The last five chapters were about what is wrong. It is easier to find fault than to build, and a paper that stopped here would have done the easy half. This chapter turns the findings into requirements. There are seven. Each answers a problem already described, and each is met by a specific part of the model in Part Two.
They are requirements for a better system. Chapter 1 set that standard: we cannot avoid misjudging people, so a pay system should keep its mistakes small and in view. The first requirement is that standard applied to pay.
1. Narrow the Gap
The problem. Pay at the top is hundreds of times pay in the middle, and the multiple measures nothing (Chapter 2). Whatever gap exists in pay grows wider in what people end up with (Chapter 3).
The requirement. Limit how far apart any two people’s pay can be. A narrow gap is how the mistakes are kept small. If the system is wrong about someone, it can only be wrong by a little.
How Part Two meets it. The top salary is at most three times the lowest, and the lowest is a living wage (Chapter 8). Profit is shared equally by days worked (Chapter 9). In the example company the highest total pay in a good year is about 1.8 times the lowest.
2. Value Over Vintage
The problem. Much of what passes for reward pays people for when they arrived. Equity favors whoever joined first (Chapter 4), and salaries that rise every year pay for time served.
The requirement. Pay for what a person does now.
How Part Two meets it. A band reflects the level a person works at today, and no salary rises for length of service (Chapter 8). A day worked this year earns one Future, for someone in their first year and someone in their twentieth (Chapter 9). Founders are repaid for the pay they went without and receive no permanent stake (Chapter 12).
3. Beyond the Exit
The problem. Pay stops on the day a job does, and the bills do not. In 2024 the median spell of unemployment in the United States lasted about ten weeks.1 Equity makes it worse, because leaving forfeits what has not vested (Chapter 4).
The requirement. What a person has earned stays theirs when they leave, and reaches them over time.
How Part Two meets it. A year’s profit share is paid across the following year, half in January and half monthly, whether or not the person is still there. Someone who leaves in the middle of a year receives their last payment eighteen months later (Chapter 9). If the company is sold, people who left within the previous five years share in the proceeds (Chapter 14).
4. Simplicity
The problem. Pay that takes an adviser to understand is worth more to people who can afford one (Chapter 4).
The requirement. Anyone can work out their own pay, and check it.
How Part Two meets it. The model has eight rules and one sum (Chapter 7). A person needs three numbers: their band figure, the days they worked and the value of the year’s Future. Nothing has to be bought, exercised or filed.
5. Adjust Everything Else
The problem. Most companies hold to a principle of fair pay until it costs something. Then an exception is made for one hire, one function or one investor, and in time the exceptions become the system.
The requirement. Fix the core rules, and make everything else move around them.
How Part Two meets it. The core rules sit in a charter that the council cannot change by an ordinary vote (Chapter 11). If the top band has to rise to hire someone, the whole ladder rises with it (Chapter 8). If the work is needed regularly, the role goes on the ladder or the company does without it (Chapter 13). Investors fit the model by buying Futures, and the model is not bent to fit them (Chapter 12).
6. Empathy and Understanding
The problem. The same pay is not worth the same to everyone. Childcare, care for a relative and debt decide how much of it a person keeps, and the better returns go to those who already have money (Chapter 3).
The requirement. Take people’s circumstances into account, without making pay a matter of circumstances.
How Part Two meets it. Benefits attach to circumstances and are the same for anyone in the same position. Rollover gives everyone the return an investor gets (Chapter 10). Harder working conditions shorten the standard day and leave pay unchanged (Chapter 8).
7. Democratic Decision-Making
The problem. Pay is set by people who do not live on it. Boards set executive pay by looking at other boards, and the people who do the work are not asked (Chapter 2).
The requirement. The people who live under the rules set the rules.
How Part Two meets it. A trust owns the company. Everyone who works there elects the council that governs it, with one vote each. The council sets the numbers the charter leaves open (Chapter 11).
The seven together
| Requirement | Problem it answers | Where it is met |
|---|---|---|
| Narrow the Gap | Unbounded pay; gaps that compound | Chapters 8 and 9 |
| Value Over Vintage | Reward for arrival date and time served | Chapters 8, 9 and 12 |
| Beyond the Exit | Pay and equity that end on leaving | Chapters 9 and 14 |
| Simplicity | Complexity that favors the advised | Chapter 7 |
| Adjust Everything Else | Exceptions that become the system | Chapters 8, 11, 12 and 13 |
| Empathy and Understanding | The same dollar worth different amounts | Chapters 8 and 10 |
| Democratic Decision-Making | Pay set by people who do not live on it | Chapter 11 |
The requirements pull against each other in places, and Part Two says where. Simplicity limits how much the model can adjust for circumstances. A narrow gap costs a company some of the people it would like to hire. Sharing profit equally exposes the lowest-paid to a bad year. FairShare makes a choice in each case, and every one of those choices is open to argument.
One more requirement applies to the proposal itself. It has to be possible to find out that it is wrong. An idea that cannot fail a test is a belief, and we have enough of those about pay already. Chapter 16 lists the results that would show it.
Notes
- U.S. Bureau of Labor Statistics. Current Population Survey, annual averages for 2024: unemployed persons by duration of unemployment. The median was 9.6 weeks. https://www.bls.gov/cps/data/aa2024/cpsaat30.htm