Three-track pay: set grade, allowance and bonus separately
Take a strong engineer the company wants to lead a team. He doesn't really want to manage. But if he doesn't, his pay won't go up.
Or take a manager whose team gets dissolved. The company wants him back as a specialist. By the grade table he either gets demoted or keeps sitting on an empty management grade. The company doesn't dare demote him, and he doesn't want it either.
Both problems have the same root. The traditional grade puts how mature this person is and how heavy this seat is on a single track. Adding responsibility means a promotion. Stepping down means a demotion nobody dares to make. A specialist who doesn't want to manage can only get a manager's pay by managing.
So I split it into three tracks.
Grade describes the person
A grade looks only at the person: ability, depth of experience, how fast they learn, how independently they can work. All of that comes from the patterns and equipment layers in the four layers.
How many people they lead, how big a budget they hold, whether they sign off, where they're based. Those belong to the seat, not the person. They stay out of the grade.
That means management isn't a separate ladder. It's just one responsibility a role can carry. A specialist and a manager can sit at the same grade, and that's on purpose.
Grades basically only go up. A promotion needs new, specific events as evidence. A big bonus doesn't count. If someone only had a quick assessment, they get a provisional grade, confirmed after the first-90-day verification.
Responsibility sits on the role, paid as an allowance
Leading people, carrying a number, making final calls, representing the company externally, compliance sign-off, a time-bound mission. These responsibilities sit on the role. Each one becomes a module, paid as a role allowance. You get it when you're appointed. It ends when you step down.
Each module spells out five things: which requirement of the role it answers to, how many levels it has, how it's priced, when it starts and when it ends, and what counts as evidence.
The most important rule is that a module has to point back to a specific requirement of the role. If it can't, it doesn't get added. That's the only gate that stops companies from inventing a module to fit a person.
Modules are priced in fixed amounts by level, independent of the holder's grade. They're not a percentage of base pay. If they were, every promotion would make the module more expensive, and the two tracks would be glued back together.
Scarce skills or unusually hot functions can carry a market premium module. It must have an expiry date and a review when it lapses. It can go down, and it can stop.
If one role carries too many modules, that's a sign to split the role, not to keep stacking.
Results set the bonus
The bonus pays for results only, not behavior. Behavior and ability are already in the grade. Responsibility is already paid through the allowance. Counting them again in the bonus means paying twice.
I write the results down at the start of the period. At the end I only check them. Nothing changes mid-period. The data can't be self-reported.
One test works well. Can this metric grow without creating any value? If yes, it stays off the results card. Calls made, resumes submitted and overtime hours all fall in that group.
Some cases reset the bonus to zero: crossing a bright line, faking data, or getting this period's results by borrowing from the next. A reset is different from missing the target. A miss is handled in the next period. A reset is handled through the appointment itself.
Company-wide results set the size of the bonus pool. The individual's level sets their share. I don't use forced distribution. The pool limits the total. No curve limits how many people can do well.
The test: a manager goes back to being a specialist
Once the tracks are split, a transfer only changes the allowance, a promotion only moves the grade, and results only flow through the bonus.
The manager from the opening steps back into a specialist role. His fixed pay loses the allowance for leading people, and his base pay doesn't move at all. A traditional grade system can't do that.
The order matters as well. Judge fit first, then set the grade, then attach modules, and only then make an offer. Talk numbers before setting the grade, and the grade you end up with is the one that got negotiated.
Two caveats before you use it in Japan
Rules like "the allowance ends when you step down" have to be written into the wage regulations, and checked by a local labor law professional. Otherwise a pay cut on stepping down can be treated as a one-sided reduction in working conditions.
The model itself is still a draft. The structure is set, but it hasn't been through a full real cycle yet.
On the candidate side, you can take your own offer apart along the three tracks: Read your offer in three tracks.
That's the last of the method pages. Head back to the method overview, or look up a term in the glossary.
Shorter thoughts go on LinkedIn.