Fees are an important topic in every company. In a company like Buffer, where our salaries have been transparent since 2013, the fee is a transparent internal discussion in which the entire Buffer team can share opinions and feedback.
A lot has changed in our payroll formula in the last few years. We took a very simple formula and made it more precise in the job market, and recently we focused on improving our formula to make it a true benchmark for the distant world.
In this article, we will share an overview of our compensation philosophy and a simple explanation of our salary formula. Transparency is an incredibly powerful tool and we hope that sharing our approach to compensation can help others who are currently moving through this space.
How we think about compensation
Our approach to compensation has evolved over the years, and our salary formulas have taken different forms, but several basic pillars of our overall compensation philosophy have not changed.
In the end, we see compensation and benefits as a set of tools that empower our teammates to do their best at Buffer, so that we can share the same generosity in serving our customers. We want every interaction with the user to be a pleasant experience. By ensuring that our team members are fulfilled and engaged in their work, we can build solutions and tools that support our clients in achieving success and fulfillment in their private and business lives.
These key principles guide all decisions we make about our team’s fees and benefits:
Transparency: We openly share our approach and all salaries to build trust, hold ourselves accountable and serve as a resource to the industry.
Simplicity: Our goal is to keep a formula that is easy to understand and allows everyone to easily see how we come to any individual salary.
Honesty: We ensure that those with the same role and responsibilities who have the same level of experience are paid equally.
Generosity: We pay above the market to attract the team we need, progress as individuals and avoid the exceptions and inequalities that result from negotiations.
Our salary formula
Each basic salary in the Buffer is derived from our salary formula. The formal approach minimizes biased compensation decisions. This was a valuable tool to ensure our awareness of any gender pay gap, as our salary formula is rooted in objective market factors that are consistently applied throughout the team. Read our latest payroll analysis for more insights into equal pay at Buffer.
Our formula is your role x cost of living = your salary.
How we determine role compensation
We compare each role with data from Radford, platform which collects data on fees and benefits from companies participating in global surveys twice a year. The reference role is based on the software industry and the 50th percentile of market data in San Francisco. We chose San Francisco as part of our principle of generosity because it is a competitive job market.
How we apply the cost of living
After comparing the level of position and experience, we multiply by the cost of living factor that objectively considers one of the four geographic areas compared to the San Francisco Price and Living Price Index.
High cost of living
100% of the San Francisco market = multiply by 1.
Examples: San Francisco, CA and New York, NY
Average cost of living
Multiply 90% of the San Francisco market by 0.90
Examples: Singapore and Sydney, Australia
Average cost of living
85% of the San Francisco market, multiplied by 0.85
Examples: Boulder, CO & Madrid, Spain
Low cost of living
75% of the San Francisco market, a multiple of 0.75
Examples: Bangalore, India and Wroclaw, Poland
These cost-of-living multipliers take into account that they are a global team, while closing the gap found in traditional approaches to compensation.
To see this formula in action, check out our full payroll page for the entire tampons team.
The future of our salary formula
In the last few years, we have aimed to further simplify the formula and abolish the consideration of the cost of living as a component of the formula. In practice, this would mean eliminating the low, middle, and middle belts to pay everyone the same level of wages in the San Francisco market.
The result of this change would be an increase in operating costs of $ 1.2 million based on the team we have today (March 2021). While this change remains a consideration, we have deliberately set a goal to do so gradually, not all at once. Investing in our team is important, although we have to consider trade-offs, and this season for Buffer we believe that increasing our team is more in line with the needs of our customers.
In the meantime, we are also seeing market shifts that will have an impact on global compensation. As more and more companies accept telecommuting, access to talent no longer depends on the local talent fund. You don’t have to live in Silicon Valley or New York to work for companies based in those areas. You also don’t have to have a headquarters in those cities to access top talent! Although we have never looked only at the local market to compare our wages, we recognize that the cost of living is likely to become increasingly irrelevant as part of the move to support the global workforce.
What do you think about our approach to compensation? In what ways would you like salaries to become more transparent inside or outside your organization? Join the discussion with the Buffer community on Twitter here.
Do you want to work in a team that has transparent salaries? Check out our current jobs here.
Friendly communicator. Music maven. Explorer. Pop culture trailblazer. Social media practitioner.