You are Mojca Hribar, HR Director of Logika Solutions in Ljubljana. Four senior engineers have just resigned to join the same firm in Vienna. Before you design anything, you have to tell the board what is going wrong with how Logika pays.
The situation
It is Monday, 12 January 2026. Logika grew out of a former state computing bureau and now builds software and runs outsourcing for banks, telecoms and public bodies across Central Europe: €96 million of revenue, an 11% operating margin and 720 people, 540 of them engineers and consultants. Nine days ago the chief executive, Andrej Klemenčič, announced that the firm will stop selling engineers by the hour and start selling products and platforms. The board's brief to you: redesign pay and performance for that strategy, inside a frozen compensation envelope of €49.5 million, and present it in April.
The four leavers gave the same two reasons: their pay does not track what they contribute, and they cannot see where the next five years go. The Vienna firm pays an outcome-linked bonus and publishes a progression ladder. At Logika only 8% of pay is variable, against 18–22% at regional technology peers, and the bonus is triggered by billable hours and tenure. Engagement scores 58 out of 100, against about 72 for the sector; only 41% agree their pay reflects their performance. Voluntary turnover among mid-level engineers is 21%, and each regretted exit costs about €38,000: around €4.3 million a year.
An internal review also found an unexplained gender pay gap of 11% at engineer grades, which new European pay-transparency rules will make visible to every employee. Tanja Rupnik, the finance director, projects three points of margin lost within twelve months if nothing changes, and she has closed the other exit: whatever you add to variable pay or development must come out of base. Vlado Jereb, who chairs the works council, is already asking who the roughly 130 people are who would be worse off on day one under any re-mix. You drew the salary bands yourself in 2018, and your own bonus is calculated on billable utilisation.