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Compensation Confession

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Recently, Buffer, a San Francisco-based startup published the salary of all its employees online.  Why?  The company’s CEO Joel Gascoigne explains by creating a transparent formula and paying above market rate, he hopes to promote long-term commitment from employees.

Setting a competitive compensation structure at a growth company requires careful planning.  Management must walk the line of a high-enough salary to attract the best minds and a salary that doesn’t burn through cash too quickly.  Pasted below is Buffer’s salary formula:

Buffer’s Salary Formula

Salary = job type x seniority x experience + location (+ $10k if salary choice)

Job Type = base salary

  • happiness hero = $45,000
  • content crafter = $50,000
  • engineer = $60,000
  • designer = $60,000
  • Operations officer base = $70,000
  • Executive officer base = $75,000

Seniority = base multiplier

  • Senior + 5% base and 3k/$m revenue
  • Lead + 7% base and 4k/$m revenue
  • VP + 10% and 6k/$m revenue
  • C-level + 20% and 8k/$m revenue
  • COO + 20% and 10k/$m revenue
  • CEO + 20% and 12k/$m revenue

Experience = multiplier

  • Master:  1.3x
  • Advanced:  1.2x
  • Intermediate:  1.1x
  • Junior:  1x

Location = addition

  • A:  +$22k (e.g. San Francisco, Hong Kong, Sydney, London, Paris, New York)
  • B:  +$12k (e.g. Nashville, Birmingham, Vienna, Austin, Las Vegas, Tel Aviv)
  • C:  +$6k (e.g. Talinn, Warsaw, Bucharest, Santiago)
  • D:  +$0k (e.g. Manila, Delhi, Hanoi)

Equity / Salary choice

  • You get a choice of more equity or more salary, if you choose salary, you get +$10k

Here, the news magazine Quartz commented, “It’s unclear what, if any, benefit disclosing every employee’s salary to the public offers a budding startup like Buffer.  Disclosing salaries within a company is one thing—it promotes openness and fairness, which is a good for morale—but disclosing every employee’s salary to the public is another thing entirely.”

Tell us what you think in the comments below.  Would making salaries public do more harm than good?