienced. The representative helping the customer will be better certified and trained in the specific product and services that we support. “Now they don’t have to go through five people who can’t help them in order to get an answer from the top,” says Gillard. “Instead, we’re presenting our best employees to our best customers.”
HOW DOES THE $70K PLAN WORK?
To make things clear to employees, we’ve created our F12 Career Phases, an advancement structure complete with development and compensation details that highlights how we onboard new employees and quickly elevate them to the $70K minimum within a year. It goes further than that, however; through strategic and personalized upskilling and training, our dedicated team members have a clear path created for them with specific goals like becoming a team lead or subject matter expert, taking on management roles, or even investing by becoming a shareholder.
“I’d gone through this entire journey, but it was never formalized,” says Yeatman. “I started as the receptionist at F12 when there were just nine of us. I’m living proof that this path is something you can build a very successful career on.”
SO—DID IT THE $70K PLAN WORK?
How has it worked out for us thus far? Our turnover—something that particularly spiked during the pandemic—has been reduced dramatically. It is now less than a third of what it was at its highest. When we first announced our minimum salary base, we were inundated with resumes, but it’s now a case of quality over quantity.
“We’re starting to see the difference between those who are looking for a career and those looking for a job,” says Gillard.
Are you curious about our crazy idea and wondering if it might be a good move for your company? Give us a call at 1-866-F12-8782. We love talking about our big $70K plan almost as much as we love talking about IT.